An agent I’m currently coaching just lost his partner and he was struggling on what he should do going forward. What came from this coaching call might be helpful for others, so I’m sharing it with you.
This particular agent had been operating in a partnership with another agent over the last year or so. His partner had recently decided to quit because of challenges in their business. His partner left because they weren’t being compensated adequately for the time they were working in the business.
His partner seemed to view the time invested into building their business along the same lines as time worked as an employee. In other words, his partner felt they should be getting paid a decent hourly wage for their time invested into building their business. Instead of taking money out of their business, they were reinvesting it back into the business. They were purposefully buying new clients through direct response marketing. They were hiring past clients to become agents on their team and were helping to pay for their licensing classes. The goal they were fighting for was to have a a profitable business that operated without their day-to-day involvement.
This was a great plan, but it is a little challenging to follow during the first few years. The reason why is because you have to work your ass off in the beginning without receiving a great deal of compensation. His partner quit because they had come to the conclusion that the trade off wasn’t worth it. They felt it was better to get paid hourly today than it would be to have a profitable business down the road. On a high-level, his partner had an employee mindset.
This situation has really highlighted the differences in how people think. In fact, it is very similar to some of the writings of Robert Kiyosaki when he compares his Rich & Poor Dads. In his book, “Retire Young Retire Rich: How to Get Rich Quickly and Stay Rich Forever!,” Kiyosaki writes….
“It is hard to become rich working for money. If you want to become really rich, learn how to build, buy or create assets.”
All of this had caused the agent I was talking with to question the original plan. He was wondering if building the business was worth it, or if he should follow his former partners footsteps and focus on hourly compensation instead.
During the call, I reminded him that building his business according to his original plan would ultimately provide monthly income for years. This would happen through the cashflow of the business or from selling the business down the road. Focusing on hourly compensation is a very limited way to look at business because it completely misses the value of the business and the future opportunities. His former partner would have to work every week, year-after-year in order to receive their weekly pay check. He would soon be able to work a lot less for more money. I begged him to continue building his business as originally planned.
When you start a business that will eventually run without your day-to-day involvement, you have to be willing to work extremely hard and you also have to be willing to reinvest every penny back into the business in the early stages to fund additional growth.
In Kiyosaki’s book mentioned above, he specifically shared that in the beginning his Poor Dad made more money than his Rich Dad. This was because his Poor Dad was receiving a salary starting on his first day of this job. His Rich Dad had started a business and wasn’t getting paid. Even worse, his Rich Dad was working many more hours building his business when compared to the hours his Poor Dad worked at his job. However, after many years, the situation reversed and his Rich Dad was working a great deal less and was making a great deal more. This change occurred because his business had become extremely profitable and the business was now being operated by employees and no longer required his day-to-day involvement.
I can still remember the first few years of my real estate brokerage. There were many months when I couldn’t cash my paychecks. If cashflow in the business were tight, I would simply void out my paycheck and make the best of it. I never once thought of quitting or working less. I was working to build an asset and my focus was always on progress, not what I was making per hour. As the business grew, my workload decreased significantly. This workload decreased systematically as I moved through these stages:
1. Hired a bookkeeper to do all accounting, pay bills and paperwork.
2. Hired a buyer’s agent to work with the business’s clients.
3. Hired second buyer’s agent to work with business’s clients.
4. Hired an administrative assistant to help process closings and handle administrative tasks.
5. Hired a third buyer’s agent to work with the business’s clients.
6. Hired someone to handle all marketing funnel sales letter mailings.
7. Hired a fourth buyer’s agent to work with the business’s clients.
8. Hired a marketing person to run and manage all lead generation advertisements and track response rates.
9. Hired a fifth buyer’s agent to work with the business’s clients.
The biggest reduction in my workload occurred when I finally removed myself from home sales and turned all of my clients over to my agents. It is important to understand this process continued slowly over time…
I went from working 70 hours a week to working 65 hours a week.
I went from working 65 hours a week to working 55 hours a week.
I went from working 55 hours a week to working 45 hours a week.
I went from working 45 hours a week to working 35 hours a week.
I went from working 35 hours a week to working 25 hours a week.
I went from working 25 hours a week to working 15 hours a week.
I went from working 15 hours a week to working 5 hours a week.
When I sold the business, it was operating 99% without my involvement. I had hired a president to run and manage the business on my behalf. This entire process took 7 years. The first four years were a great deal of work for very little money because every penny was invested back into the business. The last three years were a great deal easier as my workload decreased and the business’s profits grew each month. My focus the entire time was always on the following:
Is the business getting better at attracting and converting prospects?
Is the business improving monthly cashflow?
Is the business increasing in value?
Are we doing everything we can to add value for our clients?
What new income stream is the business starting?
Are my employees and sales agents handling prospects and clients to increase their lifetime value? How can I improve their performance?
By the end of the call with this agent, he was fired up again. He realized the original goal was still worth fighting for.
I am sharing all of this with you because I am hoping that you continue to fight to build an amazing business (asset). No matter where you are today, stay focused on making constant progress. This progress should include new agents on your team, better systems, and acquiring more clients. Don’t worry too much about how much you’re making right now. In the big picture, it really doesn’t matter. If you’re able to stay focused and make progress over time, you will ultimately work a lot less and you’ll be make a hell of a lot more.
More importantly, you have to be very careful accepting limiting beliefs of others. Every person you talk with can potentially derail you from your goals by the way they think. You have to have the ability to “see” limited or incorrect thinking and stay focused on where you want to go.