Four key areas to focus on for business profitability

As business owners, increasing profitability is something we all want to achieve. While there are a number of different features which help determine our overall level of success, it’s our profit margins that ultimately provide us with opportunities for future growth and expansion.

Within the real estate industry, profitability can hinge on several different factors. From fluctuating market trends to our own office dynamics, it can be difficult to know what to expect next – especially when you lack the business knowledge needed to ensure profitability.

In a recent industry report conducted by Core Logic, it was noted that almost 70% of real estate principals had less than 10% revenue growth within their agencies. Furthermore, the study also found that of the principals surveyed, almost 50% of those who ran businesses with negative growth had no formal business training whatsoever.

Just imagine what these businesses could achieve if they had invested more in their training and education. Throughout my career, I’ve sought to gain experience in several different industries, and something I’ve learned is that the importance of education simply cannot be questioned.

As Chief Operating Officer of Stockdale & Leggo, one of my main priorities is to ensure that business leaders within our group have access to the tools they need to continue to thrive in an industry where many others are failing. By focusing on these four key areas, our franchisees across the country have been able to achieve high profit margins and maintain a consistently superior level of service.

Leadership

Strong leadership skills are a vital component of running a successful real estate business, and while there are those who would argue that a good leader is born and not made, I would have to disagree. In fact, it’s paradoxical that I ended up in a leadership role myself when my own mother decided I should leave school before graduating because she didn’t feel women were meant to have careers!

My own experience has shown me that some of the best leaders can actually be the most reluctant – as these are often the ones who truly value teamwork and are willing to put the good of the team above their own ego. With the right support, leadership skills can most certainly be learnt, and a good leader should always look to improve their skills and refine their people management abilities on a consistent basis.

Recruiting for culture

Have you ever considered how focusing on hiring the right people to fit your culture might affect your profitability? Ensuring you hire the right people from the outset can actually increase profitability in more ways than most people think. Recruiting the right person for the right job reduces loss of productivity, time spent continuously training new people, not to mention covering the down time in between the position being filled – all which can all cost a small fortune.

Technological infrastructure

The workplace as we know it is continually changing, but how do your operating systems stack up in the face of the digital economy? We are now more connected than ever, and in a business sense, these technological advancements are designed to improve your everyday operations so that you may increase your business earnings.

When I commenced in my current role at Stockdale and Leggo, we underwent an organisation-wide technological overhaul, which saw the introduction of our new state-of-the-art digital platform. Rolling out the new technology and providing our group with the necessary training and education was no easy feat, but we have already begun to see some significant improvements to our profitability as a business since.

Financial benchmarking

In order to help your business achieve peak profitability, it’s important to have a strong financial system in place, and benchmarking your business against your competitors can be a valuable first step. Make a point to analyse other organisations outside your industry and consider how your business compares.

In what areas are they doing well? In what areas are they doing poorly? What would you do differently? Use this insight to better your own business and set some realistic and attainable goals. Be strategic in your process and consider recruiting a reputable financial services firm if you suspect your business could do with a financial overhaul. While it may be a costly expenditure, remember that good conduct is good business, and the results will more than pay for themselves.

Remember, it’s not what you make – it’s what you keep – and by investing in education and focusing on these four pillars, your business is sure to thrive and remain profitable in the face of an ever-changing economic landscape.