Seven figure success starts when you start thinking like a CEO.
Welcome to the John Kitchens Coach podcast experience as your host, John Kitchens.
Get ready to think bigger and transform your business into
a path to lasting freedom.
What is happening,
man, excited.
I'm, I'm loving this series.
So pumped for the next one.
Yeah, me too.
Um, and just a, just a really good, um, you know, a deeper dive,
a little more clarity on, you know, the, the, the components in.
This process.
Um, and, and really the process, the more, the deeper I dive in going through
this and kind of being enforced kind of on the project we're working on
to, to help tell the story, had to go through this and re re revamp everything
and, and really looking at kind of the true agent to CEO process and.
You know, part one was the clarity compass, uh, that we, that we covered
really kind of working from A to B, um, a real honest look at current reality.
And, you know, kind of the saying is, you know, all progress begins with
telling the truth, but also charting, you know, for us to chart the course,
we gotta know where we're going.
And once we know where we're going, then we get to chart the course, which
really is the vision framework that.
Um, allows us to really, truly create the soul of our company and
what's been really instrumental, um, in a lot of the conversations as
we're talking about 26 and beyond.
And I, and, and, and I know you're conveying the same message, Joel is
like, listen, 26 has to be the fuel.
That's puts us on the path to, to where we want to be in 27, 28, and 29.
Like, that's, that's the shift in moving from an agent that's stuck on
the transaction treadmill to moving and actually building a business
is that everything we're doing and building has to be moving us in the
direction to three years down the road.
But we need that, that, that, that fuel.
The soul of our company because if part of our objective is to bring
people in, even if it's admins VAs support fractional or agents.
We've gotta have a vision that people believe they can
accomplish their dreams in.
And talking with agents that are, that are taking their teams or they're
part of vi, you know, vision board exercises, getting them to dream.
And I'm like, listen, you can take your team through that.
But if you're pushing them to, to challenge their dreams if they don't
believe or, or, or know the vision for the company and if it's not big
enough to where they can believe they can accomplish those dreams.
You just gave them, you know, you know, the keys to, to leave is
essentially what you just gave them.
They're, 'cause they're like, I've got these big dreams that you're, you're
helping me come get clear and push, but I'm seeing your vision and your dreams
and they're tiny compared to what I want.
I can't be a part of this.
So that's why we, it's so important to nail that, to chart
the course, to have the vision.
Then last week, part three was where we upgrade kind of
our operating system mentally.
Right?
That's where the critical thinking component, the mental models, the
way we think those frameworks and the stuff that you and I geek out about
all the time, right, that we're talking about and how to think and think more
accurately to stay out of the drift.
Um, and, and really focus on, you know, accurate thought and accurate
thinking, but having the frameworks to navigate through different scenarios.
So that was part three.
This week we're gonna touch on part four, which is the profit engine.
So this really gets into the model that we have to have in order.
To, to really build, to build that out.
So we're gonna build that blueprint out.
So we're gonna dive into that.
Um, we're gonna be off next week, and then we're gonna come back in week two
and week 3rd of December to hit parts five and six of the agent to CEO process.
And so part five, it will be the roadmap, right?
That'll be the ex execution roadmap, and that that's really
those 90 day execution cycles.
That we operate within.
Um, that's our strategy.
And then the final component is, is really the leadership flywheel.
This is the magic, right?
This is really, you know, to where we get to the point to
where it all comes down to people.
It all comes down to the team.
It comes down to your life team that you have that's gonna support you.
In executing, you know, those 90 day execution cycles within this profit
engine that we're gonna talk about, that we've, we've changed the way we think.
We don't think like a transactional treadmill, you know, a FA average
frustrated agent, or you can put F in there for whatever you
want to use it for, and then.
As we're in pursuit of the vision, we charted the course and we're operating
with tremendous clarity from where we're at and where we want to go.
So that's the process and, and you know it, I look at it both ways.
Joel, and I'd love your, your 2 cents on this before we jump in.
I've looked at it like a ladder to where you start with, you know, the destination.
Where are we going?
What's, what's this engine, this profit engine?
What do we need to execute on every 90 days in the team, that
leadership flywheel built to.
Execute on that 90 day execution within this profit engine in
pursuit of the destination, right?
So it can kind of go up and down, but you could also flip
it and put it into a flywheel.
Because once you have more clarity, you're knowing where you're going.
You've, you've got great thinking.
You're implementing that in, in not only yourself, but the people around you.
You've got the right profit engine with the right execution, with the
right people that's gonna get help.
You get more clear.
That's gonna then continue to, you know, make sure we know and, and
amplify the soul of the company.
So it can also work in a flywheel or it can stack up and
go, kind of go up and go down.
Um, either way is a great visual for, for both.
But I, I, I just, I'm.
I know this process is right, but the way we're kind of going about
it and reframing it, uh, it's, it's just, I'm loving it even more.
Yeah.
Same with me.
For me, the, the visual that resonates with me is, is the flywheel, and for
anybody who's not really familiar with that, it, it's basically an upward
spiral where each component of the process fuels the next component.
And it, and it just, it gains momentum and energy as it goes.
Um, continuing to get upward.
But what I like about the idea of the flywheel is, is none of these
ever really stop at a certain point.
You know, some of these pieces might not take a lot of time, but it's
still, I, I just still think it's still valuable to revisit them every 90 days.
You know, the clarity compass.
Yeah.
That might be set for a few years and it takes us a half an
hour, you know, to review it.
Um, but I still think it's valuable to include it in, in that.
Um, because it really does just continue to drive everything
forward and that mm-hmm.
That flywheel idea is, is exciting.
Mm-hmm.
If you can figure out a, a real flywheel, like that's, you know,
that's kind of the business dream.
So I I I love that.
Uh, yeah.
Visual.
I, I, I could go with that.
I, I can fall more in love with that too as well, because it's the one thing that
we talk about, it's always about building momentum and the faster that flywheel
is turning, the more momentum you have.
