Monday, April 11, 2016

What Is The Single Most Important Requirement In All Your Business Relationships?

 What is the single most important thing that must be in place to succeed in any business venture? It is always that you and any partners, team members, or those who you work for or works for you is that you have aligned interests. It is critical that you all either prosper together or feel pain together or  it isn't a question of if a problem will appear, it is simply when.

 What does aligned interests really mean, and how does that look in real life? One of the things I often explain to agents is that there are some popular business models that sound excellent on paper, but are creating a misaligned interest between the agent and their brokers, where one loses if another gains, this is a problem waiting to happen.

 Consider this if the plan has a cap, where at a rather low level, the agent no longer pays the broker or main company any further fees this sounds awesome, but let's look at it deeper. Let's say that I'm your best friend who is your top producing agent at a Cap company and you're my Broker. By February each year I produce enough business that I cap and have no more fees to the house until the following January.  However, you still have to provide basic services to support my business, but won't receive any compensation. You still have rent to pay on the building, staff to pay, utilities, office expenses keep going and actually climb as my business climbs. So once I have capped your net income on my business actually drops with each transaction you have to provide services for I grow my business.
This is a gross misalignment of business interests. Not only are you not rewarded for helping me grow, you're actually punished.

 Now let's look at the model we use at RE/MAX Ability Plus where you as an agent hire us to support your business. There is a fee structure that covers overhead and your receive 95% of the gross commission,  then the potential profit to the broker is 4 of the 5% with the 1% going as the franchise fee to RE/MAX. That means that the profit we look for is 4% of the gross commissions of each of our agents and the only way we can increase the net profit is to help our agents grow their businesses. So if you are a 5 million dollar agent and want to be a 10 million we are 100% committed to help you do so. If you are a 10 million who wants to be a 20 million you have all our staff at your side helping you. The interests are aligned, the ONLY way we can increase our net profit is to help you increase yours and for every extra 1,000.00 we can help you make each year we make an extra 40.00.

Our only question is How Big do you want to go?