What I’ve learned from coaching real estate agents over the last decade is that virtually every agent that gets into the business wants to be the true CEO of their business.
What this means is that 1) they want to make money off the efforts of other people than themselves and 2) they want to have the benefits of being able to work, or not work, when they want to.
For many, what I’ve found is that the ultimate goal is to have an enterprise that runs like a well-oiled machine whether they come into the office or not.
At a minimum, I’ve come to understand that at a minimum, agents would at least like to step out of production and either run their business on a day-over-day basis or turn the reins over to a key person who can do that for them.
The danger in doing this is getting out of production to early and then having to get back into selling homes to make sure your business survives over the long term.
As you know, building a real estate business takes a lot of time, energy and money and it can really wear you down to the point where you want to enjoy the fruits of your company’s labor without you being the one to make it happen..
The key in being able to do that successfully rests in setting your business up properly and doing the right things in the right order so you can exit your business at the right time without having to step back in.
The good news is that with a solid plan and the right exit strategy to execute, you can put yourself in position to step out of your business at the right time.
Here’s what you should consider:
Build Your Core Capital
Running your business successfully on a month-over-month basis requires a certain amount of operating budget to be met.
If you’re conducting your business properly and crushing your sales goals, you should be able to make enough money to keep your working capital strong, pay yourself a salary and put money away to build up your core capital...all at the same time.
Loosely defined, core capital is the reserve of cash you have to cover your business expenses (and to help grow your business) for a specific period of time whether or not sales are made.
The ideal amount of core capital you’ll want to have in the bank while remaining active in your business is a minimum of 90 days. You need this amount because it covers one full sales cycle for selling homes in the event of an emergency.
In order for you to be able to step out of your business at the right time - and in good conscience - you’ll want to have at least twice that much in core capital in the bank.
With six-month’s reserves, you give yourself the cushion you need to handle just about ANY potential catastrophe, like the loss of a key individual or the sudden change in market conditions, that could impact your business.
Having six-month’s core capital gives you time, if necessary, to get back into your business and start producing without feeling like you have a gun to your head as you make it happen.
If you really want to give yourself the buffer you need to step out of your business comfortably, you’ll also want six months of core capital set aside for your personal expenses, too. That way, if things go to hell in the proverbial handbasket, your family’s quality of life and style of living won’t be impacted negatively.
Stepping out of your business at the right time requires the discipline to put enough money away run your life and business without any of your efforts.
Systematize Your Business
You need to set your business up so that it comes with instructions included. In addition to having an employee manual, you need to have an employee manual or what the folks at Harvard B School call a Standard Operating Procedures (SOPs). These are a set of rules, systems, programs and strategies employees can follow for repetitive tasks in your company.
This will ensure employees have a rulebook/operations manual they can follow when you’re not around, and, when one employee leaves, you can quickly swap them out with a replacement to take on duties of the job.
The goal of any good business is to never have systems problems.
You must be able to plug the right person into your systems and have them be able to do their job efficiently, without having to figure things out for themselves.
Yes, we want people who can think for themselves, we just don’t need them reinventing the wheel every day they come into work.
Here are some of the areas where you must have the systems dialed in and easy to follow and implement:
Ideally, you must be able to provide a robust enough infrastructure that allow your business to run whether or not you choose to show up on any given day.
If people have to wait to work until you come in or if deals won’t get created and closed without you, then you can’t step out of your business.
Create Leaders Within Your Organization
If you’re looking to put your business on autopilot, there’s a strong possibility that you’re what the folks at Predictable Success call a Visionary:
“Visionaries…[are] big-thinkers turned on by ideas, they’re easily bored with minutiae and are consumed by the need to create and to achieve. [They] are often (although not always) charismatic. Engaging communicators, able to motivate people to bring their best in every endeavor, they inspire deep loyalty in others, and frequently a small, tight team or ‘posse’ will develop around them, a group of committed individuals who share the Visionary’s…well, vision – and who want to help see it realized ...[T]hey’re the passionate, ever-hyperlinking, ‘30,000-feet’ big-picture types who arrive back from most weekends and vacations with yet another bright idea, the ‘glass-half-full’ optimists who believe (and frequently demonstrate) that there’s always a way through every problem.”
As a visionary, the good news is that you can take your team as far as they are willing to follow you.
The challenge is that once you step out of your business, you need people who can continue to 1) keep the team bought into your vision and 2) grow production so that the business thrives in your absence.
To make this happen, you need to groom people and create leaders out of the people who will carry on your legacy once you are gone.
The structure of this type of team looks like this:
Granted, this is a 10,000 foot view of what it will take for you to be able to step out of your business at the right time.
That said, it’s crucial that you nail the areas that I covered in this post today so that you can move forward comfortably with your strategy to exit your business.
The more sound the core of your business is, the easier it will be for you to step away when you are ready to do so.