Free Real Estate Agent Profit and Loss Statement Template (Excel, PDF)

Transcript Search in video 0:00 and we got to keep analyzing our p l at 0:02 least twice a year to make informed 0:05 decisions if you say should i make this 0:06 expense should i hire this person do i 0:09 need to fire this person should i do 0:12 this marketing my first answer is i 0:14 don’t know can you 0:16 pull a p l 0:18 [Music] 0:23 analyzing the p l to a budget is a whole 0:26 different animal though 0:28 that’s what i want to talk about 0:30 so when we talk about analyzing your 0:33 business financials 0:35 analyzing the profit and loss in the 0:37 budget that’s where the magic really 0:39 happens and that’s that’s where you kind 0:41 of go next level 0:43 guru right 0:44 so 0:46 take a look back at this right we talked 0:48 about 0:49 your profit and loss statement we’ve 0:51 talked about your budget those are the 0:53 two statements that you should be 0:55 analyzing at all costs all the time 0:58 so 0:59 back at the p l we noticed a few things 1:01 right we notice number one your net 1:03 income is way low it’s only 33 percent 1:06 that’s like putting yourself on a 33 1:08 commission split okay in our sample 1:11 a 33 permissions commission splits very 1:13 low we talked about how 1:16 you know that should be somewhere based 1:18 upon this team’s production level you 1:20 know he’s got gross commission income 1:22 here of 454 1:24 454 1:25 and on our team budget 1:27 that told us that 1:30 the net income should have been 1:31 somewhere 1:33 you know close to 50 percent so we’re 17 1:37 low here 1:38 we notice part of that’s because his 1:40 operating expenses are too high 1:42 operating expenses no matter who you are 1:44 should never exceed 30 1:46 of gci we’re at 36. so six percent of 1:49 that’s high 1:50 and we identified where some of that’s 1:52 coming from admin salaries 1:55 which are three percent too high okay 1:59 so we know where some of this stuff’s 2:01 coming from 2:02 but not all 2:03 so 2:04 what could that mean 2:06 it could mean a lot of things but to do 2:08 it we’re gonna have to look at the 2:09 budget and kind of see where we’re at it 2:11 could mean for example that 2:14 you have 2:16 just hired a bunch of people 2:18 and we haven’t really received the 2:19 income from them yet 2:21 that’s probably the most common 2:23 it could be the cost of sales are we 2:25 paying like 2:26 are we paying too much to our agents 2:29 let’s go back and look at that maybe 2:30 we’re paying too much to our agents 2:31 maybe we’re paying too much to our 2:32 broker maybe we’re paying too much to 2:34 our team leader who knows 2:37 like we know his cost of sales that he’s 2:40 paying out is 22 2:44 let’s go take a look at the budget and 2:45 see how that lines up so everybody 2:47 always thinks they’re paying too much to 2:50 somebody right so let’s go over here 2:52 we know 2:53 he’s close to this five 2:55 uh 540 number 2:57 right he had 454 000 in gci so he’s kind 3:00 of between him but he’s a little closer 3:01 to this one 3:03 actually now he’s right in the middle of 3:04 the two 3:05 so you got to be right in this case he’s 3:07 right in the middle of the 390 gci and 3:09 540 because our sample p l shows 454 000 3:13 so he’s kind of straddling this line 3:15 um so which is often the case on this so 3:17 you got to kind of look in between them 3:20 and remember he had operating expenses 3:22 or admin salaries of 69 000 he was 3:25 pretty high right so he was over here 3:28 close to this category he’s already 3:30 assuming that he’s gonna make the leap 3:31 which is okay if the plan is to get 3:33 there 3:34 that’s okay i mean he’s got expenses a 3:36 little bit far out in front of his 3:37 income he’s leading with expenses a 3:39 little bit which i’m you know depending 3:40 on who you are and how much you got in 3:42 your reserve account maybe you gotta 3:43 maybe you’re married to a plastic 3:44 surgeon you can run your profit margin a 3:47 little slim 3:48 to get there a little faster i’m cool 3:50 with that 3:51 um not a big deal you don’t have to 3:53 always lead with with revenue if you’ve 3:56 got a little safety net of income to 3:57 play with so he’s there uh but his cost 4:01 of sales 4:02 he was at 22 4:04 so he’s a little high there 4:07 you know he should probably be at about 4:09 17 4:11 so he’s a little high there he’s a 4:12 little high everywhere he’s a little 4:14 high here he’s kind of