The Good, Bad & Ugly: What’s the Point of Owning a Business?

Hey there. Welcome back to the Business Freedom Podcast. My name is Lars Hedinborg. I'm the founder of Real Estate B School, co founder of High Performance Real Estate Advisors in Charlotte, North Carolina. This is the good, the bad, the ugly of building a real estate team. This is kind of a special edition of the podcast where a little bit of a rant, a little bit of just sharing stuff with all of you. If you're looking to scale your real estate business beyond yourself or maybe one admin and a buyer's agent, just kind of of build a business worth owning. I want to share the good, the bad, the ugly of my journey, Some lessons learned, some things to avoid to make the process easier for you. So today I want to get into what is the point of owning a business? You know, when we think of the real estate industry, if you've missed some of our, some of our other podcasts here, you know that we're really passionate about the future of the industry. It's my opinion that it's going to be tough to exist in our industry three to five short years from now if you're not taking a stand with what your business model is going to look like. I don't believe that top producing real estate agent is going to be a dominant force in the future of our industry. There's too much money, there's too much technology, there's a lot of disruption going on which if you don't know about it, you've got to get smart on it. I'm not going to dig into it because I've covered another podcast. You got to dig into it yourself there anyway. So let's get into it. So what is the point? Why are we doing this? Right? This is not the easy path. Building a sustainable business is not necessarily the easy path. And a lot of real estate agents don't even realize that they are a business owner. And think about that for a second. You know, a real business has different aspects to it, right? So there's six key drivers that we focus on in real estate. B school, it's the roadmap, right? You know where you're going. You have a marketing driver, a sales driver. That's the front stage of the business. Your operations driver, how you deliver the experience to your clients. You have your finance driver, how you track in your business, how you keep track of your numbers, your finances, your net worth, how you actually achieve financial freedom with your business. And then you've got the people driver. Right? People underlie this whole equation. How do you find the right people? And put them in the right seats. And so you've got to start acting like a business owner. And most agents and a lot of team leaders are busy just working in the minutia. And if I'm going to go into a productivity session where we're going to do some simple math on what your worth every hour you're working, that'll stop. Stop that. In terms of working the minutia, even if you're running a small team or you're just a solo agent, you're still running a business and that means money and tracking matters. If you're not tracking anything in your business, it's going to be tough for you to exist in the future. And I really mean that. You've got to think about the key positions I mentioned, the drivers in the business, but things that have to get done on a regular basis every day. Either you're ignoring these things if you're a solo agent or small team and you're not, you know, generating buyer and seller leads consistently, or you don't have a buyer process, a sales seller process that that kind of runs without you, or you're not tracking your finances, your net worth, or you don't have a people process, you're not attracting talent to your team. You're either ignoring these things or you're doing all of them. And neither, neither of those is good. And there's three things I want you to write down. You have to leverage your marketing, right? You have to use leveraged marketing principles. That's a big sort of cornerstone of what we study in real estate B school. Number two, you have to generate and convert leads into clients systematically without your involvement. Doesn't mean, well, it doesn't mean you're not involved in it, but it has to live beyond you. All of these things do. Number three, you have to deliver an outstanding client experience. And number four, you have to be able to track the results. Those are the four things that you have to have happen on a regular basis for you to have a business worth owning. If you can't step away from your business for more than 30 days, you are. It's not going to be a good thing. It's not going to be good in the future. And if you, here's, here's the striking truth or the brutal truth, right? If you don't have a business, you have a job. If you can't step away from your business for any period of time, you don't have a job. And running your business like a business requires the CEO. So you have to start thinking about yourself as the CEO, to implement systems, policies and repeatable processes. And that's the least sexy side of real estate. Let me repeat, as the CEO, it's important that you look at your business as a system of systems, which are policies and processes that are repeatable. And the goal of running a business is to generate cash flow from your business without having to work in the business. So that is the goal. The ultimate goal is to build systems in terms of your marketing, your technology, your people. Build everything in a leveraged and sustainable way where you still provide a service differentiated from other agents in your market and you don't have to do it working seven days a week, 24 hours a day. And you also should look to maintain control of the client. And that's the biggest differentiator. With a high performance real estate team and a traditional team or a brokerage, you're looking to maintain control of the client experience and delivery of value as well as the lifetime value of your client. And too many agents get caught in the trap of trying to be Superman or Superwoman. And that's not sustainable when it comes to the future of real estate. Like I said, I don't believe the top producing agent, the agent that sells 15 to 25, 30 homes, I think that agent is going to be marginalized. I think the discounters, the technology plays and the premium service providers in our market, I think are going to make it difficult to play at that level. If you do, you try to do everything yourself in your business. First of all, number one, you limit your income because you're doing activities that are below your pay grade. Number two, you will burn yourself out because you're running contract to closing, you're running the marketing. You're going on every buyer consult you're showing every property, you're going on every listing appointment, you're doing seller price reductions, you're having difficult conversations with overpriced listings or difficult closings you're having to jump into and put those fires out. So you can't do everything in your business. And I want to talk for a second about the outcome of a business. So this started as what's the point of all this? What's the point of doing this, of building a sustainable business, of building something that runs without you? You know, it needs you, but it can run without