Here’s a positive perspective on the theme I began in my last post. As we look at ways to reinvent and resurrect our real estate businesses today, I’ll focus on two areas: Changing your Business Model, and changing your Marketing Strategy. Today we’ll look at the first five under Changing Your Business Model.
Change Your Business Model – Everyone who has ever taken a business class knows the classic case-studies of The Fisher Body Company and the Union Pacific Railroad. It’s where we get the often worn out phrase “buggy whips and trains.” In a nutshell, these studies show how at the beginning of the industrial revolution, when powered transportation in the USA was limited to horse carriages and trains, two super profitable business models were making buggy whips, with which to motivate your horses, and railroading. However, only a few short years later, affordable automobiles and commercial aviation basically put all the rich buggy-whip makers out of business! But one such buggy whip and seat manufacturer didn’t want to close down, and decided to change their business model. They declared that they were now to be known as The Fisher Body Company, and that they specialized in making seats and interiors for automobiles.You know their interiors…General Motors had “Body by Fisher” plaques riveted to the running board of every Chevrolet, Buick, Cadillac they built, for over 50 years!
You can see where I’m going with this, right? Same sewing machines, same workers, probably even the same bench seats for buggies, now being marketed as automobile interiors. By changing their Business Model, the Fisher Brothers resurrected their business.
And as all the business textbooks state, “if Union Pacific had simply changed their declared business from railroads, to simply transportation, we’d all be flying Union Pacific airlines today.
What business do you say you are in? Maybe it’s time to rethink your Business Model. Here are five ways to help you do just that during this trying times.
- Expand Your Services – Add other services that are tangential to real estate,that can increase revenues per customer. Dan Elsea, President of Real Estate One, Inc. in Michigan has through acquisition or joint venture, added insurance, mortgage, and title services to their offerings. Elsea says the revenues from these new avenues of income are helping them weather the storm. Remember, you don’t need to become a title company to have one in under your roof, and share in the revenues and margins.
- Merge with Your Competitor – The Bible says that “two are better than one, because when one is down, the other can lift him up.” Instead of both of you cutting each other up trying to slice an ever-diminishing pie in your market, why not join forces? Joe DeKroub, owner of the Michigan Group Realty, merged with his competitor RE/MAX Platinum, to save expenses and gain a critical mass. You could form a new LLC using Internet lawyers for about $100, and have your new super agency ready in less than a week.
- Invest Creatively – Maybe it’s time for you to use that MLS access, and your contacts with banks and mortgage brokers for yourself, rather than just your customers. Have you ever thought about picking up one of those foreclosed homes that are now priced at 50cents on the dollar? You could fix it up and sell it in less than 90 days, using your own offices to market it. Don’t like the idea of fixing up a damaged or partially finished property? How about simply buying and selling options? I was into this over thirty years ago, and it still makes sense today. Give a bank or a homeowner $2000 for an option to buy a property at a discounted price. Then sell that option to your customer for $10,000. Easiest $8000 you’ll make this month.
- Find a new niche – When my grandmother was a real estate salesperson in the 1950’s, generalists were in vogue. She farmed neighborhoods by geography, and it didn’t matter who lived in those neighborhoods; young couples, retirees, immigrants from Germany who only spoke German, it didn’t matter to Grandma Sadie. If you were in her farm, she felt she could serve you.But today, if you don’t specialize, and have a niche that people know you by, you’ll be lost in the crowd. Customers today are internet-savvy and your competitors will eat your lunch if you don’t do this. So you can decide that you are “The Condo King”, the “First time homebuyer specialist” “A Buyers’ Agent Only” or “El Rey de San Fernando” serving the Hispanic market, but whatever you do, don’t be a generalist. For more on this you can read a sample chapter of my book, here: http://www.realestateexpress.com/examprep/samplechapter.asp
- Mix Methods — Try borrowing some sales tactics and techniques from other industries to show that your business model is different than the rest. You’ll get PR buzz and more people contacting you as a result. Muhsin Muhammad, an NFL player in Charlotte, enlisted broker Brandy Hayes to offer his home for sale on e-Bay. Inquiries went through the roof. Many homeowners and brokers in Arizona have teamed up to offer their homes as a grand prize for a lottery. If you get a thousand people to give you a partially tax deductible $500 for a chance to win a $400,000 home, everyone wins.
What are some ways you’ve changed your business model. Leave a comment below. I read them all. Thanks!
Next post we’ll talk about your new Marketing Strategy.
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