Hans Hansson | April 3, 2018
It used to be that most employees would simply punch a card when they got to work and punched a card when they left work. There were set days off for vacation and sick leave–with a full work week representing 40 hours. As salespeople, if we were employees, we too worked 40 hours as independent contractors, but the good ones would work a lot longer.
In order for us to learn if we were productive, we would take what we expected to earn in income and divide that number by the number of hours we were working and estimate what we needed to earn in order to make that intended income. For example, if we wanted to make 200,000 average/annually, we’d have 52 weeks minus three weeks for vacation which means we need to do $4,000.00 per week or based on a 40-hour work week $102.00 an hour in net production.
This became the formula taught at most sales seminars to gauge production results.
Today, it’s very difficult to quantify one’s performance. Cell phones have now moved offices from stationary to mobile, extending work hours and extending periods that someone can also not be working.
Social media and networking to secure new business has also changed the dynamics of qualifying one’s efforts. Today, all salespeople need a way to create a 24/7 marketplace for themselves when business can be generated anytime, any day.
In real estate, sales is extremely important because there are no “hours of operation” for when people are looking for real estate. You could easily get a lead midday or at midnight.
The problem for an individual salesperson, particularly an independent contractor, is that you cannot simply divide your working hours by the amount you want to make to gauge results. You really need to spend more time monitoring your daily activities and gauge results per specific effort.
This is why a business plan becomes such an effective tool. If you break down your business plan to include set pillars (or tactics) in which you are going to create business, you can quantify how many calls, networking connections, or emails you need to make and then track for success in each area. For instance, if posting a Craigslist ad is part of your business plan, you can count how many calls and connections you make as a result of your postings. You can then figure out how many of these connections lead to a deal as a percentage of how many connections are made. For instance, if you plan to post 10 Craigslist ads and you receive an average of 10 responses per week, which lead to one deal – then you can quantify a dollar amount against that deal.
You can apply this formula to cold calling, too. If you plan to make 100 calls in one week, you should expect two prospects to turn into one deal. You could quantify how much one deal would produce, and then measure that against your overall goal.
In the past, you would have a business plan tied to the number of hours you planned to work, but today, the business plan also stands on its own. If you track your results by monitoring each pillar, you can translate that into deal flow, average deal income, and then yearly income.
Yes, it’s still important to monitor your true working hours, but it is no longer the standard you should use. Instead, focus on the pillars of your business that you need to monitor the most and measure whether you are successful in implementing your business plan. If you are not, then you will need to change your plan to get your ultimate goal back on course.
Hans Hansson | March 27, 2018
Today, the costs to build any residential or commercial properties are through the roof. When you set yourself a budget, my recommendation is to double it to ensure you protect yourself against the unknowns that will come up and “bite you”.
If you are going through this process for the first time, there are some key line items that almost everyone either misses or underestimates when it comes to total expenses.
- Expect (Major) Delays: Always just assume there will be delays in the building process. You can make an estimate for project completion, but I would double it to make sure you plan for more realistic timing and consider the overall carrying costs in terms of rent, financing, etc.
- Expect Change Orders: No matter how you are managing the project, if change orders don’t come about by changes in plans or ideas, it will come from the city when they begin inspecting the premises. Expect the city to give absolutely no leeway and ask that you maximize whatever the code would say. For example, restaurants need to have grease traps installed. If you install the minimum standards required to pass, expect the city to push you to install the highest standards. This change order could represent a cost difference of $6-$10,000 dollars by itself.
- Expect PG&E to Be Slow: Even basic installations could take four to six months or longer. Once you file for an installation, you’re put onto a wait list that gives you no guarantee of PG&E following up with you to schedule the installation.
- Sewer and water fees will cost you: From our own experience in building a bakery in Sonoma, California, we learned quickly about sewer and water fees. We had assumed that the sewer hookup fee would be between $5-$10,000, so we were completely shocked to receive a bill for $37,500 dollars. Starboard recently did a deal with a client that needs to install a new 4-inch waterline in order to improve their sprinkler system–our client was shocked to learn that the cost of the permit was $35,000.