you. The outcome of business is to create a sustained. And I want you to write this down, it's to create a sustainable system that allows you to consistently increase the quality of your life and the lives of people you serve. Sustainable system consistently increases the quality of your life and the lives of the people you serve. And the people you serve are your team members and your clients. And this will lead to time and money, freedom as well as fulfillment. A lot of folks are trapped in their businesses, team leaders, right? If you make this a sustainable system or a system of systems, you can have that time and money, freedom and fulfillment. And the challenge is most real estate agents and team leaders are on the transaction treadmill and they can't slow it down because they have a lifestyle they want to support and they can't step off of it because it's going too fast and they haven't built it on a desired outcome. When I started in real estate in 2007, 2008, I knew exactly what I was building. I didn't know exactly how I was going to get there in the pieces and I made a ton of mistakes. Generally though, I knew that I wasn't going to be. I knew I had to bring in high quality buyers and seller leads to get busy enough to be able to hire an admin, to be able to hire buyer agents, right? To be able to go on listing appointments, to get more buyer, higher quality buyer leads, to hire more buyer agents, to have a couple of those step in as listing partners to hire my second admin, to hire more buyer agents. You know, so all of this sort of it goes together. But I knew I was building a business that had a life of its own. You must serve your clients in a unique and special way and consistently give them what they want and need. Our industry is not known for being revered by clients. The level of service and the expertise and professionalism in our industry is really, really low. On the one hand, that's really, really good because it allows us to step in and build something better and different. And on the other hand, it's super challenging because we're in an industry that is not thought of very highly. And finally, the outcome of business is to make a profit, a huge profit, to make all of it worth it. So this, there is no easy path in real. So you'll hear me say that a lot. Being a solo agent working for a discounter like Redfin, maybe you're the guy that's going to be the technology play where you go to a website and you can do everything as a buyer or seller via technology, that's a hard path. Working for Redfin is a hard path. Buying your leads from Zillow, that's looking to marginalize the real estate agent. Take as much of their commission check as possible through the, the cost of the leads they sell you. Right now they're at about, you know, a quarter of the commission check they're taking. If you, if you look at. So nobody's looking out for your best interest unless you decide for yourself that you're going to go down this path of building a high performance real estate team. And I want to talk a little bit, and I'll end with this talk a little bit about what makes a business grow. So this is, everyone says they want to grow their business, right? But are you really taking the steps necessary to be able to do that? And the first thing is you have to consistently add more value than anyone else in your market. Are you really looking at every touch point, the first conversation, the text sequences, the email sequences? Are you looking at the before the buyer console, before the listing consultation? What are you doing at the appointment? What are you doing? Are you serving them coffee in the office? Are you sending them brownies before you get together at the actual appointment? How are you selling them on your services when you take that client, right? When that client agrees to work with you, a buyer or seller, how are you treating them within, you know, 30 minutes after them making decision to work with you? And then throughout the buying and selling process, how you service them, if they're overpriced, what's the process to sit with them and do a market review? These are all things that we consider every day and we look to optimize every day in my business because we know this shift is coming in terms of, you know, this shift. There's an economic shift that's going to happen here in the near term. There's also a big a market shift in terms of just the technology and the way business is going to be done in the real estate industry. That's why we're looking at every little process in our business to make sure it's optimized, that the client gets the best experience and our agents and our team members are treated really, really well as well. So you must fall in love with your clients, not your services. If your businesses business is organized to meet your needs, and I did that for many years and it led to a bankrupt culture. If it's organized to meet your needs instead of your clients, you'll ultimately have a job and not a business. And you have to draw the line between the purpose of your business and your own personal objective. So this thing, I don't care where you are in your business journey, you've got to Start to look at your real estate business as a business that's independent of you and the purpose of your business. It's a life of its own. It's independent of your personal objective. And if you've heard me talk about e myth and franchise prototype and building 10,000 and that whole conversation, here's the thing. To build a real business, even if you never plan on selling it, you have to plan as if you have an exit strategy. And an exit strategy, if you're not familiar, is basically you have to act as if you're going to sell your business at some point in the future. So just decide, five years from now, I plan to sell my business. Even if you don't. Most small businesses aren't worth selling because they're only worth about 3, 4 times cash flow. In a real estate business, when you set it up the right way, it can serve you for 10, 15, 20 years in a highly, highly leveraged fashion. The year I did 450 plus sides, I worked 42 days that year and I made more money than you ever could have imagined. And so you do this right and you can really set it up in a highly leveraged fashion where it does have a life of its own and does operate at a high level. And your dollar per hour is off the charts. So you've got to act as if you have a business strategy. Alright, so that's it for today. Hopefully that gave you a little bit of context about making the shift from just this production mindset that we're just all, you know, not in love with, but we're fascinated by this production mindset. And how many homes did you sell? You know, make that shift from production mindset to business owner mindset? Right. What does it take to actually build this thing out like a business? If any questions whatsoever, make sure you connect with us. Be happy to jump on the phone with you and talk about your business and just go through a simple business growth assessment to see if this is the right move for you. And this is not for everybody. Growing your real estate business isn't for everybody, but if it's for you, be happy to help you with that. We'll talk to you soon.