in between these 4:15 two numbers when he should be in between 4:17 these two numbers he’s probably paying 4:18 out 4:19 a little bit more in to his broker or to 4:23 his buyer’s agents probably 4:25 or he’s not selling as much himself and 4:28 his buyer’s agents are doing a little 4:30 bit more than in a perfect world 4:32 but un you know and and you can see that 4:34 his operating expenses was six percent 4:36 too high 4:38 so he you know he’s he’s he’s over here 4:42 because his operating expenses we’re 4:44 down there at 163 just above the so he’s 4:46 again he’s kind of in this column when 4:48 his production’s really over here 4:51 so he put his administrative salaries in 4:53 the next column when he’s kind of in 4:54 between the two he put his cost of sales 4:57 even past this column a little bit when 4:58 he’s in between the two and he put his 5:00 operating expenses over in this column 5:02 when he’s still a smack dab in the in 5:03 between the two but his gci is right in 5:06 between the two if not a little closer 5:08 to this side so it’s not a big deal 5:10 that’s okay i mean he may have just made 5:11 these hires and started doing it but 5:13 what does this tell me 5:15 we’re going to put a red light up on 5:17 expenses right now you’ve heard the 5:18 concept in budgeting and p l of red 5:20 light green light with expenses right if 5:23 you’re operating at budget or beyond 5:25 budget we’re gonna put a red light up 5:26 you don’t get to spend any more money 5:27 dude it’s time to put your head down and 5:29 lead generate like you need to go take 5:30 more listings you need to generate 5:32 listings you need to call your soi you 5:34 need to do something to generate more 5:35 business we got to get the team 5:37 generating you generating right now 5:40 you’ve got to build your gci up to get 5:42 in alignment with your expenses once you 5:44 do that i still got the red light up 5:46 because you i mean you’re just in 5:48 alignment there like i’d like you to 5:50 lead with revenue so let’s get your 5:52 green light up so you start earning more 5:54 income 5:55 so that you’re ahead of your expenses 5:57 now we don’t want to go too far though 5:59 if you go too far with the green light 6:01 and play it super conservative you’ll 6:03 burn out your admin people you’ll start 6:05 to lose opportunities because you’re not 6:07 marketing enough because your marketing 6:08 expenses aren’t up there enough you know 6:10 you’ll start to drop balls in your 6:11 transactions because you don’t have 6:13 enough administrative support things 6:15 like that will start to happen so we we 6:17 do have to get our expenses up in 6:19 alignment so when that green light 6:20 happens we need to start hiring 6:22 right away 6:24 or our profit margin can actually get 6:25 too big 6:27 and people are going to start smoking 6:29 out their ears your buyer’s agents are 6:31 going to get frustrated your admins the 6:32 bottles are going to get dropped and 6:34 teams blow up and you go way back in gci 6:37 and you go way back to the left side 6:40 of the budget if we don’t keep 6:42 our budget in alignment 6:44 this person i don’t think is too bad 6:46 believe it or not you can see what 6:47 they’ve done they’ve led with expenses a 6:49 little bit which i guess is a little bit 6:50 of a spent thrift i don’t know or maybe 6:52 they just got a good emergency reserve 6:54 account set up and they’ve got a couple 6:56 hundred thousand the bank they’re like 6:57 hey if it’s to be it’s up to me i’m 6:59 gonna go so i’m not going to i’m not 7:01 going to go slow and wait till i get a 7:03 green light i’m going to hire an 7:04 advanced and i know i’m going to get to 7:05 work but this is usually when the coach 7:07 says all right buddy we’re okay we don’t 7:09 need to fire anybody but right now your 7:11 profit margin’s going to run a little 7:12 slim 7:14 you know rather being at 50 which is 7:16 where you should be right now you’re 7:18 down at 36 7:19 we can’t keep that forever so let’s 7:21 generate some business ourself right now 7:23 once we generate more business then we 7:25 can recruit more agents because that’s 7:27 what we know to recruit more agents 7:28 because then we can pay them the cost of 7:30 sales to stay in alignment our cost of 7:32 sales won’t be so high 7:34 right now your agents are kind of out 7:36 producing you they’re ahead of your 7:37 budget on the amount of cost of sales 7:39 you should have 7:41 