- New Code Compliance Adds Zeros: The Americans with Disabilities Act (ADA) requires you to provide parking for the disabled that includes the proper ramps, signage, lighting, etc. Your architect may have drawn plans to compliance, but expect the city to require changes that could involve serious costs to in order to be compliant.
- Final Permit Is Never Guaranteed: No matter how good your architects and contractors are, you can never guarantee that you will secure a final permit. In another project we worked on–a simple $2,000/square ft. retail renovation– we had to schedule three separate times in order to secure approval of the building plans. Each time we completed the changes that the planner required, we had to go back for another approval. When they would review after the changes were made, they’d find something else we needed to include. This added time and costs that were not accounted for in our original budget.
Although all of the items mentioned above are bound to happen during your project, there are a couple of things you can do to set more realistic expectations. I would recommend that you ask your contractor to share samples of previous jobs similar to yours and adjust your budget based on those change orders. I would also recommend connecting with anyone who recently went through a building process and learn from them what happened during their build, so you can try and avoid similar sticky situations.
Lastly, I’d recommend holding a pre-planning meeting with the city’s water department, health department, and PG&E. The more you learn in advance, the less surprises you will encounter.
Photo Credit: CreditDebitPro Flickr via Compfight cc
Hans Hansson | March 18, 2018
In most sales roles, your company assigns you a quota that you need to meet. However, in real estate, where agents can be independent contractors, sales quotas are actually rarely used. Instead, firms divide their expenses by the number of agents they have and add a profit to that number to achieve the performance goal that is required by each agent in order to keep the doors open.
It is much harder to create a monthly sales quota because deal flow is completely uncertain, and the amount of commissions earned cannot be gauged since each fee is different depending on the size of the transaction.
Most real estate firms do not have a sales quota. They will have tracking reports to gauge your monthly production against deals that are pending and if you do not produce at least desk cost you may be asked to leave. Therefore, as independent sales contractors, it’s up to you to create your own benchmarks and monitor results regularly.
Make a Plan: At the start of the year, most firms require you to complete an annual business plan.
Track Your Results: As a start to benchmarking results, you should be reviewing your plan each week and determine if the plan you created is being executed upon and if the results are putting you on the trajectory of success. If not, you should course correct accordingly.
Year-Over-Year: Next you need to keep a record of your prior years’ performance by month, then compare those results with what you are doing in the present. This will show you if your business is growing and by what rate.
Course-Correct: If your sales are down, then this is a real sign that you need to re-evaluate your business model and figure out how and where you can improve. This is where most sales agents fail the most. They continue to do business the way they always have and not evaluate their past performance.
Real estate is a business when truly you’re only as good as your last deal. Because we are in a business that is not consistent, it’s also harder to gauge. Yet, patterns are noticeable if you track at your results over a longer period of time.
One of the worst things you can become is a sales agent who is satisfied to do the occasional deal. We are in a business where you can find deals quickly. Everyone has a real estate need at some point, so we have a large pool to “fish” in.
However, if you don’t have a plan on how you conduct your business and monitor that plan, nor establish benchmarks to visualize your standing now and over a longer period of time– then you will become the agent that does the occasional deal. You can still make it, but your chances of growing your business year-to-year will be difficult to achieve.Photo Credit: Alan O'Rourke Flickr via Compfight cc
Hans Hansson | February 8, 2018
Common etiquette, at least what I have learned and practiced, has certainly evolved in ways that are very different today. “Please” and “thank you” have been replaced with “Can you” or just silence.
“Please” and “thank you” used to communicate civility. It was a request for help and a response for acknowledging help received.
The lack of these manners has also changed how we communicate in the workplace. As a commercial real estate broker, I am in a unique business where my competitors are my rivals one day, and my ally the next. Just like in any partnership, communication is critical to make sure both sides are moving forward to ultimately close a business transaction. Our job is to figure out the right strategy, communicate, and negotiate with one another until hopefully we come to an agreement.
