MREA: Business Planning Clinic Instructor's Notes 11/9/2018 MREA: Business Planning Clinic For the Millionaire Real Estate Agent Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Introduction 1 Objectives Ground Rules What you will learn Instructor's Notes 11/9/2018 Introduction Objectives Ground Rules What you will learn How you will learn 1 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Ground Rules 2 Arrive on time Form groups quickly Instructor's Notes 11/9/2018 Introduction Ground Rules Arrive on time Form groups quickly Limit side conversations Turn off cell phones Be comfortable Respect time Respect each other Help eacho Respect confidentiality Have fun! 2 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

What You Will Learn 3 Goal: Identify 1-year, 3-year, 5-year goals Introduction What You Will Learn Goal: Identify 1-year, 3-year, 5-year goals Create a business plan for your 1-year goals 3

What You Will Learn 3 The Why of Millionaire Models The Economic Model Introduction What You Will Learn The Why of Millionaire Models The Economic Model The Lead-Generation Model The Budget Model The Organizational Model Goal Setting Focus 3

How You Will Learn 4 Action Oriented Training Participate Observe Instructor's Notes 11/9/2018 Introduction How You Will Learn Action Oriented Training Participate Observe Create a business plan Create an action plan 4 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Peer Partner Exercise 3 hobbies or activities Mingle! Introduction Peer Partner Exercise 3 hobbies or activities Mingle! Identify your peer partner Define accountability 5-6

Chapter 1: The Why of Millionaire Models Instructor's Notes 11/9/2018 Chapter 1: The Why of Millionaire Models Objectives Identify the value of models Identify the 6 MythUnderstandings Define how to think like a Millionaire Real Estate Agent Define the 4 fundamental models of a Millionaire Real Estate Agent 7 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

The Importance of Modeling Chapter 1: The Why of Millionaire Models The Importance of Modeling Model: A pattern … an example Success leaves clues. So does failure. People have lived before us. 8

Creativity 9 Implementation before Innovation! Chapter 1: The Why of Millionaire Models Creativity Implementation before Innovation! 9

Chapter 1: The Why of Millionaire Models Achievement 10

Begin with the End in Mind Chapter 1: The Why of Millionaire Models Begin with the End in Mind Think Big! Aim High! Big goals pull you through your smaller goals. Climb the mountain! 11

The 6 Mythunderstandings Instructor's Notes 11/9/2018 Chapter 1: The Why of Millionaire Models The 6 Mythunderstandings MythUnderstanding Truth 1 I can’t do it. Until you try, you can’t possibly know what you can or can’t do. 2 It can’t be done in my market. Yes it can, but you may need a new approach. 3 It would take too much time and effort—I would lose my freedom. Time and effort are not the deciding factors in success. 4 It’s too risky—I’ll lose money. Risk is in direct proportion to how well you hold your incremental costs accountable to producing incremental results. If you hire people without having a business plan, it’s very risky. 5 My clients will only work with me—only I can deliver quality service. Your clients aren’t loyal to you; they are loyal to the standards you represent. 6 Having a goal and not fulfilling it is a negative thing. Having a goal and not trying to achieve it is a negative thing. Not trying is failing. Whenever you try you either succeed or learn. 14 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

The 9 Ways an MREA Thinks 13 Powered by a Big Why Chapter 1: The Why of Millionaire Models The 9 Ways an MREA Thinks Powered by a Big Why Big Goals and Big Models Possibilities Action Without Fear Progress Competitively and Strategically Standards Service 13

Chapter 1: The Why of Millionaire Models 14

Chapter 2: The Economic Model Instructor's Notes 11/9/2018 Chapter 2: The Economic Model Objectives Define the numbers in the MREA Economic Model Create your economic model 15 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Chapter 2: The Economic Model MREA Economic Numbers 16

MREA Economic Numbers 16 Definitions Gross Closed Income (GCI) Cost of Sales (COS) Operating Expenses Net Income 16

Average Sales Price/Conversion Rates Chapter 2: The Economic Model Average Sales Price/Conversion Rates Average Sales Price Assumption in the model: $250,000 Makes a difference in closed units required Conversion Rates Appointments to Listings Listings to Sales 16-17

Your 3 Key Focus Areas 18 Focus on Numbers You Must Hit Appointments Chapter 2: The Economic Model Your 3 Key Focus Areas Focus on Numbers You Must Hit Appointments Conversion Rates 18

Chapter 2: The Economic Model The Numbers to Hit 18

If you don’t have appointments, Chapter 2: The Economic Model Focus on Appointments If you don’t have appointments, nothing else happens. Last year… How many seller appointments? How many buyer appointments? 19

Focus on Conversion Rates Chapter 2: The Economic Model Focus on Conversion Rates If you have appointments… How many become clients? … How many become sales? 20