And I wanna tell you guys listening into this.
If you have momentum.
It is the number one thing you never want to lose because if you lose
momentum, it's 10 times harder to get it back going than what it was to get it.
It's the whole thing.
It's easier to stay in shape than to get in shape.
It's easier to maintain momentum and accelerate it than try to rebuild it.
So whatever you have working, wherever you feel some mojo, wherever
you feel like some, some wind in your sails, like, don't do what?
What Joel?
It has coined that real estate agents are the most notorious for
is building half-built bridges.
And you know, it's, it's essentially like I'm here in Pittsburgh.
It's essentially like if you guys know there's more bridges in Pittsburgh
than any place on the planet.
And it's essentially like if you were in Pittsburgh and you couldn't
get anywhere because all of the damn bridges are half built.
That's what real estate agents do with their company.
So it's like truly, truly.
Finishing.
And that's why when you, when you have momentum, um, man, you
never want to get complacent.
There's always a little bit of extra.
Squeeze and you know, to squeeze out of that, out of that orange, there's
a little bit more left, um, for good seeing some new faces on here.
So I appreciate you guys jumping in.
Um, we're, we're gonna jam through this.
If we have a little time, we'll open up some questions.
But I was telling Joel I. We love the format of, of, from a book format of I
think, I think Jocko, uh, Jocko's book.
Um, extreme Ownership is like the best format that you can, you can structure
a book because it tells a story.
He distills a principle, he applies it to business and one of their
business partners, um, or one of the people that work with them at
Echelon Front, which is a leadership.
Training organization company is, um, a gentleman by the name of Dave Burke.
And Dave Burke is a Marine that, um, got into, um, flying jets fly, um,
getting, getting, um, to be able to fly.
F 16 is in f eighteens.
And he was, um, an instructor at, uh, at Top Gun.
And so, um, he got to working with Jocko.
They served together in, uh, in Iraq.
And so they were boots on ground in Iraq.
And as a Marine, he was boots on ground, but he's also a fighter pilot.
Um, but he tells, um, he's got a great leadership, new
leadership book that came out.
It's called The Need to Lead.
So if you kind of dig, you know, anything military fighter
pilots, you, you know, um.
Marine Corps, you know, um, combat if you, if, if that's kind of your
thing, especially like Top Gun.
Um, this book is, has been fantastic so far, and it's in
the same principle, same format.
And chapter one was, and is, Joel's heard me say this over and over.
There are no, there are no business problems.
It's all leadership problems.
Everything is a leadership problem.
And then the, the second, uh, chapter Joel, um, got into, um.
I'd have to go back and look, but the chapter I'm on, I'm on chapter three
right now, but it's all about complacency.
Oh, chapter two is humility.
So the most important word out of a, from a leadership framework is humility.
And then, um, number, this chapter three is complacency.
And that's the thing that will kill you.
And so when you have momentum, how you'll lose it is, is complacency.
And, um, he got complacent, uh, in a little bit.
And he's like 99.9%, uh, of the top fighter pilots ever.
And he got s he got, he got taken out in a, in, in a dog fight
exercise by his mentor instructor.
And he, 'cause he got complacent in a turn and his, his mentor exposed him.
So that's just a great example of.
Momentum is everything, guys.
I just like, I can't stress it enough.
So when you have something working, I can promise you, you haven't
squeezed all of it outta there.
So as you're thinking about, you know, kind of the future, what
you're gonna commit to, where's your business gonna come from?
How are you gonna continue to grow going into 26?
You always want to make sure you start with what's working and how can you
maximize it, how can you add more to it before you try to build another bridge?
Make sure the bridge you have is fully built and don't leave it half built
like, like Joel always talks about.
So I know I rambled a little bit there, Joel, any, any final
thoughts before we jump in?
Yeah, just it's momentum.
Don't, don't coast.
Yeah, don't coast.
If you got good momentum, put your foot on the gas and keep going.
Don't coast it, it runs out quicker than we think sometimes.
Yeah.
Um, kind of adopted it.
Charlie's saying Go max.
Right?
So like go hard, go as max, max it out as much as you can.
Ed Millets, you know, max out.
So it's just continue to keep your foot on that gas.
So we're gonna jump into part four, uh, which is the profit engine.
And essentially the core concept of the, of the profit engine is the blueprint
for a business that is no longer dependent on the owner's personal sales.
So this is, this is important, right?
If you, if you have aspirations or goals or dreams of someday
building a business that is not dependent upon your production.
Now, can you sell if you want to?
Absolutely.
What we're trying to get to is that if you want to escape production, you've
gotta move from this agent to CEO mindset.
And listen, there's nothing wrong in this business.
If you wanna build lifestyle, we've, Joel Joel's broken down the five
business models of the future, and a couple of them are the ATM model, right?
ATM, where the agent does everything.
You print as much cash as you can.
The other is, um, you know, ATM supported, right?
Where you've got some, some leverage and some support around you.
But the whole objective is for you to just sell as many dang houses and stack
as much cash as you can, use your cash and your profits to go invest in assets
that are gonna per turn, you know.
Generate a return to where that's your exit.
Um, so what, what, whatever, whatever kind of the direction that
you want to go, but there's still.
A profit engine to whatever it is you're trying to try.
But, but in this context, what we're talking about is an approach design
that is team driven business model.
With that, we're using financial drivers, scalable lead sources, and really protect.
That profit margin really protect that, that bottom line, and this is where we
can ensure stepping outta production leads to profit increase, not a dip.
That's, that's the biggest thing that we've always seen helping, helping team
leads step outta production, is that the profit takes a dip because they don't
know how to structure it correctly.
So the key activities as we design, we're the architect, right?
This is a creative world, not a reported world.
We get to design, so we're the architect, the core components
of the, of the business machine.
Number one is the economic model, right?
This is where, um.
