A Simple Real Estate Business Roadmap Revisited: The Economic Model

KEY TAKEAWAYS

• At its core, the economic model is not just about numbers; it's a philosophy.
• Always assess your roadmap to ensure you're heading in the right direction and on track
• A link to download the Economic Model Worksheet is available at the end of the article

The difference between merely surviving and truly thriving often lies in execution of a plan. Before you can execute a plan, you have to create one. Most of us are no strangers to the concept of a business plan, but which format you use makes a big difference in how you work. That's why simpler is better, in my humble opinion. I prefer The Economic Model, a strategic framework designed to steer our business practices toward predictable success. The model was originally introduced at scale in the book Millionaire Real Estate Agent, written by Dave Jenks, Gary Keller and Jay Papasan . However, revisiting this model with a fresh perspective can uncover new pathways to achieving our professional goals.

The Essence of the Economic Model

At its core, the economic model is not just about numbers; it's a philosophy. It's about setting clear, achievable goals and reverse-engineering our path to meet them. This approach involves breaking down our overarching objectives into actionable steps, focusing on net profit, closed sales volume, gross commission income (GCI), and the precise activities needed to reach these targets.

1. Net Income: Your North Star

Net income, the ultimate indicator of success, tells us how effectively we're converting our efforts into earnings. It's the clear, uncompromising measure that reflects the health of our business after all is said and done.

2. Gross Commission Income: The Fuel for Growth

GCI represents our gross earnings before expenses, a crucial metric that influences every strategic decision we make. It's the fuel that powers our journey towards our financial goals, dictating the pace and direction of our growth.

4. The Path to Your GCI

Identifying the number of transactions needed to achieve our desired GCI is both an art and a science. It requires a deep understanding of our market and the efficiency of our lead generation and conversion strategies.

5. Managing Costs: The Unsung Hero of Profitability

In our quest for net profit, managing the cost of selling is paramount. It's about optimizing our operations to ensure that our hard-earned income is not eroded by unnecessary expenses.

6. Gross Profit and Expenses: The Balancing Act

Our gross profit and the management of our expenses are the balancing act at the heart of our business. This delicate equilibrium determines our capacity to invest in growth while securing our financial well-being.

A Call to Reflection

For many of us, the economic model is a familiar blueprint. Yet, in a profession as fluid as real estate, taking a moment to reflect on these fundamentals with a fresh perspective can be enlightening. It's an opportunity to reassess our strategies, refine our goals, and recommit to the disciplined pursuit of success.

As we continue to navigate the complexities of our industry, I encourage you to revisit this model, consider its principles in the context of your current practice, and explore new ways to apply its wisdom to your journey.

For those interested in diving deeper, I invite you to access a comprehensive guide on the economic model through this link. Whether you're looking to refine your current plan or seeking inspiration for a new strategy, this resource is designed to support your path to success in real estate.