Conversion Rate Benchmarks Chapter 2: The Economic Model Conversion Rate Benchmarks 21

22 The Economic Model $1,000,000 Net Income (before taxes) $2,400,000 Chapter 2: The Economic Model The Economic Model $1,000,000 Net Income (before taxes) $2,400,000 Gross Closed Income (GCI)— divide net by .416 $700,800 Cost of Sales (29.2% of GCI) Operating Expenses (29.2% of GCI) 22

22 The Economic Model  3% = 65% 80% $1,200,000 $40,000,000 $250,000 Instructor's Notes 11/9/2018 Chapter 2: The Economic Model The Economic Model $1,200,000 Gross Revenue from Sellers Gross Revenue from Buyers  3% Commission = $40,000,000 Seller Sold Volume Buyer Sold Volume $250,000 Average Sales Price Average Sales Price 160 Sellers Sold Buyers Sold 65% % Conversion Rate 80% % Conversion Rate 246 Seller Listings Taken 200 Buyer Listings Taken 308 Seller Listing Appointments Buyer Listing Appointments 22 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Your Economic Model Goal Average Sales Price Conversion Rates Chapter 2: The Economic Model Your Economic Model Goal Average Sales Price Conversion Rates Seller Appointments to Listings Buyer Appointments to Listings Seller Listings to Sales Buyer Listings to Sales Average Commission Create Your Model Now! 23-24

Chapter 3: The Lead-Generation Model Instructor's Notes 11/9/2018 Chapter 3: The Lead-Generation Model Objectives Define the numbers in the MREA Lead-Generation Model Create your lead generation plan 25 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Your 3 Key Focus Areas 26 Prospect and Market. Chapter 3: The Lead Generation Model Your 3 Key Focus Areas Prospect and Market. Set Up a Database and Feed It. Systematically Market to Your Database. Leads are fuel to your economic engine. 26

Prospect and Market 27 Chapter 3: The Lead Generation Model General Public Haven’t Met Group Target Group Haven’t Met Group Network Met Group Allied Resources Advocates Core Advocates 5 50 100 1,765 16,000 At large 8 by 8 33 Touch 12 Direct 1 on 1 HAVEN’T MET MET (Inner Circles) 27

Set Up a Database and Feed It Chapter 3: The Lead Generation Model Set Up a Database and Feed It 28

Systematically Market Chapter 3: The Lead Generation Model Systematically Market Action Plans 8x8—to cement a new contact 33 Touch—ongoing after the 8x8 12 Direct—to your Haven’t Mets Real estate sales is a contact sport. 29

Lead Generation Ratios Chapter 3: The Lead Generation Model Lead Generation Ratios The Research Mets: 2 net sales from 12 Haven’t Mets: 1 net sale from 50 For 320 Sales Mets only: 1,920 Haven’t Mets only: 16,000 50/50: 960 Met, 8,000 Haven’t Met 30

MREA Lead Generation Numbers Chapter 3: The Lead Generation Model MREA Lead Generation Numbers Strategy Prospecting Based Marketing Enhanced Assumptions (Marketing Costs) Lead generation costs = 10% of GCI Average cost of a “touch” = 50¢ 31-32

Cost of a Lead Gen Program Chapter 3: The Lead Generation Model Cost of a Lead Gen Program Mets 12 people (396 touches) = 2 sales 1 sale = 198 touches @ 50¢, 1 sale = $99 For 320 sales, cost is $31,680/year Haven’t Mets 50 people (600 touches) = 1 sale @ 50¢, 1 sale = $300 For 320 sales, cost is $96,000/year 32

Focus on Seller Listings Chapter 3: The Lead Generation Model Focus on Seller Listings A properly marketed seller listing will consistently yield one or more buyer sales. 33

The Lead Generation Model Chapter 3: The Lead Generation Model The Lead Generation Model Option 1: Mets Only Sales Goal * 12/2 = _________ contacts Option 2: Haven’t Mets Only Sales Goal * 50 = _________ contacts Option 3: Combination __% Goal * 12/2 = _________ contacts __% Goal * 50 = _________ contacts 34

Your Lead Generation Model Chapter 3: The Lead Generation Model Your Lead Generation Model Which option will you choose? Mets? Haven’t Mets? Both? How are you doing now? Contacts to Be Generated MET HAVEN’T MET Goal Numbers - Current Numbers = People I Need to Add Monthly Additions 35

Your Lead Generation Model Chapter 3: The Lead Generation Model Your Lead Generation Model Choose Your Sources Lead Sources  Mets/Sphere/Past Clients Apartments Door Knocking in Farm Builders Open Houses Networking Sign Calls Seminars For Sale by Owners (FSBOs) Sponsorships Expired Listings Advertising Website Registrations Banks Social Media IVR Allied Resources Client Parties Direct Newsletters Just Sold Mailings Just Listed Mailings Agent Referrals 36

