I firmly believe that businesses that do monthly financials make more profit than businesses that do not do monthly financials. Many small business entrepreneurs hate accounting. They hate the idea of having to do accounting or understanding accounting. They would like to just get out there, sell stuff, and close deals. I said it, the unspoken truth.
Do not feel bad. If you are a top salesperson, you likely dislike accounting. What do you hate more, accounting or databases? It is a tough call!
Over ten years, it will be worth $1,000,000 to improve your net profit from 20 to 30 percent or from 30 to 40 percent for a Billion Dollar Agent Business. Do you see the impact? It is worth facing the challenge of moving from a salesperson to a businessperson.
In speaking to hundreds of top agents, I can usually sense how much salesperson versus businessperson they are. The most powerful mix is someone who is a businessperson with excellent salesperson skills. If you are mainly a salesperson, your challenge is to learn what is needed to properly run a $1,000,000 business. The key is to focus on your unique talent and delegate everything else.
For accounting, we recommend that you use an online accounting system such as QuickBooks Online. You want to have three key people who have easy online access to your financials. You need to be able to access your accounting system remotely to view reports or check information. Your bookkeeper needs to do weekly and monthly data entry. They need to update information and run monthly financials. Your accountant needs accountant-level access to do your annual taxes and review quarterly financials to make sure the bookkeeper is doing everything correct.
For most teams, once organized, doing monthly accounting only takes a few hours each month. Best Agent Business provides accounting services to get your QuickBooks organized. After that, we do the monthly bookkeeper steps. You should be able to hire someone for $15 to $30/hour to do a few hours every week or month. The monthly financials can then be sent to you, your accountant, and any advisors.
An important part of your accounting is getting your financials to match both reality and records. To do this, you will need a combination of coding for reconciliation of cash and checks, and other entries for business purposes.
If your brokerage takes out your split or desk fees from commission checks before they come to you, you will need to add them back and state the proper total commission. You will need entries for each fee type. This is a huge problem, and it causes confusion for agents at some of the top franchise brokerages. It gets more confusing depending on how they handle buyers' agent commissions.
I have spoken to teams who thought they had $550,000 in GCI for the year and they really had $750,000 in GCI once we added back brokerage fees and agent splits. Their net profit margin was much lower than they thought. Sound familiar? Call me, email me, reply to this blog.
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