UNDERSTAND YOUR COSTS From commissions to brokerage fees, it’s important to understand exactly what money is going out the door and how it affects your bottom line. Use these questions to help set your record straight: • Am I paying reduced commission splits for appointments set by the team? • Based on my agent splits and regular business expenses, are referral fees worth what I am paying? • Does the value from my brokerage justify its fees, and have I hit my brokerage fee cap? • Is my gross profit at 50% or better, and how many of my agents’ transactions were on <50% splits to the team? DIG INTO YOUR OPERATING EXPENSES Have you gone through your expenses in detail? Now is the time to do so. Print out the statement, and as you go through it, be alert for monthly or yearly recurring charges. Ask yourself: • Which of my expenses could be reduced or eliminated in a low-production period? • Am I personally authorizing/approving new expenses before they’re incurred? • Do any expense jumps stick out or do you notice any unfavorable trends over the past 12 months? • How does my current month compare to my year-to-date in each spending category? • Which of my expenses are known revenue-producing activities? • Are my staffing expenses what I expected, and are my employees and contractors aligned with those expectations?
DON’T FORGET THE ODDS & ENDS A true audit isn’t complete without looking at yourself, team growth, and lead generation. Here are some important considerations to keep in mind: • How many agents were productive in the month, and how much did I contribute to the team production? • What is my team’s trend in agent count? • How much time am I devoting to agent recruiting on a daily basis? • How much am I spending on leads; how quickly is my team initiating follow-up and converting them into transactions? • Is every client in my database set up to receive a listing alert or market report? • Am I taking full advantage of the PLACE technology platform? STAY CONSISTENT You dove headfirst into your finances. You asked yourself the important questions and made the necessary adjustments to increase profits. Now, it’s important to not lose steam. Set a goal to review your P&L on a monthly basis and focus on growth and profitability. What will help you achieve both? Stay true to your targets, and use your review to determine when to go full speed ahead, and when it may be time to pull back. LEAVE IT TO THE PROFESSIONALS If you are looking for more support managing expenses and driving profitability, reach out to your financial team at PLACE for a consultation. Our accounting professionals can help you develop a plan to improve profitability.
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