Chapter 4: The Budget Model Instructor's Notes 11/9/2018 Chapter 4: The Budget Model Objectives Define the numbers in the MREA Budget Model Create your budget plan 37 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Your 3 Key Focus Areas 38 Lead with Revenue Chapter 4: The Budget Model Your 3 Key Focus Areas Lead with Revenue Play Red Light, Green Light Stick to the Budget 38

Make money before you spend it. Chapter 4: The Budget Model Lead with Revenue Make money before you spend it. Minimize start up costs Generate revenue before incurring expenses 39

Play Red Light, Green Light Chapter 4: The Budget Model Play Red Light, Green Light Hold your money accountable. When you spend, evaluate the results Set a specific time period If there isn’t a return, stop spending! 40

Percentages should remain stable. Chapter 4: The Budget Model Stick to the budget Percentages should remain stable. 41

Stay in touch with your spending. Chapter 4: The Budget Model Natural Rhythm Keep a monthly budget. Examine it weekly. Stay in touch with your spending. 42

MREA Budget Numbers 43 Cost of Sales (COS) Seller Specialist Chapter 4: The Budget Model MREA Budget Numbers Cost of Sales (COS) Seller Specialist Usually on salary 4.4% of GCI Buyer Specialist Usually on a commission split 24.8% of GCI Total COS = 29.2% 43

MREA Budget Numbers (continued) Chapter 4: The Budget Model MREA Budget Numbers (continued) Operating Expenses The Big Two Salaries (administrative) 12.0% Lead Generation 9.2% All others—2% or less Total Operating Expense = 29.2% 44

45 Your Budget Model Chapter 4: The Budget Model COST OF SALES MREA $$ based My Budget Plan $$ % of GCI on MREA Seller Specialist(s) 100,000 4.2% Buyer Specialist(s) 600,000 25.0% Other COS minimal Total COS 700,000 29.2% Your Budget Model OPERATING EXPENSES MREA $$ based My Budget Plan $$ % of GCI on MREA Salaries 288,000 12.0% Lead Generation 220,000 9.2% Occupancy 48,000 2.0% Technology 36,000 1.5% Phone 24,000 1.0% Supplies Education Equipment Auto/Insurance 12,000 0.5% Total Operating Expenses 700,000 29.2% Total Expenses 1,400,000 58.4% 45

Chapter 5: The Organizational Model Instructor's Notes 11/9/2018 Chapter 5: The Organizational Model Objectives Define the numbers in the MREA Organizational Model Create your organizational plan 47 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

The Path to People Leverage Chapter 5: The Organizational Model The Path to People Leverage 48

If you don’t have a maid … Chapter 5: The Organizational Model When do you hire? If you don’t have a maid … you are one. Is your time better spent on other things (like lead generation)? Does your budget permit additional expense? 49

Hiring Path Hire administrative help Add a Buyer Specialist Chapter 5: The Organizational Model Hiring Path Hire administrative help Add a Buyer Specialist Complete your administrative infrastructure Add a Seller (Listing) Specialist 50-51

Your Organizational Model Chapter 5: The Organizational Model Your Organizational Model Where are you? Where do you want to be? Who is capable of taking you there? Who isn’t? What is your biggest issue? 52

Chapter 6: Goal Setting 53 Objectives Instructor's Notes 11/9/2018 Chapter 6: Goal Setting Objectives Identify the 3 Ls—the Millionaire Real Estate Agent’s 20 Percent Define the 8 goal categories of the Millionaire Real Estate Agent Identify the key numbers for your 3-year and 5-year goals 53 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Chapter 6: Goal Setting The MREA 20 Percent 54

Chapter 6: Goal Setting The Three Ls 55

Leads & Listings 56 Lead Generation Listings Chapter 6: Goal Setting Leads & Listings Lead Generation Lead Generation is always turned on. MREAs lead generate Listings Marketing opportunities Control of time Maximize per-hour compensation Volume Better market knowledge Bring you buyers (and more sellers) 56

Leverage Who is going to do it? People Chapter 6: Goal Setting Leverage Who is going to do it? People How will they do it? Systems Your first hire should create your systems. What will they do it with? Tools Your admin leverage should bring tools. 57-58

8 Goal Categories 59 The list—quickly! Should know goals and actuals Chapter 6: Goal Setting 8 Goal Categories The list—quickly! Leads Generated Listings Contracts Written Contracts Closed Money People Systems/Tools Personal Education Should know goals and actuals 59