Math is the math, and sometimes the math don't math and we have to make
sure that it does and, and listen.
Business is just math then it's just layered with leadership on top of it.
But at at the core, the economic model is super, super important to get.
And so it was the third component for us that unlocked everything
after strategy in a strong value proposition is that we had to nail this.
We didn't have this, we couldn't escape until we nailed the economic model.
Um, and so we wanna design the clear financial model that outlines how
the business makes money at scale.
This includes defining commission structures, team compensation
plans, operational budgets that are profitable for the business while still
attracting and retaining top talent.
Right.
How do you, how do you.
Attract and retain, how do you keep top talent?
Um, and, and without.
Getting crushed with the margins are given away to too, too much agents.
Your cost of sales too high, your gross, your gross margin.
You don't have enough dollars to make the thing work.
Um, number two is we want to nail and systemize the lead flow, right?
We're the architects of the lead generation and conversion
systems that will fuel the engine.
Okay?
The focus is on creating predictable, measurable.
And team executable lead sources that are not dependent on the owner's
personal network or rainmaking efforts.
The other word that I would throw in here, this is system.
You know, we're putting a system with it, but it has to be consistent.
Listen, I get it.
A word of mouth, A baffini model is a highly, highly profitable model.
Built on reputation, built on word of mouth.
It's slow to build, but it's not consistent.
I don't care how good you get at it.
It's so inconsistent when you're trying to build a business on
word of mouth and referral.
So.
You can do it and it can be highly profitable.
It's just not gonna be consistent.
So I would throw that key word in there.
What can I do that's gonna be consistent?
Um, and then we gotta define the service model.
So we clearly define the client.
They're not customers, they're clients.
What's the client journey and the roles and responsibility of the team?
To deliver a world class experience.
If you guys have been hanging with me and Joel at all, you know one of the key words
moving into the future is experience.
And what type of experience are you creating that is gonna have people latch
onto you and your brand and then truly become that advocate for your business.
So the operational clarity really.
Service quality has to remain high or continue to improve as you, as the
owner steps back from the day-to-day in the trenches, right, to where you're,
you're stepping back because why?
Because you're utilizing your business to unlock opportunities and
utilize your profits to go invest in assets that's gonna build wealth
and freedom for you and your family.
Listen.
This is not about building a business and not in residential real estate
that's gonna be worth anything.
Like we ain't building an exp. You can, if that's your goal and
your aspiration, get after it.
I love you.
Support you on it.
You want our help?
We'll, we'll, we'll help you get after it, but the real name of this game.
Utilizing and building a real estate model that's gonna unlock
opportunities and provide enough resources, cash to go invest in those
assets and unlock other opportunities, that's the real exit in this game.
Um, and so, you know, I love telling the Kyle Whistle story, right?
Kyle arguably had one of the best, biggest, and best.
I mean, he lives in damn Southern California.
His model, profitable printing cash, had the business sold, had it sold.
But guess what they were doing?
Who was buying it?
They were gonna tie him to the business for three years as part of the buyout.
He had to stay committed to it for three years and get his buyout over time.
He's like, why would I do that?
I'm gonna come to exp, which he did and built.
Utilized his brand to build his organization.
Which now has unlocked him, but now he's loving it and he's even bigger.
He is building bigger, you know, rolling companies in.
So we just want to understand what is the goal, and this goes back to part
two of charting the course, right?
And charting the course is only possible because we know where
the clarity compass has taken us.
What is freedom for you?
So the, this engine is gonna drive it.
So really in short, the profit engine is where we architect the business
model that funds your vision.
Um, it's a step-by-step blueprint for building a predictable team-driven revenue
machine that ensures your profits grow as, as you systematically ex exit production.
I would es escape production is, is a better word to use for that.
Um, Joel, I'm gonna stop right there and then we can touch on, um, you know,
kind of, kind of maybe unpack that a little bit more, talk about some,
some benefits and then we'll get into.
Um, walking through the, the blueprint.
Yeah.
Love it.
I think an an important point that gets overlooked a lot is,
is your, your circumstances, your market is gonna dictate a little
bit of what's available to you.
And so sometimes, you know, we, we talk to, uh, clients of
ours or mastermind members too.
They're like, oh, I wanna do, I don't, I wanna do what he's doing.
Well, he's doing that in a. Market, whereas average sale price is
$800,000, you're in a market where your average sale price is $200,000.
You're not gonna be able to run the same, the exact same model
and expect the same results.
So, ha you know, having a, a, a high overhead, large office, lots of staff.
Um, model in a low price point, market's gonna be really tricky to pull off.
So just what's available to you, you know, is gonna be different
depending on where you are.
So this, again, one, one more reason why we, we sit down and we
really map this stuff out, right?
What's my average commission gonna be that I can expect?
What can I charge here in this market?
There might be higher price point markets that have already had some commission
pressure and you're making less per deal.
So we have this information available to us, which is one of
the great things about real estate.
We're not, it's not a brand new product that we're trying to figure
out what the market's gonna pay for.
Like, this data's all available, which gives us such a leg up as
business owners here, but we still have to take the time to model it out.
Um, what, what can we, you know, expect to collect?
What is the going rate of talent, of leads of software, of office
space, of whatever we need.
We can map this all out.
It's one of the reasons we get so excited about still helping people
build real estate teams is 'cause it has the potential to be so predictable
because so much of this has been figured out in, in some way or another.
It doesn't mean it's easy, right?
It's still a hard business just like any business.
But real estate is such an opportunity because there's so much
that's already been figured out.
Or that we have all the data we need to make good decisions and we
just need to spend the time on it.
Yeah, a hundred percent.
So getting into getting into the blueprint, really, like I said, remember
we get to design this and you know, obviously there's some principles
and things in place, but we get to, you know, uh, design out the journey.
And this is, you know, following within from, from agent to CEO.
And listen, your personal production is a job.
Um, you know, not, not a business model.