see what i’m saying in addition to that 7:42 your marketing expenses are about right 7:44 where they should be 9.1 so we’re good 7:46 there i mean you have some you have some 7:48 room there but hey you’re over on admin 7:50 salary so we’re not going to spend any 7:51 more in marketing right now you’re six 7:53 percent over there you know everything 7:55 your operating expenses are a little 7:56 high and also there’s some missing 7:58 operating expenses there i want to take 8:00 a look at like where is i mean because 8:02 yeah we got six percent from admin 8:04 salary through three percent of which is 8:06 is an ad is from there we got a little 8:08 bit more of our cost of sales but 8:09 there’s some still i mean we’re off by a 8:12 good 14 so i want to analyze like where 8:15 where are we spending the rest of our 8:16 money i’m gonna go through some of the 8:18 other line items 8:19 and i might even say what are some of 8:21 the other big line items that are 8:22 expenses that i don’t typically analyze 8:25 you know maybe we went to a huge seminar 8:27 this year 8:28 um you know you know 8:30 and and it was really a trip to 8:31 disneyland for five days and we just 8:33 happened to do in a seminar in orlando 8:36 and then we went to disney world for a 8:38 week and put that all in the p l which 8:40 okay 8:41 you know i’m not the irs so i’m cool you 8:43 get that tax savings you don’t pay as 8:45 much 8:45 taxes that’s between you and your 8:47 accountant whatever but understand don’t 8:50 charge your business and say there’s 8:51 something wrong with your business 8:52 because you spent an extra fifteen 8:54 thousand dollars in disneyland 8:56 your business your business bought that 8:58 for you had forty percent off you know 9:00 whatever your tax window rate is you 9:02 know 9:03 so don’t blame your business let’s back 9:05 that out as a personal expense 9:06 so that’s how we analyze it if we’re 9:08 still out of whack and it’s not from one 9:09 of the categories the one two three or 9:11 four categories i normally track and 9:13 it’s not 2a 2b or 2c 9:16 i’m going to look in the other 9:17 individual line items and see what’s in 9:19 there maybe it’s something that snuck in 9:20 there that’s personal it’s almost always 9:22 what it is 9:23 if it’s not jumping out you or it could 9:25 be a one-time expense you know but 9:27 generally speaking this is when i put a 9:29 red light up and i go forward okay 9:32 now i will tell you when we first 9:34 analyze a p l as a coach 9:36 nine tens out of ten 9:38 i don’t put up a red light after 9:39 analyzing someone’s p l for the first 9:41 time it’s vice versa i analyze i almost 9:43 always put up a green light why because 9:45 that’s what we find 9:47 most of you are on here saying wow i’m 9:49 spending way too much money i can’t 9:50 afford anything 90 of you are not 9:53 spending enough and that’s what’s 9:54 holding you back 9:56 90 of them it’s always that you’re 9:58 afraid everyone’s really good and prides 10:00 themselves on being frugal 10:03 which makes you frugal not a good 10:04 business person 10:06 sorry good business people know to 10:07 invest in their business right 10:10 they do they know to invest in their 10:11 business that’s just i mean you look at 10:13 what’s different between you and 10:14 everybody else i mean friggin elon musk 10:16 goes out there and you know raises 400 10:18 billion in venture capitalist funds to 10:20 start his businesses paypal and things 10:21 like that they go out there and they 10:23 race they spend boy and they invest 10:25 most people don’t they just save which 10:27 means that’s great 10:28 you you’re gonna you’re gonna keep on 10:30 getting what you get 10:32 you’re not going to get any change until 10:34 you invest in your business right that’s 10:35 why i’m an la dodger fan they invest in 10:37 their business and they freaking win 10:39 bot teams don’t they pride themselves on 10:41 not spending a lot of money well that’s 10:42 that’s the camp you fall in 10:44 you’re gonna keep getting what you get 10:46 but if you invest in your business 10:49 you’ll move forward and if you don’t 10:50 think sports are a business i don’t know 10:51 what century you’re in 10:53 that’s just the reality and if you wish 10:54 it wasn’t okay 10:56 that’s the same people that wish real 10:57 estate was just about customer service 10:59 well it only is as long as you’re in the 11:00 business because then you’ll have