Charlotte Savoy fell from super successful small business owner to a half-million dollars in debt, and quickly realized the only way to survive was to change her spendthrift ways.
“When you have a really high level of success and you go from a salaried administrative type of job, where you’re earning $40,000, to a real estate agent making $100,000, $200,000, $300,000, it’s very attractive and very easy to pick up the bill at dinner. When the market tanked, I – like many – wasn’t prepared for that,” she says.
Today, she’s mentoring others on how to operate at an outrageously high profit margin – her team’s model is 80 percent profit. How? Read on to get her top tips.
Tip No. 1: Drop Bad Habits
First, Savoy began monitoring her bank accounts daily so she knew what was going in and what was going out. “There is a misperception that to be a successful real estate agent, you have to have the $100,000 car and the nicest house, and that people won’t take you seriously if you don’t have those things,” she explains. “I certainly believed that for a long time. But what I believe now wholeheartedly is that people want to work with my team for reasons other than the price of my car or the size of my house.”
Tip No. 2: Shop Smarter
Savoy has trained her six-person team to shop around to find the best deal for the business, and then to get her approval before making a business purchase. Savoy estimates that as much as 30 percent of her profit comes simply from watching what team members spend on a day-to-day basis.
One area where she regularly finds waste is in recurring charges. It’s easy to sign up for a subscription or an ongoing service that you’ve forgotten about. Suddenly, it’s three or four months later and you notice the charge. By the time you cancel it, you may have wasted a few hundred dollars. “Even if that website is only costing you $40 per month, you should ditch it if it’s not fulfilling its function – for my team, bringing in leads,” she says.
Savoy also prefers debit over credit cards.“Trust me, when you’re buying office supplies using your PNC bank card out of your operating account – where you have to pay salary and expenses – you’re going to be more careful about what you spend than when you put it on a credit card,” she warns. “Plus, you’re not paying interest.”
Tip No. 3: Lean Networking
Along with fancy pens and too-posh holiday parties, Savoy eschews lead generation services and unproven self-promotion, which she believes are the two primary areas where real estate professionals overspend.
Since more than 90 percent of her team’s business is referral based, she focuses on logging the origins of those referrals and working on cultivating more of them through networking, which costs a fraction of paid lead generation.
Last year, she tracked 60 percent of the company’s leads to Facebook visitors, showing her how valuable the free platform could be. “We do things some real estate agents hate doing, like calling our database and talking to our clients. Going to those parties, where inevitably somebody says, ‘Oh, this is my friend Charlotte. She’s a real estate agent. I love her.’ Then someone says, ‘Oh, I was thinking about selling my house.’ All of a sudden that Pampered Chef party you went to turns into a $5,000 or $10,000 commission for your family.”
The team does have an ROI-focused policy on advertising. Agents have two opportunities to do it, but have to pull the plug unless it generates a 250 percent return.
Tip No. 4: Celebrate Your Success
With all the penny-pinching, it would be easy to peg Savoy as all thrift and no play. While she admits that unrelenting austerity can wear down your team, saving money is a fun endeavor because it creates incentives and improves morale.
In fact, the office holds quarterly “fun days” to celebrate hitting their goals. In the past, these have included trips to the spa or to a Baltimore Ravens game with beer and burgers. “I have actually reviewed the books for other small businesses, and found more often than not limiting beliefs that employees need a water cooler or the fancy coffee maker with $8 per box coffee pods,” Savoy says. “Funny enough, employees actually want bonuses – profit share or a surprise $700 or $800 deposit in their bank accounts each month – way more than they want any of that stuff.”