So the blueprint, um, is the tool to help design the actual business,
um, machine financially sound strategically, um, dialed in and, and
operationally, you know, to where we can continue to, to grow and scale.
So obviously as we've kind of gone through this, every.
Section connects to the other, right?
It all write things, right Order, everything has to, has to connect.
And, and really this helps us as we, as we kind of walk through this build, build
the engine for what we, what we want is consistent, predictable growth, right?
That's, that's really what we're, what we're trying to, to push and unlock.
So, you know, part one is the math, um, it's the economic model.
Um, and listen, top line revenue is, is vanity.
Um, how much it keeps is what we're, is, what we're after, what is, what is
truly coming to the, to the bottom line.
What is that healthy, um, profit percentage That's not hoarding too
mon, too much money that is stopping you from investing in growth, but.
What is a good, healthy, healthy number?
And so we really want to, to be able to, to back in and reverse
engineer as we're really trying to get to our, our freedom number.
And you know, we talked about it in the clarity compass.
Y'all have heard my definition of freedom is two things.
How much money do you need to come in?
You know that you're not trading time for dollars through, through investments,
through other revenue streams.
Yes, your business can provide, you know, the predictable profit and the
profit margin, but we want to utilize and harvest those profits as much
as we can to invest in assets that's gonna provide revenue streams to
where you guys have money coming in, when you're sleeping, when you know.
You're, you know, taking, taking the trip on the other side of the planet
to, to go visit, you know, awesome locations and just live life, experience
life and, and that's really what we're, what we're really trying to get to.
And that's what your real estate business can fund.
And listen, we have, they put Martha Stewart in jail.
For, for, for, for less than what we have access to.
Right?
Think about that.
Especially if you run a motivated seller offer to your market, a cash offer,
working with motivated borderline, you know, distressed type opportunities,
desperate seller type markets.
Your cash offers, your guaranteed offers, you're gonna unlock opportunities, right?
Like information that.
You have a privy to, to be able to, to make, to make those investments.
But you gotta know what that number is.
That's one part of freedom.
The other is, are we living and moving closer to our perfect day?
But that number one is, is like, what number are we working towards?
And that's like, if we can get, get locked in on that, that's also part
of the decision making process that you know, Joel and I would ask you.
You would say, Hey, I don't know.
Should we do that?
I don't know.
Is it gonna move you closer to your perfect day or is it
gonna move you further away?
Is it gonna move you closer to your freedom number?
Or is it gonna move you further away?
So really being able to know that the decisions we're making is moving us in,
in that known direction, but we gotta know what the number is and, and being
able to just really look at that and back into it and how much money do we
need to be trying to look to invest.
That's the profit targets we're, we're really looking to, to invest in.
I, I, I mean, Joel, if we follow Creb Treese, you know,
he's, he talks 15%, um, up to.
You know, whatever.
But 20 to 40 is really, is really healthy.
Um, I, I think really depending upon team size, market size, that that
number's really gonna kind of fluctuate.
We were selling $120,000 homes.
Our target was 15%, not in production, 15%, but you've got.
You know, the Blake Sloans of the world that are locked in 25, 30% or more.
Um, so where, where do you really push to think, man, we really need
to set this target profit margin.
Like we really wanna stay right in this, this range.
Hey, quick break before we move on.
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Alright, back to the episode.
I've, I've changed my mind a little bit, a bit on it when it comes to real estate.
Um, and for me it's, it, it's getting to 30, 30% or above.
And the, the reason I say that is because if, if we get below that, definitely if we
get below 20%, it's almost not worth it.
You can make so much more money doing it on your own than having a large
business that's not super profitable.
So let's just say we're making a million dollars in GCI and
you're 10% profitability, right?
You're getting an extra a hundred thousand dollars.
It's so much easier for you to go sell a bunch more houses
by yourself to make that.
Than it is to have a business at a million dollars with 10%.
Yeah.
Now all of a sudden you need to, you need to get up to a three,
four, $5 million business for that slight profit margin to make sense.
But if we're at 30%, you're at a million dollars, now you're getting
300,000 in profit, you know, at the end.
Mm-hmm.
Now it's starting to make sense for all of the, the work
that goes into that business.
Now, maybe all we need to do is get to one and a half to 2 million in revenue.
We're talking about, you know, five, five to 600,000 in profit.
So for me it, it's shoot for 30.
Like is it still worth it at a little bit less than that?
Fine.
You know, but for me, it, for me, it's in a real estate team, not in all business.
Right.
But on a real estate team, it's, it's 30%.
Otherwise, it just, it sell more houses on your own and make more.
And use that money to, to, you know, invest in those assets.
I think too, once you kind of reverse engineer into that freedom number,
what is, what is kind of the philosophy around compensation that you have?
What is the primary goal of your, of your compensation model?
Attract the absolute best, most experienced agents.
That margin means you gotta give a little bit more than than what you're gonna keep.
So that makes the margins a lot tighter.
Do you have maximize the profitability of every company generated lead?
Right.
That's the Blake Sloan model, right?
He has everything is after motivated sellers.
He has listing partners that are only getting compensated 2020 5%, he's
keeping 80 to 75% of the opportunity.
Um, and, and or create a loyal, stable team that grows with the business.
Is there a good balance in there right, to where you are providing opportunities, but
also, you know, being generous on sphere?
I'll tell you one thing that, that, and Joel, we don't need to go deep on it, but.
Having the teams and especially the team leads that are still kind of in
production and we're trying to get 'em under 40, 30, 20 5% of, of the overall
production as they're growing the team.
Pretty, pretty generous on the sphere.
And then anything team generated, you know, kind of defaulting back down
to the 50 50 or even 40, you know, 60 to the company, 40 to the agents.
But one of the things that we started looking at, and I, I really love this.
The, the real expenses is your time as a team lead, right?
That you, you give your time to the team, you wanna support them, you wanna
be there, you want to help them, you know, feed them, not, not necessarily
feed them, but help them convert.