However, common practice of the past is no longer the way business is handled. Fellow brokers today no longer update one another on deals, nor for that matter show any regard for their fellow brokers’ time and effort.
For example, a typical property tour used to comprise of a broker calling several days ahead to schedule a walk-through of a space. Today, we oftentimes hear from a broker with an hour or two of when they’d like to see the property. We do our best to accommodate, but frequently end up getting no-shows, extremely late showings, or cancellations to the showing. This ends up being a huge waste of time– and time is money.
The broker is not necessarily the problem here. Many times, a client today has little sensitivity or respect for a broker’s schedule and has expectations for the broker to work around their schedule.
After accommodating a last-minute scheduling to show off the space, we rarely receive a follow up from the broker to update us on interest from their clients. We will call, email, text– but rarely do we get a response. If a broker’s client is interested, we won’t hear from them until the offer is sent. Earlier in my career, business was handled between brokers and we would discuss what it would take on both ends of the deal to close. We may discuss terms of the buildout, term rate expectations, etc.
We have also experienced deals where brokers on both sides simply go radio silent. If you ask for an update, you can expect no response. Recently, I was involved in deal where a broker represented his client and took us through interest, an official offer, and even space-planning. Shortly after planning, they disappeared from the transaction only to reappear, and disappear again. Our obvious conclusion was that they were negotiating with another party.
I ask myself – “When did common courtesy get thrown out the door?” They say to receive respect, you must earn/show respect. If each of us practices gestures of etiquette, even the smallest actions, every day (particularly with strangers), one would hope to see a domino effect spread, making life–and business– much more pleasant for all of us.Photo Credit: http://tvorbaweb-stranok.sk Flickr via Compfight cc
Hans Hansson | January 7, 2018
The ongoing tradition of making a list of positive changes you want to implement in your life in a new year can actually be productive. A number of people will sign up for fitness classes, perhaps give up drinking, or cut back on unhealthy foods. Others may decide to make changes in their professional careers, make financial commitments to save more, or make a bucket list of places to travel.
New Years is a time to reflect and see the possibilities of the brand new year ahead. It’s a time to look forward, not backward. Unfortunately, most of us that make these potential life changing resolutions don’t stick with them long-term. Overtime, the motivation for change often weathers away.
The reality is: change is difficult. It’s difficult to actually start making changes and it’s even harder to maintain over a long period of time. As human beings, we like stability– regardless of if we are in a good stable place or bad stable place. Change takes us out of our comfort zone and brings us into the unknown, which can be very scary for most.
Although we may mean well to seek out positive change, we almost always feel obligated to simply because it’s a new year. But like any change, it doesn’t come easy and we rarely see it through.
What makes uncertainty such a challenge? Perhaps because it means nothing will ever be the same. A new job may not provide greener pastures as you had thought. Starting your own business could quickly go sideways and make your current circumstances a hundred times worse than they were.
Chip and Joanna Gaines, stars of the hit HDTV television show “Fixer Upper”, wrote a book called “The Magnolia Story” that explores how Chip is a constant believer in change, while his wife is a constant believer in stability. Chip believes that once you have reached stability and feel comfortable– change is necessary. Although his wife believes in the opposite, she supports Chip when a decision is made and jumps in to make the next change in their lives work. Chip feels that growth occurs only through uncertainty. Uncertainty requires you to be creative, open, and willing to deal with uncertainty head on. In turn, this creates growth.
My first grandchild was born in December. She is entering a world that will see changes like no other period in history. My granddaughter will probably never drive a car. Most of the products she’ll use will be manufactured through robotics. Commercial space travel and humans living on Mars may be the new norm. All of these items today bring a tremendous amount of uncertainty in our lives. The thought that we would not have control of our automobiles scares a lot of people. The thought that you would live on another planet and be able to travel to space is beyond uncertainty for most.
Every invention – from the light bulb to the computer, and the world tech giants like Amazon have created has ushered uncertainty into the marketplace and within our lives. Yet, we begin to accept these changes and adapt.
The world does not come to an end for most; rather we evolve. As the New Year begins, if you truly want to grow– jump into the pool of change. It might appear cold at first, but you will begin to swim. And who knows? It might put you in a better place than you are now.