Leads are the most important number to know. Chapter 6: Goal Setting 1. Leads Generated Leads are the most important number to know. What to track Leads received Source Conversion rates 60

2. Listings 61 What to track Seller Listings taken Chapter 6: Goal Setting 2. Listings What to track Seller Listings taken Buyer Listings taken If you choose to track only two numbers, track your leads and your seller listings. 61

Contracts: 3. Written & 4. Closed Chapter 6: Goal Setting Contracts: 3. Written & 4. Closed What to track—Contracts Written Number of units written Total volume written Gross income written What to track—Contracts closed Number of units closed Total volume closed GCI 62

5. Money 63 What to track GCI Budget Net Income Chapter 6: Goal Setting 5. Money What to track GCI Budget Net Income 63

6. People 64 What to track Recruiting Training Consulting Chapter 6: Goal Setting 6. People What to track Recruiting Who do I need? Where will I find them? Training Consulting 64

7. Systems/Tools 65 What to track What new systems are needed? Chapter 6: Goal Setting 7. Systems/Tools What to track What new systems are needed? What improvements or upgrades do we need for current systems? 65

8. Personal Education 66 What to track: What knowledge do I need? Chapter 6: Goal Setting 8. Personal Education What to track: What knowledge do I need? What does my staff need? 66

Setting Your Goals 67 Key Goal Numbers Net Income Chapter 6: Goal Setting Setting Your Goals Key Goal Numbers Net Income GCI Expenses Cost of Sales # in Met Database # in Haven’t Met Database Is your goal big enough? 67

Your 3-Year and 5-Year Goals Chapter 6: Goal Setting Your 3-Year and 5-Year Goals Set Calculation 3-Year Net Income Goal Current Net Income + Annual Increase GCI 3-Year Net Income  .416 Expenses GCI x .292 Cost of Sales No. of Sales GCI  .03  250,000 No. in Met Database Sales x .5 x 6 No. in Haven’t Met Database Sales x .5 x 50 Set Calculation 5-Year Net Income Goal Current Net Income + (Annual Increase x 3) GCI 5-Year Net Income  .416 Expenses GCI x .292 Cost of Sales No. of Sales GCI  .03  250,000 No. in Met Database Sales x .5 x 6 No. in Haven’t Met Database Sales x .5 x 50 68

Chapter 7: Focus 69 Objectives Identify how to focus on what matters Instructor's Notes 11/9/2018 Chapter 7: Focus Objectives Identify how to focus on what matters Use the 4-1-1 to maintain your focus Create your action plan 69 Keller Williams@2003 MREA Business Planning Clinic Jan 2004

Anyone can do it; Not everyone will. Chapter 7: Focus Focus Anyone can do it; Not everyone will. 3 Steps: Create a personal plan Time block Get accountability 70

1. Create a Personal Plan 71 Implement plans Chapter 7: Focus 1. Create a Personal Plan Implement plans Get the plans from a Big Model Have a Big Goal 71

2. Time Block 72 Are you in “busyness”? Chapter 7: Focus 2. Time Block Are you in “busyness”? Are you focused on what has to be done to drive your business? Are you clear about your models? Do you schedule time with yourself on your calendar to get things done? 72

Getting focus is easy. Keeping it is not. Chapter 7: Focus 3. Get Accountability Getting focus is easy. Keeping it is not. Focus feels like routine Accountability helps to focus … and re-focus 73

3. Get Accountability (continued) Chapter 7: Focus 3. Get Accountability (continued) 1. Set Goals 2. Do the Key Activities 3. Measure Results 4. Evaluate the Process 5. Make Adjustments Accountability Feedback Loop 74

The 4-1-1 75 Setting your annual goals Define your annual goals! Job Chapter 7: Focus The 4-1-1 Setting your annual goals Job Business Personal Personal Financial Define your annual goals! 75

76 The 4-1-1 (continued) Monthly Goals Define your monthly goals! Chapter 7: Focus The 4-1-1 (continued) Monthly Goals Derived from Annual goals Key activities Define your monthly goals! 76

77 The 4-1-1 (continued) Weekly goals Define your weekly goals! Chapter 7: Focus The 4-1-1 (continued) Weekly goals Levers—actions or activities Limit of 6 – 8 key goals Define your weekly goals! 77

Chapter 7: Focus The 4-1-1 (continued) Now… Create your 4-1-1 78-79

Give an Aha! Take an Aha! The concept I’m still struggling with The single most important “Aha!” for me How I will use this “Aha!” How I will benefit What I need to do to make this happen 80

Create Your Action Plan Chapter 9: Putting it All Together Create Your Action Plan Three specific tasks Accountability dates Peer partner contact info Share with peer partner Commit to taking action! 81-82

Don’t forget your evaluations Thank You for Being Here! Don’t forget your evaluations