Key Performance Indicators: The Language of Business
Real estate professionals all run a business - even if you ‘officially’ work for a broker, it’s important that you behave and think like you’re running your own business.
And as a business owner, you need to make sure your business thrives.
When you get certified as a real estate agent, you’ll know everything there is to know about real estate… except for running a business.
Who will teach you how to run a business?
When starting out, so many real estate agents and brokers have no idea how to run a business. They just plug away -- bright-eyed and well-intentioned -- but they don’t have a proper plan in place.
So, often they fail… disappointing themselves and their loved ones.
Some even need to return to the desk-bound career they left behind when they joined the ranks of real estate professionals.
So how do you avoid all this?
You need to become a businessperson first, real estate professional second.
It sounds weird, but it’s true.
If your business isn’t running properly, you can’t plan for the future. You can’t be sure that you’ll have enough money coming in every month to support your business and your family. So, you’ll be distracted. You won’t be able to take risks when needed and you’ll probably miss important opportunities -- further damaging your business.
Read more: The Simple Real Estate Business Plan
Teach yourself to speak the language of business
So here’s the deal. To run a proper business, you need to learn the ‘language’ of business. Understand what drives business, what makes it thrive, what makes it grow.
A lot of people say the language of business is accounting. We agree with that in part, but like widen the scope a bit.
The language of business is all aspects of business that can be measured objectively.
So that includes your financials.
But also your Key Performance Indicators (or Indices), such as average sales price, units sold, calls made, goals, timelines, project management, process management, etc…
Why is this so important?
Simply put, you need the language of business in order to communicate about your business. Say you need a loan. If you go up to a bank and ask them for a loan without including your KPIs and financial figures, you’ll get laughed right out of there!
So you need to be able to talk about your business in a way anybody can understand. That means keeping track of your financial data, performance metrics and key indicators.
You’ll always be ready to tell people about your company.
Some other people you might need to talk to using the language of business:
- Other real estate professionals: they might be interested in setting up a joint venture or other ways of working together
- Accountants: Whether you’re talking to your current accountant, or you’re thinking of switching to a new accountant, you’ll need to be able to tell them where your business stands now, and where you want it to be in the future
- Lawyers: If you’re seeking legal advice -- say you want to incorporate your business -- you’ll need to be able to talk to your lawyer in terms they understand. That includes your business financials and performance indicators.
- Governments: If you’re looking to apply for or renew your business license, local authorities may ask you about revenues and other financial metrics. If you don’t have them readily available, you’ll waste time applying for a license instead of selling real estate.
Want to know the best way to start collecting information about your business? Arrange a demo of Zipi and see how quickly you can learn the language of business.