THE COST OF DOING BUSINESS

At a recent seminar I was promoting a series of listing and sales workshops I offer and the inevitable question came from an audience member: "What does it cost?" I answered with another question: "That depends. Do you mean if you do it, or if you don't?" Certainly there are costs incurred from actions we do not take. Consider the old saw, "if you think education is expensive, try ignorance."

COMPUTER SOFTWARE
The actual cost of doing business involves both the amount you spend and the losses from what you don't. Take computer software, for example. There is a variety of industry-specific and general application software programs called contact managers. These programs manage your contacts with clients, customers and prospects so that if you are supposed to call them, write them or see them, it will either happen or you have to order your computer to stop telling you to follow up. That's important because the number one cause of lost business is that our prospects slip through the cracks. Then by the time you follow up (if you remember to at all), they've either signed with another sales person or altogether changed their minds about buying and selling.

Contact managers are expensive to buy (generally in the $495 range). But each transaction you lose is worth perhaps $2,000 to you, and without consistent and thorough follow through, you stand to lose fifteen to thirty such transactions each year. Why save $495 by not buying a contact manager and lose $30,000 to $60,000 for not using one? You see survey after survey that real estate clients were sufficiently satisfied with their last agent that they would use him or her again - but have not heard from the agent in several years and don't remember the agent's name. Bingo.

Star producer Demetria Chadbourne of Gorham ME (180 closings/$20 million for 1999) says the single best investment she can make is in keeping in touch with her past clients, who represent 80% of her business. Each dollar she spends on keeping in touch with that group comes back exponentially. Notice the difference: most agents don't follow up at all, while star performers never let a past client forget where they can find us. How will you apply that lesson?

PERSONAL PROMOTION
What does it cost to conduct a program of personal promotion to keep your name, your availability and your successes in front of people? David Lentz of Lentz Design in Chicago says your budget for full color postcards like he produces might run as little as $50 a month plus postage. And what would all that promotion be worth? Depending on the turn-over of property in your area, you could have anywhere from an extra three to twelve closings each year. Demetria Chadbourne spends 50% of her advertising dollars on personal promotion and 50% on her properties. But her personal promotion tracks to a 110% rate of return while property ads only yield about a 50% return on investment. Therefore every ad for a property includes an ad for her personally.

Cheri Rufino has excelled in her College Station TX market for 20 years and enjoys about a 90% referral/repeat business rate. Several years ago she began a program of personal promotions (postcards, etc.) and experienced a 50% increase in production in the next year alone. It's paying off; for 1997 Cheri and her team of 2½ assistants closed 140 transaction at $14 million in a small Texas college town. Today among other activities Cheri hosts an annual client appreciation party at her home during the holiday season. It's characteristic of her to want to touch her clients and greet them in such a personal way. At a cost of $2,500 to host such an event, you'd better want that many people in your home. But like so many other exceptional performers we've met, she insists that it's more than a genuine thank you. She also gets enough business after the party that the event pays for itself in the next 30 days. All the other referral business traced to that party is icing on the cake, which makes her client appreciation party a wonderfully effective expense.

CRS, GRI
To complete a course of study earning you the Certified Residential Specialist designation, you will spend a couple thousand dollars, top to bottom, plus travel expenses to get you to any programs held outside your area. The value? Average income for a Realtor® in 1997 was $37,500 while CRS members earned an average of $85,276. CRS designees are just 4.9% of the total Realtor® population but are involved in 25% of all transactions. Let's see: spend a couple thousand once to earn the designation, then average an annual $48,000 pay raise thereafter. Worth it? You do the math.

CONTINUING EDUCATION
Steve Stewart Seminars is approved in a variety of states to offer continuing education credits upon the successful completion of certain courses. But I happen to believe that all states should drop their continuing education requirements. That's because many states won't allow you to earn credits by learning anything that will help you work with clients. What's holding you back from higher production: being unfamiliar with your new HP calculator, or not having enough buyers and sellers wanting to work with you?

The net result of current education policy in most states (administered by people who have never sold a house) is that agents frequently refuse to attend any program that won't earn them credit hours. That puts all the focus on issues like tenant evictions and federal monetary policy, rather than on getting and satisfying more buyers and sellers. How smart is that? Paul Volker never sent you a client. You don't want to spend your life in motivational seminars. But if you spent three or four times the hours in seminars that you do now, you could eliminate 80% to 90% of the dead buyers and uncommitted sellers that you deal with. That would save more time and earn you a fortune!

BUSINESS CARDS
After a recent R.S. Council Sell-A-Bration conference, I was looking through the collected business cards and comparing them to other stacks of cards collected at seminars around the country earlier that week. The difference was striking; the Sell-A-Bration attendees all had cards that were more colorful, informative, most with photographs, and printed on heavy, expensive stock. Yet these people give their cards out easily and readily compared to other licensees.

I collect a large number of business cards from active sales people at my seminars. All cards are entered into our computer database; once in there, you can never get out and you are on the mailing list as long as I can still get mail to you. But twice a month when going through the collected cards, we'll find one from an agent who's down to his last ten cards and not sure whether he should re-order. So he's been Xeroxing his last ten cards on the office copier. Classy. They are printed askew on 20 lb. bond paper and cut out with a pair of scissors with rough cut sides (hey, it's faster to hand cut a couple sheets at a time ... even if the cuts are crooked!). Go ahead, save money on card printing, hand them out like you're proud of them and see how much money you save!

GOOD EXPENSES
Every good expense you incur is a profit center, not a true expense item. Good expenditures make you more than they cost you. Should you print nice flyers or plain flyers on white paper? Should you save by not washing your car, or clean it regularly never knowing when you might have a buyer who wants to see property?

The current cost of a four-year college education in the U.S. runs between $50,000 and $120,000 depending on location and public vs. private schools. That's a total, one-time cost. But high school grads earn $18,737/year while college grads earn $32,629/year - $800,000 more over a lifetime (Doctorate holders pull in $1.5 million more than high school grads over a lifetime), and typically spend their lives with more interesting work to do.

The cost of having braces on your teeth as an adult will run approximately $3,500 if you needed them. What would a great smile be worth to your sense of confidence?

A buyer's home protection plan costs around $400 in most areas of the country. But homes with such plans sell in half the time (and half the house payments) as homes without, and they sell for $500 to $2,000 more than homes without. For $400 payable at the closing, that's a great expense.

In short, when you face a good expense - one that pays you more than it costs you, you don't save a nickel by not taking action. Look around your desk and your in-coming mail. What do you see you could invest in? Then, as Nike would say, Just do it.

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steve@steve-stewart.com