Harvesting Financial Smarts
Harvesting Financial Smarts
What are you going to do before you leave the office today to set the stage for your company’s financial growth? If you’re not consistently evaluating your operation, you’re leaving money on the table, say brokers who’ve taken their business to new heights in the last few years.
Opting for the status quo is “a cost you can’t put a handle on,” says Victoria Printz, owner of Victoria Printz Team, REALTORS®, in Midland, Texas. For example, she found that by continually recruiting for the same type of associate, she was sabotaging her business. Here’s how she and five other brokers have stanched money leaks.
The recruiting game
Money drain: Recruiting the wrong associates.
Solution: Use a consultant in recruiting.
Benefits: Reduce cost of supporting failed hires; increase productivity.
Victoria Printz’s company, with five associates, closed 332 transaction sides in 2005, up 21 percent from 2004. She credits the performance improvement to a consultant she hired in 2005. He helped her change the sometimes difficult process for how she selects recruits. “He saved me thousands of dollars because I now hire the right people,” says Printz. In the year before hiring the consultant, Printz says she personally closed 120 transaction sides. Last year, she closed 208.
The consultant showed her that, among other things, she was recruiting associates who were too much like herself. What she needed were associates whose differences complemented her skills. She calls herself an idea person who’s strong in follow-through but with no strength in computers.
At the consultant’s suggestion, Printz began to use the Kolbe Index—a test that measures natural instinct. Printz uses the test to measure candidates’ strength in four areas. You can take the Kolbe Index test online (www.kolbe.com). The results interpretation costs $49.95 per test.
Printz continues to spend about $1,250 per month on consulting services; she thinks it’s smarter to spend that money than face losses from hiring the wrong associates. “I don’t know the exact cost of replacing an associate, but just redoing my advertising and promotions to reflect the new recruits is probably $10,000 per person, and that might happen four times a year,” she says. “To say nothing about the business I’ve lost if associates made consumers unhappy or took customers with them.”
Money drain: Unmotivated office staff who are paid too much.
Solution: Job sharing.
Benefit: Happy office staff; lower per-hour cost.
Wayne Short, CRB, CRS®, began improving his bottom line a few years ago by letting part-time support staffers share jobs. Several assistants share the receptionist position. He also has three part-time assistants who share the job of bookkeeper.
The result has been a drop in turnover and better productivity, saving his brokerage thousands of dollars in hiring and training costs. “We tend to get a better employee who wants to work part-time,” says Short, broker-owner of RE/MAX Realty Professionals in Wichita, Kan., who says he pays part-timers about $10 per hour. “I get moms who have children and work the morning shift but want to be off in the afternoon when their kids get home,” he says. “I also get a number of college students.”
Money drain: Closing details fall through the cracks, sometimes causing sales to collapse.
Solution: A closing coordinator.
Benefits: More efficiency; salespeople freed up to sell.
To keep his sales associates in the field selling, Jeremy Danielson hired a closing coordinator. With the coordinator managing paperwork, transactions are more likely to get to closing, he says.
“The percentage of closings that actually take place after a contract is signed has gone to 100 percent from about 97 percent,” says Danielson, broker-owner of U.S.A. 4 Percent Realty in St. Cloud, Minn.
“Once associates have executed contracts, they hand the paperwork to the closing coordinator,” who tracks every detail from that day to closing, Danielson says.
The coordinator earns roughly $30,000 annually, supplemented with a $50 bonus for each closed transaction. That’s not cheap, but the benefits have been twofold. Besides improving the closing percentage, the coordinator has been a recruiting tool, providing “an incentive for associates to come on board,” he says. Having coordinators especially appeals to strong performers, because “it puts them on the street doing what they do best—making money,” he says.
Money drain: Office staff absent; associates “dumping files and running.”
Solution: Incentive program.
Savings: Improved staff attendance; less overtime.
Shelley Dow, broker and office manager at Century 21 Marty Rodriguez Real Estate in Glendora, Calif., is using incentive programs to resolve two recurring problems.
The first is what Dow’s staff calls the “dump and run.” That’s when salespeople turn in transaction files with paperwork that’s incomplete or missing. “Our office staffers said they were wasting time filling in details that the associates should have provided,” she says.
To resolve the problem, the company created “Marty Bucks,” which allows salespeople to win quarterly and annual prizes based on points earned for turning in completed transaction files. For the first quarter of 2006, the Marty Bucks–winning associate earned a $250 travel certificate. The end-of-year prize for 2005 was a four-day, three-night stay in Napa Valley, Calif.
The second problem is office staff who are consistently tardy or unexpectedly absent. “Having our administrative staff here on time every day is important,” says Dow. So she created a game that allows her 13 administrative staffers to earn bonuses at each six-month review. Staffers are rated on a 1–5 scale, based on the number of times they’re absent or tardy. If staffers earn a 5, they win a $200 bonus. Staffers who earn a 4 win $50 cash and a $50 gift certificate.
Together the two programs cost Dow about $4,600 a year, but she says the costs are well worth the productivity increases she’s seen.
The paper chase
Money drain: Too much paperwork taxing too many office staff.
Solution: Paperless transactions.
Benefit: Not having to hire new office staffers to track paperwork.
To save work hours and ease administrative headaches and expenses, Matt Widdows is implementing a paperless transaction system for his company’s four offices. In-house tech specialists at his company, HomeSmart International Real Estate in Phoenix, created the program in 2003 to enable associates to input transaction data into the company’s computer system and route it automatically to the broker for review. “There’s no one manually pulling information off faxes and creating files,” says Widdows, “and we don’t have a bunch of files floating around and getting lost.”
The program has freed administrative staff from handling and managing paperwork for the company’s 7,000-plus annual transactions. As a result, Widdows has been able to move administrative staff into positions that he would have otherwise had to fill with new employees. “We didn’t have to hire for four to six positions because of the system. And [the reduction in paperwork] sets us up to handle quite a bit of increased volume.”
Development costs for the program, which he continues to refine, have been slightly more than off-the-shelf transaction management software. But by building his own system, he’s able to customize it, he says. “I don’t even know what it’ll cost us when we’re done adding everything we want—probably upwards of $120,000,” he says. “But our overall savings in terms of work hours and labor is going to be huge. With the volume of transactions we have, we’ll probably recoup our costs within six months to a year.”
Money drain: Energy costs.
Solution: Find ways to save energy in the car and at the office.
Benefit: Lower gas and electric bills.
Big savings can accrue from taking small steps to curb energy use, says Claudia Zucker, senior partner of Living Structures in Cairo, N.Y. “My biggest savings have come from changing from a gas-guzzler to a hybrid car for my business,” she says. “My annual expenses for gas went from $6,000 to $3,000, and my clients in all economic brackets think it’s very cool that I drive it,” she says.
To save at the office, Zucker bought a programmable thermostat that does what her sales associates always forget to do: Turn down the heat at the end of the day. “Since associates don’t pay the bills, they forget to reset the temperature,” she says. Sheprogrammed it to turn itself down to 50 degrees after 7 p.m. and ramp up at 8 a.m. “I’ve been able to save at least $100 per month,” she says.
Another small change she implemented at the office: switching to fluorescent lightbulbs. They cost more than standard bulbs, but they last longer and use less energy, saving her about $20 per month.
To save money in your business, you don’t need to undertake large-scale change. Keep your eyes open for opportunity. Ask—and reward—your associates and staff for suggestions. Your next cost-cutting move might be right under your nose.