Make sure that you know they're doing well.
And, um, one of the things kind of loved was if I have to step in as the team
lead to help you secure an SOI deal, that should be defaulted as a team compensation
instead of an SOI compensation and the.
Kind of one person that kind of talked about having this conversation, I
said, how did the agents take that?
And they go, they absolutely loved it.
They were like, thank you.
Yeah.
I'm willing to pay a team structure for you, helping me
secure and close these deals.
So I thought that was kind of an interesting kind of twist to what defaults
down to, um, a company generate it.
Comp structure versus just a SOI agent generated comp structure.
So just, just food for thought.
Just, you know, if you guys have hung out with us long enough, we're gonna throw
a bunch of things at you just to change up and, and challenge the way you're
thinking about, about your business.
So, define your philosophy.
What is that?
What are, what are the what?
What's the model scenario?
Um.
Healthy is about 50 50.
Right.
You know, 50 company, gen 50, agent gen. If you, if you shift a little bit more
to the agent gen side of things, you're gonna have to figure, figure that out.
Um, because if agents feel like they're, they're giving more than they're getting,
they're not gonna hang around with you.
I know, Joel, when we were, uh, before we transitioned to exp. Uh, stepped
away from partner model outta Texas.
We were, we were faced with a real riddle that we were gonna have to solve.
And what we were gonna have to solve is the agent generated
business side of things.
And we had a couple agents that paid us six figures in
one year off of their business.
They brought to the table and they're like, guys, this
isn't a healthy relationship.
We go, we agree.
Thank goodness we didn't have to solve that problem.
But I think what we were gonna have to do is we were gonna have to.
We were just gonna have to cap how much money they paid in from,
from their side of the business.
That I think was what we were gonna have to land with that.
I don't know what the math was gonna math, but you gotta model out these scenarios.
And I can tell you if you're running a 75 25 model, 25% to you.
You ain't ever getting outta production.
Um, you're gonna get sucked back in at, at some point unless you
have other revenue streams to where you don't get sucked back in.
But if you're trying to depend upon this business in, in that structure,
it ain't gonna work because that only gives you 25 cents of every
dollar for profit salaries, expenses.
Which includes marketing.
So your value promise has to change.
That's why you know, you, you gotta make sure you, you know, you know
your na, you know your numbers.
Um, and, and really modeling out where the business is gonna come from to, to
be able to nail the value proposition.
And then what is the cost?
What is the machine cost?
And this is where you get into salary cap and nailing the budget.
And I've been asking this question, Joel, in every room I
go into, um, the last few months.
And I ask, how many of you have a budget that you look at on a weekly basis
and you're updating every month and you're running a budget versus actual,
what do you think the percentage of of people in the room that raise their hand?
I would guess less than 10%.
Yeah.
Accurate.
And so if you guys don't have a system to be able to run it, um, I know
looking at, you know, the technology side of things, especially like.
You know these companies offering whatever you get tapped into csu got a bunch of
agents utilizing CTE or spreadsheet.
You gotta have something, right?
Be able to, to really pay attention to that.
But when we look at kind of nailing kind of that salary cap, top line revenue,
how much is going out in cost of sales?
How much are you paying your broker?
How much are you paying your agents?
Um, we wanna be in the 45, 55 range, is kind of where we want to try to get to,
to what, what we're bringing in that's coming to us after, after that split,
what is, how much money are we spending on marketing and lead gen? How much
are we spending on salaries, including what are you paying yourself, and then
what are all the operating expenses?
You've gotta know what, what those targets are, what those measurables are, and
also leaves room for that 25, 30, 40%.
I would say probably 25 to 30% on the profit target because then that
allows you enough money to keep reinvesting back into the marketing
and lead gen to continue to grow.
And then guys just, just really making sure the math, maths.
But the first thing in, in the profit engine is the economic model.
Dude, you gotta know the math and you can't stick your head in the sand.
You gotta, you gotta really dive into it.
The book, I'll tell you the book, two books.
Um, the, the, the one book that unlocked all of this for us was
Greg, Greg Crabtree's book, simple Numbers, straight Talk, big Profits.
I think where we can kind of see a hybrid within real estate is bringing in
mackowitz, uh, profit First, and you can kind of, kind of create a hybrid of where
wherever you're at with your business.
Incorporate the mackowitz kind of profit first, layering in the salary
cap and understanding the critical numbers to pay attention to within
the Crabtree, uh, Crabtree book.
And then, um, I think the, the, the one book that I know people that,
that kind of, you know, struggle with.
Um, the, the money side of things that, that's really helpful.
Um, and I'd have to look up his name, but the name of the book
is The Psychology of Money.
And so I think, you know, unlocking that mental aspect of it and then utilizing
the tool, framework of Crabtree and Mackowitz and kind of massaging those
in together will really help you nail down that financial, the financial
buckets in the financial model for you.
So that's, that's, that's part one.
Part two, we get into the promise.
This is the value proposition.
This is so important, and I remember hearing Ryan Dice talk about it,
and I, I think Joel, I told you earlier this year, he's like, I
don't, I don't care about your goals.
I don't even want to know what your goals are until I know what your,
your value promise to the market is.
Once I know your promise to the market, then I can help.
Then I can, then I can help you accomplish your goals.
And, and I can also tell you if you're gonna be able to achieve your goals.
So what is your value promise to the market?
So remember, our businesses.
Our businesses, uh, compete on promise.
What is our promise, the promise we can make, and more importantly, the
promise we can keep to the market.
And if you're building a team and you, and you get, you know, north of
1520, your, your clients change, but you have buyer sellers, investors,
builders inside of the marketplace.
But you also, if you're building a team, you have agents.
And like I said, when you get north of a dozen, a baker's dozen, two
dozen, your clients become the agents.
So what is your value proposition to the agents?
What promise are you making?
And more importantly, what promise can you keep?
