Though 2009 may prove to be a year many brokers would rather forget, your company’s success going forward may well depend on how effectively you incorporate this year’s results into your future plans. Did you scale back marketing or reduce training because cash flow was down? Have you carefully assessed and compared productivity declines within your sales force? Are you occupying office space that’s larger than you need? Grappling with these sorts of questions now can help you position your brokerage for a profitable 2010.

 

Good planning requires comparing your performance expectations for the year against reality. "Look at what you thought was going to happen in 2009 and what actually happened," explains Jim Merrion, CRB, CRS®, Elgin, Ill.–based regional director of the RE/MAX Northern Illinois real estate network. "By quantifying your goals and identifying mile markers to help you stay on course, you can review your plan as 2010 unfolds to see if you’re successful."

 

Here, we provide a road map for planning a strong 2010.

 

Run the Numbers

Less than 20 percent of brokers draft a business plan, estimates brokerage consultant Jonathan Nicholas, CRB, CRS®, head of The Company CEO Inc. in Winnetka, Ill. Without a specific, written plan, however, you can’t gauge how close you are to your goals at any given time. Several software programs can help, including Lone Wolf’s Realty Management System, Lucero Summit Real Estate Broker Office Management Software System, and Broker Office Solutions’ self-titled Web-based system.

 

In creating a business plan, ask yourself these questions:

 

1. Was your company profitable in 2009? If so, how profitable? If not, how deep was the red ink? What’s an achievable profitability goal for 2010?

 

2. What were your company’s 2009 sales volume and number of transactions? Based on current market conditions and economic forecasts, what are realistic expectations for 2010 volume and transaction goals?

 

3. What’s your company’s market share today, and what’s a reasonable goal for 2010?

 

4. What was each sales associate’s productivity rate in 2009 and what’s a reasonable target for 2010?

 

5. How many sales associates did you recruit in 2009, and what was your sales associate retention rate? How many sales associates do you need to recruit in 2010? How many phone calls, lunches, and breakfasts will you need to do each day or month to achieve that goal?

 

 

Evaluate Your People

Assess your current staffing levels and performance. Do the same with sales associates.

 

1. Have you done annual performance evaluations for all employees? If you haven’t, implement that process immediately so that you can determine which employees should be rewarded and retained and which you must coach or terminate. If you let staff go, meet with others who perform related functions. Your goal is to determine whether you must replace those employees or can save money by spreading out their responsibilities among your remaining employees.

 

2. Meet with sales associates individually to evaluate their 2009 performance and their 2010 plan. If some associates aren’t meeting your break-even level, determine who still has the potential to do so with additional training and who’s likely to remain a low performer, and should be asked to leave. Think about the big picture, too. If your average number of sides per associate is eight, what training will help boost that number to 10? Will it be company-funded, or will associates need to share the expense?

 

 

Assess Your Technology Needs

Staying ahead of the curve with technology can give you a competitive edge in a tough market. Questions to consider:

 

1.How comfortable are your sales associates with the technology in your office? Survey associates to determine whether their own equipment and software are compatible with what your office has. If they are, you can more confidently hold off on increasing your spending on computers, printers, and copiers for 2010. If you have outdated equipment, share information about your company’s budget constraints and solicit suggestions on paying for upgrades. People may be willing to kick in a monthly fee for improved hardware or software.

 

2. Is your Web site still doing its job, or do you need to upgrade? Evaluate your lead-tracking data to mine important Web site metrics. For instance, if consumers land on your Web site but don’t stay, it might be time for a redesign that encourages consumers to engage with your company.

 

3. Is your company doing enough to protect consumers’ private data? Whether consumers provide your company with personal information through e-mail, in contracts, or via the Web, you have a duty to maintain the privacy of that data. Assess who in your office should have access to client files and determine how long you need to keep the information and the proper methods for disposing of it securely. Determine in advance how you would handle a security breach.

 

 

Set the Budget

Scrutinize your budget from the top to the bottom line:

 

1. What were your overall expenses in 2009?

 

2. In what areas will you face automatic cost increases in 2010? For example, you may have a contractual annual increase in office rent.

 

3. Are there areas in which you can cut expenses for 2010? For instance, will customers notice a reduction in your office hours by an hour or two each day or on the weekends? If not, that simple change may be worth the savings in staff time.