no 11:01 services to customers 11:03 because you have no customers a service 11:06 once you’re out of it 11:07 so you better treat it like a business 11:09 at least to some degree 11:12 so when we analyze it nine times out of 11:14 ten we’re not spending enough we’re not 11:17 coming anywhere near 10 on marketing or 11:20 we’ve gone way too far forward as a solo 11:23 agent without any admin support 11:25 i mean i see teams where actually the 11:27 team leader the rain maker 11:30 is doing the administrative support 11:33 for the ages 11:34 like that’s crazy town i mean that’s a 11:36 team leader doing 15 an hour work 11:39 not leveraging that 11:40 off you know that’s like letting your 11:42 gardener do your freaking accounting and 11:45 you go mow the lawn that’s just the 11:46 craziest crap i ever heard of you know 11:48 so you see that all the time just 11:50 because it’s comfortable to them you 11:51 know paying a salary to hire someone to 11:54 be an admin is not comfortable but 11:56 they’re used to doing their own ad their 11:57 own admin work so they’ll do that it’s 11:59 simple i’m afraid of having money go out 12:02 of my bank account every two weeks and 12:04 that’s a genuine fear that you must work 12:06 through as a business owner so when 12:08 people hire a coach that’s what they 12:10 typically hire us for to help to help 12:12 them they think they hire a coach to see 12:15 the path which they do and they do see a 12:17 path 12:18 but that path is not a smooth straight 12:20 uphill path there’s two obstacles that 12:23 they really need to coach for 12:26 it’s to get them unstuck and here’s the 12:28 two obstacles it’s two types of 12:29 uncomfortable behavior uncomfortable 12:31 behavior number one is doing some 12:33 activity like putting together their soi 12:36 database 12:38 you know i’m preaching to the choir if 12:40 you’re watching this 12:41 you know analyzing your p l things like 12:43 that stuff you don’t want to do 12:45 like you’re not naturally going to doing 12:46 this stuff 12:48 coaches make you do this 12:50 maybe it’s calling your soi maybe it’s 12:51 having a client event you know stuff 12:53 you’re just not gonna do because you’re 12:54 gonna say you’re too busy you don’t have 12:55 enough time or you’re uncomfortable with 12:56 it or something 12:58 so it’s an uncomfortable activity or 12:59 it’s spending money to invest in your 13:01 business 13:02 hiring a coach hiring an admin paying 13:04 for marketing things like that 13:06 both of those things are equally 13:08 uncomfortable for different reasons to 13:09 different people it can either be you 13:11 know but both are uncomfortable so that 13:13 coach really gets you through that and 13:15 they build confidence for that because i 13:16 show you i mean i can easily go back to 13:17 that budget model and say here’s what 13:18 the top teams do and every team i’ve 13:21 ever coached follows this model and 13:23 there are other coaches out there that 13:25 coach at this level not a whole lot that 13:26 actually coach the budgets and the 13:28 financials but there’s trainers and 13:30 books out there that have different 13:31 budget models and financial models and 13:33 economic models and quite frankly i 13:35 looked at them all but none of them are 13:36 too far off in fact you know when i 13:38 created mine i looked at some of those 13:40 other models to see what’s working and 13:41 then tailored them to what i think is 13:43 really working and and created our own 13:45 and then i’ve tested them with our 13:47 clients for years and and that’s why we 13:49 have what we have and i really do 13:50 believe in our models and they work and 13:52 i’ve seen it work with all our clients 13:54 and they all follow so you can go 13:55 forward in confidence saying yes they 13:56 are spending this yes they are spending 13:58 that i mean it gets really really scary 14:01 when you’re analyzing a p l and you take 14:03 a good look at that budget model 14:05 as to where it can go can you imagine 14:07 analyzing a p l you know where you’re 14:10 out there and you’re doing 60 million i 14:12 mean that’s not outrageous right um you 14:14 know and and you’re out there and you 14:16 got administrative salaries over 200 000 14:18 marketing and legion 14:20 you’re only making 720 000 14:24 yet you have gci of 1.8 million 14:27 that’s scaring me you know what i’m 14:30 saying i mean you’re giving half it away 14:31 but in theory this