Um, and so that really becomes the unique value you deliver.
The example, guys, what I just told about, you know, where, where it changes.
Hey, I'll lead and support you.
I'll even step in and help you close deals.
Now the economic maths will math based upon.
Time, but that's value proposition.
Hey, I'm gonna provide leads.
Hey, I'm gonna provide support.
Hey, I'm gonna provide transaction.
Hey, I'm gonna provide your marketing.
Hey, we're gonna do content days.
I'm gonna shoot all your content.
Hey, we're gonna provide a social media manager for you.
Oh, by the way, we do get to a certain level.
We're gonna hire a VA for you that's gonna do all of your backend stuff
and support you, whatever that is.
That is your value proposition.
Um, and so you've gotta define, like I said.
Buyer sellers and real estate agents, you gotta have two.
That's, this is where it gets a little tricky in this business is you're
running almost two businesses within one business and, and so what is that,
that value proposition, what is the differentiator for you in your market?
You guys have heard us talk about this.
Listen, there's two, two choices you can make because people are
trying to get to an outcome.
They either have a desire or they have a pain.
So you have a choice.
Are you a vitamin company or are you a painkiller?
What I know is that vitamins are extremely important.
We would all agree.
However, when you ain't got no money, you ain't buying no vitamins.
So what you're better off is understanding that when people have pain, they will.
They will give you, they'll leverage their kid to remove the pain, so
you're better off being a painkiller.
So identify the pain.
What are the top three frustrations or fears your ideal client has?
When we talk about, oh, you gotta have, what is your, what is the avatar?
The avatar gets into demographics, gets into all that.
That doesn't matter.
What matters is who's the client in the marketplace that has the biggest
pain that you're qualified to solve.
That's how you gotta think about, about the value promise.
You want to design that solution.
So how does your business solve one of these pains in a way nobody else does?
Like how do you solve the pain for your ideal client in the marketplace?
And this is always a great question because.
The ideal client can change based upon the market conditions.
As we're moving into a tough headwind, we're seeing a lot more desperate sellers.
That might be the real opportunity in the market.
So your value proposition might be the solution to that pain point in
the marketplace, and you really want to forge that, you know, statement.
We are.
The only real estate team in Milwaukee that solves a, you know,
you know, helps motivated sellers.
You know, sellers, desperate sellers, you know, first time home buyers,
whatever it is that your ICP is,
which means they can get the result, right?
So, for example, why we ran.
Our guarantee, they still run it to this day.
I think they just removed the days, but our, your home sold in 59 days guaranteed.
Or we'll buy it the 59 days a seller could go, ah, okay.
So if I, if I work with these guys, I know in 59 days my home's gonna be sold.
Okay.
I can, I can, I can see that.
Right.
I know I got three months of runway.
I got four months of runway.
Hey, we need to be sold.
We need to be transitioning down south.
In, in three months.
I know 59 days is gonna be gone.
So that's a, that's a only restatement, right?
Hey, hey, we're the only real estate company in the market that guarantees
to sell your home in 59 days, or we'll step in and we'll buy it.
That solves it, right?
So that's, that's that kind of, that, that, that, that value proposition that,
you know, we're the only, we're the only real estate team in, you know, in, in
the market that guarantees you'll make, you know, a hundred thousand in your, in
your first 14 months working with us or.
You know, well, we won't take any split until, until you achieve
it, whatever the case, right?
You can throw in there, whatever you want, but that's really where you
get into that only we statement and really nailing that value proposition.
So remember, you gotta, you gotta promise to the motivated
market buyers and sellers.
And then what's the value proposition to, to your, to your agents.
I'll tell you right now, the best way to work through this.
Our tool is Zy.
Um, that's our favorite AI tool is zy.
You can go to coach kitchens.ai, but you know, all of you guys are using chat,
GPT at least what I, what what you could do right here is like, Hey, listen, I,
you know, I'm, I'm a real estate agent.
I'm a building a small team in, in Milwaukee, Wisconsin.
I want you to help me build out my agent value pro proposition.
I want you to ask me as many questions as you can, one question as as you need
one question at a time until you have enough information to help me build
up my value proposition to the market.
Just go, right.
That's how you are the thought leader and AI is supporting you
in really navigating and working through, you know, these questions
that you know you should be doing.
But she's like, where do I start?
That's where you start.
You start with the conversation with, with the AI to really help you
walk, you know, walk through this.
Um, so, so really nailing that, that value proposition.
How are you different?
How are you supporting, you know, the agents in the marketplace?
And I'll tell you right now.
You know, be clear on what, what value that you want to do.
You wanna provide, like don't go recruit brand new agents if you don't have a
great training and onboarding system.
Like if it's just you and you need some support, make sure you attract the
right agents that are gonna support you in the business model that you have.
Now, listen, if you have world-class onboarding, you have world-class
training, by all means go.
Go build agents, go start a real estate school and bring them into your business.
So it's just certain ways you want to think about it, but what, what you're
uniquely gifted and qualified to solve.
There's, there's one great Ed Millet podcast with Rory
Vaden from Brand Builders.
It's, it's early on, uh, maybe it's what, two, three years old Joel.
That is probably one of the best podcasts you can listen to that
will help you really unlock your value proposition to the market.
There's some great.
Uh, brand DNA helix that, that vaden will take you through.
It's fantastic.
But if you wanna work through this the fastest way, start having conversation
with ai, it can really challenge you and work and help you work through this.
Uh, Joel, before I move into the, the third part, um, really kind of talking
about, you know, the magnets, but anything else that you want to, you know,
touch on with the math or the promise?
I think thinking of these two things, I think of all, of all the things that, that
you've been teaching for years and that we teach now, these are the two things that,
that most agents, uh, don't do after.
When they work with us.
They, they, they still, they hear it, they believe it, but they don't go back
and work on the financials at a deep level, and they don't really come up
with, with a real value proposition.
You know, we see agents that we talk to all the time that their value
proposition is still some version of.
