It is interesting, in visiting with fellow real estate agents, that many don't think of themselves as a "business" and therefore, have not taken the time upfront to develop a solid business foundation to build their business upon. They jumped right into prospecting and in many cases have done very well, some even reaching top producer status (even in this current market). However, whether they have a lot of listings and active leads and prospects, or whether they have very few, they all seem to be struggling just trying to stay caught up with the various daily tasks and "to do" items.  

As a CPA and CFO in my former life, in the corporate world of business, I have been observing this phenomenon with interest. With most successful "businesses", there is usually a formal structure in place incorporating basic systems, processes and procedures that allow the business to operate effectively and efficiently and keep the main focus on generating revenues, controlling costs and maintaining profitability. 

This same business structure concept can easily be applied to being a real estate agent. The typical starting point, of course, is to first develop your "vision" of what it is you desire to accomplish being a real estate agent, and a business plan incorporating your short term and long term goals, actions plans, etc. However, even if you have not taken the time to do this, (or are too busy working with clients and making money!) you should still take time to develop some basic systems, processes and procedures that can make life a lot easier, and more importantly, free up time to better utilize in prospecting and client service. 

Any business, including being a real estate agent, has three things in common. They generate revenues, incur expenses, and generate a profit (or loss). This should be the starting point to begin thinking of yourself as a "business" and develop systems process and procedures. Start looking at your daily tasks and "to do" items in terms of "revenue" related or "cost" related. I realize this sounds like a no-brainer, however it is amazing how many agents I have visited with that don't have a good system in place to simply keep track of all of their costs (expenditures), let alone being able to review and evaluate periodically where and how they are spending money in their "business" and how cost effective these expenditures are. In many cases, especially when times are good and the commission checks are coming in, I see agents subscribing to this service and that service, incurring costs for advertising, marketing, Internet, and generally just paying their monthly bills without giving any thought to what their total costs are, and how cost effective these costs are. They understand the revenue segment (commission checks) but have not taken time to fully evaluate (and manage) the "costs" segment. In many cases, they have no idea what their bottom line profitability as a percentage of revenues is, or how this might compare to "industry standards" (benchmarking). It is common knowledge that most small businesses fail because of a lack of awareness and understanding of "cash flow"(how much money is coming in, how and where the money is going out, and how much is left over to live on).

So, as a starting point, you need to understand your total financial picture and bottom line profitability. If you want to go into this further, you can try determining what you "Cost per Transaction" is. This is simply your total expenses, divided by the number of transactions you closed. This year, with the market being what it is, may not be representative of your average cost per transaction, however this is great metric to use to compare yourself to from year to year. Try to find ways to increase the number of transactions, while at the same time, reducing costs, and use this metric to evaluate better cost management and process improvement efforts.

Reviewing and evaluating costs is also an opportune time to try to develop better systems, processes and procedures. For example, try to set out on paper what your overall marketing processes and procedures are. Include traditional marketing, as well as web and Internet marketing. Look at lead generation efforts and try to determine how effective you are in this area. Evaluate quality vs. quantity of leads, primary source of leads, and your lead conversion rate (percentage of leads turned into clients). Evaluate how effective you are in staying on top of leads and if necessary invest in some type of contact management system to make life easier.

Then apply this same evaluation process to all other costs, line item by line item. I recently worked with an agent that went through a thorough expense analysis and discovered quite a few expenditures being paid each month that she forgot she had subscribed to (and was not fully utilizing). There were websites that had been set up at one time with good intentions, that we not being used, but still incurring a monthly hosting fee. There were lead generation services subscribed to that were no longer being utilized and so on. We were able to cut a lot of unnecessary expenses and increase the bottom line profitability by simply taking a close look at line item expenses and monthly bills being paid.  Once this is done, turn it into a "process" by reviewing line item expenses each year as a percentage of total commissions and look for areas where expenses may be creeping up or can be better managed.

This is just a snapshot of some things to consider in trying to look at what you are doing as a "business". Hopefully, if you are finding yourself disorganized and struggling to keep up with daily tasks, or generating a lot of commissions, but not having much left on the bottom line, this might give you some ideas on where and how to look at what you are doing and try to find a better, faster and cheaper way to do things so you can enjoy a better quality of life. There are a lot of good tools available to real estate agents to help them in all of these areas.

I would welcome other thoughts on this, and especially feedback from other agents on the various tools, systems, processes and procedures they are using that make them more productive and improve their quality of life.