Are You Running a
Non-Profit Organization?
Jonathan D. Nicholas, AECSVirtual CEO, The Company CEO, Inc.Toll Free: 847-881-6535
Non-Profit Organization?
• Is it all about the agents, not the bottom line?
• Handouts & Subsidies are daily occurrences?
• Are we really “broke-er” than everyone else?
Famous Last Words…
“I can match any compensation plan that any of my competitors could ever throw at us!”
Famous Last Words…
“Recruiting more agents into the company will solve my profitability issues!”
Famous Last Words…
“The brokerage doesn’t need to make a profit if the ancillary services are subsidizing!”
Famous Last Words…
“No need for me to pour over the numbers; my accountant will alert me if there’s an issue!”
Famous Last Words…
“A good manager will increase productivity, performance and profitability – so we shouldn’t hesitate bringing another one on!”
Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
% of GCI 4-5%
Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
% of GCI 8-9%
Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
# 8 No Administrative Watchdog
Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
# 8 No Administrative Watchdog
# 7 Failing to know your numbers
Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
# 8 No Administrative Watchdog
# 7 Failing to know your numbers
# 6 Lack of budget, goals, and benchmarks
Talk About the Numbers & Indicators
• Big Picture
• Per Associate:
– Breakeven
– Revenue
– Productivity
– Expense
– % per Side
Talk About the Numbers & Indicators
• Net Retained %
• Revenue per square foot
• Days of Cash
• Uncovered Expenses
• Market Share & Agent Share
• Churn Rate
• Performance Strategies
Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized
Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized
# 3 High Variable Cost – What’s True Cost?
Fixed/Assoc – Variable = True Cost
Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized
# 3 High Variable Cost – What’s True Cost?
# 2 Failing to Pass Through All Expenses
• Training
• Technology
• Communications
• Postage/Courier
• Advertising
• Dues, E&O, MLS, Misc Fees
• Pass Through or Charge Flat Fee
Common Pass Through Costs
Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized
# 3 High Variable Cost – What’s True Cost?
# 2 Failing to Pass Through All Expenses
# 1 Company Services are not Profit Centers
The Gold Standard• Set Up a Financial Management System
– Back Office Accounting & Software
– Financial Consultant
– Review Executive Reports Monthly
– Watch Dashboard Indicators Weekly
– Know Cash Position Daily
– Budget/Goals
The Gold Standard
• Implement Performance Strategies
– Minimum Standards
– Individual Performance Plans
– Re-introduce Non-Performers to Market
– Recruit Volume/Production not Agents
The Gold Standard
• Pursue the Elusive 6+% Profitability
– Keep your Eye on the Goal
– Amongst Profitable, 2% is Average
– Compensation Plan is Key to Success
Questions & Answers