Uh, I'm experienced, I'm an expert, I'm a good communicator.
I have local knowledge, and you can trust me, that's what 90% of agents
default to something in there, right?
And, and that might be a real value that you have, but then you have to find a way
to either systematize it or articulate it.
So if you're said, all right, you know, we we're, uh, our value
proposition is that we have, we give a great experience for our customers.
Well, everybody else is saying that too.
So how are you gonna articulate it?
Maybe you have to say, you know, Hey, at our team we're, we're famous for our
X, Y, Z system for taking care of our clients, and here's what that means.
Okay?
Now that's an actual value proposition around your experience that you provide.
I don't think communication's a good one.
'cause that should be just be table stakes.
But if you wanted to make it communication, then you can say,
Hey, at at our team, we've got this.
Uh.
This proven communication system for keeping you up to date every
single day, or we've got this 32 touch plan of whatever it is, right?
So it has to be something.
It can't just be these, um, I'm experienced and I'm a good
communicator, and you can trust me.
You have to get something.
To articulate and something that you can prove.
Yeah.
So if it's experience, you better have a bunch of reviews
of people saying you, they had an incredible experience with you.
If it's getting a better result than the competition, then you better have
some listings that you sold for a higher price per square foot than the
market average that you can point to.
But there has to be some systems, and the, the more that you, the more things
you can have in your business that are, we have a proven system for x.
Um, and then we can, it has a name and we can articulate it.
That's, you know, we've got some building blocks of a value proposition.
You guys still at, at NAA had the best one ever?
Well, the best two ever.
Number one was, and I, it's funny, I still remember it and I
never even worked for you guys.
Proven repeatable system, uh, backed by market research to sell your home for
up to 18% more than traditional methods.
Right?
Uh, that's an incredible, and then, and then we've got the place mat
to show how we accomplish that.
The other one that you guys nailed was, uh, CHSA, CHBA.
All, all of our, all the agents on our team are certified home buying advisors.
Mm-hmm.
And that, that means something.
They went through this trend.
That's a value proposition to the marketplace, right?
Mm-hmm.
So.
You, you can keep it, communication, experience, you
know, trustworthiness, whatever.
Um, but you have to find a real way to articulate that
and then, and then prove it.
Yeah, a hundred percent.
And the proof house to be there.
That's, that's super important.
You know, we've talked about it, you know, I love, you know,
hearing Nick and, and obviously Eric at, at Huey talk about it as.
You know, it's been whatever.
We're moving into the trust economy, right?
So what are we doing to build trust in the marketplace?
And, you know, knowing the math in our business model, but also having
a value proposition that is, we have proof back behind it with testimonials
and, and case studies and reviews and people that are like, listen.
These guys are the real deal.
And, and that was like even on the 18% more.
And Brett Jennings did the best and he, he, I was like, ah,
dang, that was amazing, right?
So he started taking every home he would sell and he would show
how they sold it for a percentage more than what the market was.
Square foot on average in that area.
So I'll use that.
Boom.
Example, example, example, example, example.
So being able to have that is, is super important.
Once we have that, then it's all about the magnets, right?
It's now, it's about lead flow.
It's all about consistent lead flow, and your value proposition is a promise.
Your marketing is how you communicate that promise to attract.
Attract your ideal clients.
And it's, you know, it's the call out.
It's, it's, you know, the attention grabbers, it's the
headlines, it's the hook, right?
And so identify for you guys.
What is your core marketing channels?
Core marketing channels.
So based upon your unique value proposition and ideal client,
where is the single best place to communicate your message?
Choose one primary channel.
First, so, um, I don't, Renee's not on with this, um, but
Renee's really nailed her market.
We've been working with her on this, Renee Velasquez in, um,
in the, in the Cleveland market.
And she's really nailed her message to the market.
And it's, it's really those, um.
Towards kind of getting into the pre, getting into probate, getting
into kind of that last move.
Like, you know, it's the, it's the aging, it's the aging homeowners.
Like what, where are they going?
What are they doing?
Are they, you know.
You know, what she calls right sizing.
Um, or have they, you know, transitioned out of the house, you
know, is the house, you know, set up?
Are the kids taking the house or is the house being dumped in somebody's lap?
They didn't even know they were gonna get it.
So she's really, that, that aging market is, is really nailed.
Her ICP and, and we're like.
Renee, if you had one, if you could only do one channel to market
your message, what is that one?
It's Facebook, right?
Everybody 50 and older is on Facebook, everybody.
So she has to nail Facebook and content and consistent content calls to action.
Start running the, the her content that's performing now we can juice it.
We put some money behind it with clear call to action, but that's her first.
One is right there.
Um, and so that's the primary channel to master first, and if not, this
rolls into Joel's, what, what we were talking about earlier, Joel's
concept of half, half built bridges.
We're trying to hit every damn channel when we need to be hitting the channel
that our people are hanging out at.
That's super, super important, you know, for, for us to have that
distinction to be able to stay right there, nail that core message.
Right.
What is your core message, that statement?
Hook story offer, right?
What's the headline?
What's the grabber?
What's the promise?
And what is this CTA?
This is the biggest thing that I see real estate agents miss, is they
don't have a clear call to action.
Tell people what you want to do.
DM me, grab this, go to this link, do this call here, do whatever.
You gotta have a call to action.
People need to be told what to do, so hook.
What's the promise, the story, and then what is the offer?
What is the call to action that you want them to take?
Make sure you don't miss any of those.
And then, how are we measuring success?
What are the, the metrics that we're paying attention to, to
know if the thing is working?
Right.
So is it how many leads, how many new contacts in the database?
What's the cost per lead?
What, what is, how many leads are we getting?
You know, new contacts per day?
How many contacts per week?
How many contacts per month?
What is our connect rate?
What is our lead two appointment set ratio?
What are the two to three main metrics that you've gotta be paying attention
to, to know if the thing is working?