 

4. Where are you spending marketing dollars, and is that money still generating results? If you’re not doing so already, implement at least a basic system for tracking every lead’s source so that you can determine where your marketing dollars are generating the biggest return. It could be as simple as asking every caller who contacts your company, "Where did you hear about our company?" or "Where did you hear about this property?"

 

5. Where can you generate additional revenue? If you don’t charge desk fees, consider instituting them. You could ask sales associates to shoulder expenses for some of the services you provide. The key to adding fees without losing sales associates is transparency. Meet with your sales associates to explain your company’s financial picture, explain your options, and offer and solicit suggestions. Sales associates may be more comfortable with new fees if they understand that you’ve explored all other options and consider them a necessity for the brokerage’s continued success. Also consider adding additional company services, advises Harold Crye, president of Crye-Leike Inc., whose company is adding foreclosure departments in each office. Other new services may include auctions, rental services, and single-family home property management.

 

 

There's Still Time to Lower Your 2009 Tax Bill

Planning for 2010 includes last-minute moves to reduce your 2009 tax bill. Here are a few tips you can still implement this year.

 

1. Don't undercount expenses. "You don’t want to evade taxes, but you do want to avoid them" if they’re not necessary, says Dan Forsman, president and CEO of Prudential Georgia Realty in Atlanta and a certified public accountant. "Don’t forget to tally up every expense possible in your operating costs." Paying outstanding invoices before the end of the year also increases your operating expense, which reduces your taxable income.

 

2. Review your employee classifications.If you’re following Internal Revenue Service rules correctly, your sales associates probably aren’t employees; they’re independent contractors. This is a good time to double-check those rules to be sure your sales associates still qualify. In addition, if you’re classifying other workers, such as administrative assistants, as independent contractors, review that decision to be sure you’re not inviting tax trouble, says Homer Duncan Jr., tax director at the accounting firm of Frost PLLC in Raleigh, N.C. If you realize it’s more accurate to reclassify some workers as employees, you may be able to reduce your company’s tax liability by making contributions to a retirement plan for those employees.

 

3. Make year-end purchases. If your company has been profitable in 2009, says Duncan, make big purchases before the year’s end so that you reduce your company’s taxable income. If you time equipment purchases correctly—which is something to double-check with your accountant—you may be able to get some depreciation in 2009 and a full year’s depreciation in 2010. On the other hand, if you’ll operate at a loss in 2009 but think 2010 will be profitable, delay major purchases until after the new year.

 

 

Software Can Ease the Burden

Looking for software that will help you create a business plan and track productivity goals? Here are highlights of a few popular programs:

 

Realty Management System (RMS)

Lone Wolf Real Estate Technologies

www.lwolf.com

 

RMS manages all accounting and back-office functions and allows you to create a company budget and produce budget-versus-actual reports. You can create budget and production goals for individual sales associates and monitor associates’ productivity.

 

For offices with up to 10 sales associates, RMS requires a one-time license fee of $899 and a monthly fee of $119. For offices with 11 to 20 sales associates, the one-time license fee is $1,349, and the monthly fee is $179. For offices with 21 to 50 sales associates, the one-time license fee is $1,799, and the monthly fee is $239.

 

 

Broker Office Solutions

www.brokerofficesolutions.com

 

Broker Office Solutions is a Web-based system centered on the daily requirements of running a brokerage. Transaction management features include automated contract review that sends to-do lists to sales associates if there are missing contract documents or the broker needs more information to process the contract. The software automatically calculates commissions and prints commission check summaries after closings. It allows sales associates to see the broker’s notes on active and past transactions, download or print brokerage resources, presentations, forms, and training materials, and see their own statistics and past transactions.

 

Brokerage Office Solutions also offers live online chat support, video guides for every feature, and frequent updates. Phone support is also available. There’s no long-term contract, only a $75 set-up fee and a $75 monthly charge regardless of brokerage size.

 

 

Lucero Summit

www.lucerosummit.com

 

Lucero is a front- and back-office management system that automates complex commission calculation formulas and handles virtually any type of sales associate compensation plan. It provides hundreds of easy-to-read accountability, productivity, and management reports.

 

Lucero is in the process of changing from a license purchase to a monthly subscription model and hasn’t yet released its new pricing. Currently, a broker with one office and 10 sales associates pays $2,760 for Lucero Summit, including training and 13 months of support. A system for a broker with two offices and 100 total sales associates is $7,155 including training and support.

 

 

Broker Resources

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