Hans Hansson | January 7, 2018
Having been in the commercial real estate business since 1984, I have experienced three boom and bust cycles throughout my career. The beginning of the first cycle was marked by the 1989 earthquake in San Francisco, which preceded a deep national recession. That was followed by the Dot.com boom and bust of 1997 through 2001. And then the worst of them all– the stock market crash of 2008.
The current economic boom cycle started in 2010 and is now entering its eighth year. During this cycle, commercial rents have increased 60 percent on average, yet conventional business growth (excluding the tech sector) have seen business gains of less than five percent per year on average.
Historically, commercial tenants needed to pay a maximum of eight percent of their gross revenue on rent. Today, several businesses are pushing rent to 12 percent or higher. With other costs like payroll, benefits and additional regulations, businesses are being nickel and dimed. Many retailers, both local, national and international, have called it quits because profit margins have been lowered so dramatically.
That being said, the tech sector has clearly driven this current boom. However, venture capitalists have reduced startup funding, hoping to stabilize existing investments before engaging in new major rounds of funding. In commercial real estate, tech tenants are typically short-term tenants (under 3 years), that means any cutback on funding could eventually start creating vacancy issues.
Banks are starting to be more cautious too. Bank of America recently tightened their lending requirements for commercial lending in anticipation that the current cycle will end soon.
Yet with all the signs showing that we may be at the top of the cycle, growth continues to occur.
With the passage of the tax reform, we can predict that more businesses will benefit and therefore continue to see growth in the coming year.
This current cycle is so similar, yet so different from past cycles I’ve witnessed that I frankly can’t predict what will actually happen. But my gut is telling me that 2018 will be a good year.Photo Credit: photogism Flickr via Compfight cc
Hans Hansson | December 20, 2017
In a new book by Enrico Moretti, “The New Geography of Jobs,” Moretti provides a deep dive where job opportunities are and why that is the case. He explains how job hubs are created and why certain cities may never recover their past glory. Interestingly enough, some of today’s hottest markets came to fruition by complete accident. For instance, Bill Hewlett and Dave Packard created hardware components out of their garage in Palo Alto, California and created a domino effect for other tech founders. Around that time, Palo Alto’s economy was supported primarily by agriculture. HP forever changed Silicon Valley.
Paul Allen called his friend Bill Gates to New Mexico where they had worked on an early version of Microsoft. When their business grew to 50 people, Paul became homesick and decided to move the company headquarters back home to Seattle– which later became today’s tech hub of the great northwest.
Moretti noted in his book that most major business hubs would strategically choose a location near elite educational institutions in order to attract bright new talent to the area. However, some of the best schools in the country struggled with graduating students returning to their hometowns to start their careers. The University of Michigan is a prime example of an elite school that touts itself as one of the best universities in the country, yet the state has one the the lowest retention rates of its local graduates.
The same is seen in Philadelphia– a town loaded with exceptional universities, yet it continues to see graduates move back to New York or other surrounding hometowns rather than set down roots in Philadelphia.
My son attended Saint Joseph’s University in Philadelphia and graduated in 2009. My wife and I had visited numerous times over the five years he lived there. We found the historical aspects of the city beautiful, however the city itself seemed tired. Grand historic buildings were abandoned or underutilized, leaving parts of the city feeling like a ghost town. We’d see construction of new buildings take place, but overall the city appeared to be locked in a time warp.
In the last decade however, things began to change– all thanks to one local restaurateur by the name of Steven Starr. In 1995, Starr began opening unique restaurants in old abandoned buildings in downtown Philadelphia. This was highly risky, as downtown had the reputation of being very dangerous. But, one by one, each restaurant over time slowly took off and became wildly successful, changing the scene downtown.
Soon, local building owners would seek out Starr in hopes of forming a partnership to open new restaurants in their buildings. Today, Starr has opened 20 restaurants alone in downtown Philadelphia and brings in thousands of customers a day to the downtown area.