So once we have the lead flow in the magnet.
Then it's, it's getting into to the last step, which is the delivery, right?
Fulfillment.
So what is the service model?
So.
A great value proposition is a promise made.
A great service model is a promise kept.
Okay?
So it's really designing the repeatable, scalable, and team
driven process that will deliver the promise every single time.
So you have to map the journey.
What happens?
What are the five to seven major milestones in the journey?
So somebody submits information that leads to a conversation that leads to.
An appointment that leads to, what are you trying to do?
Here's our unique process, or up to 18% more to help you accomplish
what you're wanting to accomplish.
We take the, the, we take you to market.
Either you agree to move forward with us and then we.
Then we get the deal done and then we follow up with you Until you
become that raving fan, that's referring people our way, right?
You, you become the advocate.
So you have to map that, that journey, and you've gotta do it.
Listen, you've gotta do it for buyers, you've gotta do it for sellers.
And if you're recruiting agents, you've gotta do it for agents.
You gotta map the journey for all three because that's who you're working with.
You're working with three different ideal clients.
You gotta, you gotta map.
Map that journey.
And one of the things that I really like, we get into kind of this unique journey
process is how do you know what happens when they move from one step to the next?
And in a perfect world, there's a commitment and a deliverable, there's
a commitment and a deliverable.
So what is, for example, you have the conversation.
So they submit their information, they get what they want, right?
So the commitment is they gave you the information for the thing.
The, the magnet and the deliverable was the thing.
It was access, it was information.
It was a white paper.
It was a download.
It was, they scheduled a phone call.
Then you have the conversation, right?
The conversation leads to an appointment.
Remember the phone is designed to set an appointment, set the appointment,
and then qualify the appointment.
And so maybe there, the commitment is they confirm the calendar invite.
The deliverable might be a pre-appointment video that they get to consume information
about you and your process and.
Does all the heavy lifting before you actually get face-to-face,
maybe the face-to-face, they agree to move forward with you.
The commitment is they sign, they sign the agreement.
Um, the deliverable could be a copy of the agreement.
So you want to be thinking as you're moving from step to step,
how can you get a commitment?
To move to the next step, but what is the deliverable that you can give to them?
That's just a great way to be thinking about this, this five
to step, major milestone journey that we're taking them on.
Um, define who's doing what.
That's super important, right?
Define who's doing what, um, you know, the roles, the handoffs,
how does the handoffs look?
You don't wanna break down in communication.
You want the experience to be seamless and really define the function and the
role, which will become more to light when we get into the leadership flywheel.
When you're talking functional accountability.
But you gotta know who's doing what, um, where are things handed off so everybody
knows the role in this, in this process.
Example, if you have a showing agent supporting you, where's the a?
Where, where's the handoff with the showing agent?
How does it come back?
How does the client not feel?
Neglect it.
They feel, wow, I've got all of the support around me.
Or even the simple one is like, when you hand it off to a tc, right?
Where, where does, where does that go?
And then, you know, um, what is repeatable action that proves your promise?
Um.
If, if, if you're promising, um, you know, confidence if you're, if
you're experience, um, simplifying things, you know, where, where
are you connecting, right?
When, when are you making, you know the touch, when are
you doing, doing the things?
So how are you making the value proposition tangible?
That's, that's really where you want to, to step in and think about that.
So I wanna recap.
Kind of as you guys wanna think through this, on, on four steps.
Gotta know the math.
What's the economic model?
Number two, what is the promise you're making to the ideal client
in the marketplace, the the client that has the biggest pain
that you're qualified to solve.
Number three, what's the magnet to generate the lead opportunity?
And number four, what's the delivery?
Okay.
How are you working through that?
How are you, how are you really navigating?
That's the profit engine that you wanna be thinking about.
Joel, I know we, we jammed here.
Um, I will let you kind of, any, any final thoughts and then, um, if you guys
hanging out, have any final questions.
I know we're pushing up against the hour.
Joel, any final thoughts?
Yeah, just the like, like so many things in business and,
and I guess life too, the.
The simplicity that we're after is on the other side of a little bit of complexity.
So all of these exercises that we're doing, instead of just ignoring or
flying by the seat of our pants, we're, we're adding a little bit
of complexity to our business.
And it takes work to get through these things.
But on the other side of, this isn't a complicated business,
it's a simple business.
Um, it just takes a little bit of work to get there.
So there's a, there's a simple business that you have in the beginning when
you don't know what you're doing.
You're flying by the seat of your pants.
Like, that's not a good way to grow business, but it's pretty simple.
You're just reacting to everything that's simple.
Right now we're adding complexity to get back, simplicity after.
But so the stuff that we're talking about right now is the, is the little
bit of complexity that you have to add to your business and work through it
to, to get simplicity on the other side and that, and that's what we're after.
And now we can really talk about scaling a, a company.
'cause we've, we've put some time and effort into getting
the right kind of simplicity.
Is through clarity and through systems and these exercises that,
that we're sharing with everybody.
So, so put the work in.
It's so worth it.
I love it.
Brother, I appreciate you.
Um, guys, tune in.
Um, Alan, amazing.
Good seeing you buddy.
Um,
castle in the house.
I know.
I love it.
If you guys have any, you know, thoughts, questions, you know, DM us,
uh, message us, um, you can, you know, email me, email Joel, give us a call.
Um, we're here to support and help you guys, uh, loving kind
of this series of the Power Hour.
So.
Uh, like I said, we'll be out next week, week after that.
Um, week, uh, second week of December and third week of December, we will
jump into the final two components, the execution roadmap, which is the
90 day execution plan, and then, uh, really get into the people
component, that leadership flywheel.
Love it.
Thanks coach.
Awesome.
Thanks guys.
Awesome.
We'll see you guys.
Thanks for tuning in.
If you're done guessing and ready to lead like a real CEO with a custom
strategy, real accountability and proven systems, check out my executive
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