He not only gave new life to old, vintage buildings, but has ignited the transformation of a once rundown section of the city. Starr’s high-end restaurants attracted clientele of a particular demographic. Luxury retail shops soon caught on and moved their stores to downtown. Wanting their piece of the pie, more restaurateurs, coffee shops, and convenience stores started to open new locations downtown. In addition, the housing market started to take off. Like most major cities, millennial residents want to live in Center City, Philadelphia.
Remodels are seen underway of older office buildings, converting them into beautiful brand-new luxury residential properties.
Since the transformation of downtown, Philadelphia is attracting many young residents from New York seeking lower housing costs and a less crowded lifestyle. Co-working facilities are also cropping up as headquarters for new tech startups, mostly founded by local university graduates.
After all these years, Philadelphia got its spark back– all thanks to one successful restauranteur who took a huge risk and changed the city’s course for the better.
Cities around the world should take note– this is a textbook example of pure entrepreneurship, not city-planning or state-funded directives that sparked this change. Moretti’s book shares examples from around the world where attempts to change the direction of a city and it went nowhere, even though there were good intentions by city officials. Luck is most often the reason for major urban growth.
Hans Hansson | December 7, 2017
How do I do better in sales next year? The standard answer to this question has been “cold-call, cold-call, cold-call. Pick up the phone and talk to someone.” Today it’s not that simple. With voicemails taking the place of live calls and no gatekeeper to get around at the front desk, salespeople need to have a number of “pillars of business” in order to succeed.
So, here are my new rules to succeed in 2018:
Stop casting a wide net. Instead of calling more people every day, try connecting with one real decision maker every day. Rather than “dialing for dollars” and calling between 50 to 100 people a day, try researching your potential candidates. Find out what is going on in their business, if they are growing or shrinking, and who is the real decision maker there. Find out information through networking, public knowledge found online, or send a direct email to inquire more.
Create a compelling reason for the that decision maker to want to deal with you. What is going to create a reason for he or she to take time out of their day to return your call? What is your call-to-action?
Customize outreach. Make your emails personal and resist sending mass blasts. Tailor your message to the decision maker with something that is unique to their particular needs.
Be Inquisitive. Instead of telling your clients what you’re going to do for them, ask a lot of questions instead. Try to keep the conversation going as long as you can because the more you find out, the more helpful you can be. Also, the client will recognize your questions as taking care and showing interest in their needs.
Don’t give up. The old rule of thumb still exists that you need seven attempts to get one real lead. Vary your approach so that the client will see you trying to connect with them in different ways. This shows not only persistency, but also that you are strategic. This will win points in the mind of your potential client.
Become an expert. Avoid making mistakes by investigating thoroughly before making a connection with a potential client. The last thing you want to do is to misspeak– it may end up costing you your credibility in the long-run.
Connect with the lead directly. Networking is great, but can oftentimes be overrated. Yes, you may know someone who knows someone, who can connect you– but will they really vouch for you and your services? The only person who can do this for sure is you.
Schedule everything. Calendar your cold-calling activities, strategy planning, even your personal activities every day. If you put it in your calendar, you're more likely to actually do that activity – partly because you're less likely to have to make an active decision whether or not you should do it. Remember that cold-calling is not just part of your business; it’s your only business. Without a new business pipeline, you are through in sales no matter what you have closed in the past.
Find a good CRM platform and dedicate yourself to using it. Without a proper CRM system to manage your contacts, there is no way of running an effective campaign to secure new business.
Respect – Show it, give it, and earn it.
Follow these steps, and you’ll look back knowing you started 2018 in the best possible way.Photo Credit: griseldangelo1 Flickr via Compfight cc
Hans Hansson | November 29, 2017
One of the most active industrial markets in the country can be found in Chicago. Commercial Real Estate properties there can easily make $300,000 - $400,000 a year selling and leasing industrial space. Yet, commercial firms are having an ever increasingly tough time finding new agents.
No Longer a Go-To Career Choice
Real estate is not an attractive occupation to today’s generation. An industrial agent in Chicago needs to expect to have to own a car and drive on average 25,000 miles per year to cover their marketplace. Today’s generation does not want to own a car, let alone drive around all day for work. In addition, you need to put in several years of hard work with little pay to build your book of business to achieve these higher income levels. This generation wants an immediate payday.
The biggest challenge is that most younger professionals want to live in the cities that they work in and don’t typically find suburban life appealing after college. This frankly doesn’t only affect potential talent in commercial real estate, but also most traditional businesses. From manufacturing to the trades– traditional businesses are struggling to recruit while millennials seek roles at new startups in both nonprofit and non-traditional marketplaces.
Today, the average worker in trade work is 46 years old and are struggling to recruit, counting more and more on veterans rather than graduating high school or college students to fill these positions.
The big question is – what happens if you can’t find workers and compensation is not the driving recruitment tool? What happens when manufacturing or the trades pay well enough to attract and it does not work? An example is an electrician in the Bay Area can make $140,000 to $175,000 a year including pensions and full benefits far better than most jobs, yet they are struggling to find talent.
Part of the problem is that this generation has not experienced the need to fix their own things or service and assist others. The age of “now” may be showing its negative effects on society as a whole. Most of the trades attracted labor from the next generation. For example, a father who worked in the trades would likely have sons who ended up following their footsteps. Children used to work on cars themselves and learned the ins and outs of the mechanics. They would learn how to use tools at a young age, so choosing a career in the trades became a very natural choice. Today, children are working with computers– learning to code, build and design websites and software, therefore choosing a career in technology is now the new natural progression.
Business Continues to Change
Commercial Real estate agents typically were founded because their parents were in the business. Their parents were salespeople and the next generation understood what it took to be successful in sales and how to service clientele. Today, sales are done not in-person, but via text messages, emails, and social media. This has clearly caused an evolution that will eventually permanently change how we do business and how we create things.
Hans Hansson | November 15, 2017
As a result of owning my own commercial real estate firm since 1991, I have seen what works and doesn’t work in the successful development of a real estate salesperson. The single biggest thing that causes most agents to not “make it” is their inability to create a disciplined approach to time management.
Time management is the key to success for any salesperson. It’s also part of organizational skills that most salespeople do not have as an innate trait. Most personality profile tests will support this understanding. A strong salesperson’s test results will look for strong driven skills and the ability to multitask and press forward, even when it looks like there is no business to secure. Yet, almost all of those tests will show lack of organizational skills. This typically would be found in people who are more analytical in nature.
Calendaring Your Day
I have thought for years about the importance of calendaring all of an agent’s necessary activities each day. Personally, I will calendar current business, new business, “big hour”, personal business, research, and education.
The current business includes all of my deal activity pipeline and things I need to do to push those forward. The new business activity includes business development. The “big hour” is working on deals that have low probability to close, but with high rewards if they do. Personal business is acknowledging that everyone has certain personal actions that need to be accomplished each day.
Each activity requires you to create tasks to complete each day, which I keep in a separate tasks file. When I have to do work on current business, I simply go down my list of tasks associated with each activity. If I don’t complete a task, I move it to the next day to complete.
Continuing to Learn
Research and education are the hardest activities to calendar into your schedule. These are also the hardest actions to perform each day. Although education does not produce immediate results, nor lead to any direct benefits for the foreseeable future– you will increase your likelihood of long-term success.
As a commercial real estate broker, I recently attended the National Association of Realtors national convention. Most commercial brokers are not members of the NAR and most regard NAR as a service provider for residential realtors. However, NAR actually provides very strong tools, classes and networking opportunities that support commercial brokers both locally, nationally, and internationally.
I went to NAR to learn about new tools available to realtors. In the end, I learned new ways to leverage social media, new software tools available to improve how I do business while also lowering my costs, and I participated in classes that gave me inspiration to start implementing tactics with a new focus.
In terms of time management education, research is the most important daily activity you can do– and a daily calendar with scheduled time to educate yourself through listening to podcasts, reading books, mentoring, attending training classes or online webinars will help you grow as a salesperson instead of ultimately failing.