person right here man 14:33 they’re not working weekends anymore 14:35 they’re not working nights they’re 14:37 probably going into the office at nine 14:38 or ten they’re probably starting to get 14:40 out of lead generation they don’t need 14:41 to generate leads anymore um it’s all 14:44 paid for 14:45 because we’re spending this much in 14:46 marketing so that marketing and 14:48 everything is just marketing and the 14:49 activity of lead generating doesn’t need 14:51 to happen anymore 14:52 um because at that point we get to a 14:54 certain level you can get off the phones 14:56 man you can start you know getting you 14:57 got other people to do the hard work for 14:59 you they’re bringing business to the 15:00 team now because you have enough to 15:02 provide to them to supplement them so we 15:04 start you know as we move like like 15:06 we’ve talked about as you move from left 15:08 to right here 15:09 you start to really get your time back 15:12 and people forget that this isn’t just 15:13 about income yes the net income goes up 15:15 like we’ve talked about 15:17 but the profit margin goes down but you 15:20 also start getting tons of time back 15:23 i mean you know people out here that you 15:25 know the right side of that and beyond 15:26 it it goes beyond that 15:29 you can go twice as long the other way 15:31 you get up north of 100 million in 15:33 volume 15:34 3 million in gci 15:37 i mean quite frankly a lot of my clients 15:39 aren’t working anymore at that time 15:40 they’re completely out of production i 15:42 mean they’re developing 15:43 they’re flipping houses maybe they’re 15:45 opening their mortgage company 15:47 they’re just taking time off 15:50 they’re being a parent 15:52 you know they’re living six months out 15:53 of the year on an island in the 15:55 caribbean 15:56 they’re living nine months out of the 15:58 year on an island in the caribbean 16:00 they’re you know they’re because they 16:02 don’t have any client or consumer 16:03 contact anymore so everything can be 16:06 done by zoom that’s the beautiful thing 16:07 about the global pandemic it just gets 16:09 the entire world comfy with zoom 16:12 so only people you’re going to really 16:13 come in contact 16:15 with 16:16 are your agents and if you need to talk 16:17 to a client that you referred to them 16:19 that’s still a part of your soi which if 16:22 you’re out there at 100 million 16:24 remember and in the budget if you’re 100 16:26 million that means 3 million gci if 16:28 you’re doing 3 which i always like to 16:31 keep things at 3 when possible 16:33 one point almost half of that’s going to 16:34 come from your agents so your production 16:37 alone 16:38 is going to be very very small there 16:40 so if you do have to get in because you 16:42 you have a client that’s you know maybe 16:44 doing a 3 million property or something 16:45 like that that needs to see your face 16:47 zooming in is no problem 16:49 nowadays it’s so much easier to step out 16:51 of production but to do that you have to 16:54 there is a process to get there 16:56 i mean unless you got a lot of money if 16:57 you got a sugar daddy or something like 16:59 that like i said platinum married to a 17:01 plastic surgeon you know you can you can 17:03 just start hiring get your operating 17:04 expenses way out there and let the 17:06 revenue catch up 17:07 i’m cool with that i’ve we’ve had 17:08 clients do that i mean it’s not very 17:10 often but it does happen you know you 17:11 can get your expenses way out ahead of 17:13 your revenue not against that 17:15 so long as you know you might lose money 17:17 at the very least decrease your profit 17:19 margin for a while until we get your 17:20 income caught up we’ve done that before 17:23 but for the most part we want to keep 17:25 our product margin high throughout the 17:27 way you know we need to earn money in 17:28 the meantime so to do that we got to 17:31 keep hiring and keep playing red light 17:33 green light 17:35 to make sure that our expenses don’t get 17:37 too hard and far of our production and 17:39 each time we spend money then that gen 17:41 helps us generate the income to go to 17:43 the next column on the budget and we got 17:45 to keep analyzing our p l 17:47 at least twice a year 17:49 to make sure 17:50 because i don’t know how to tell unless 17:51 we look at it and you don’t either 17:53 you’re just going off emotion and 17:54 feeling so we have to analyze this 17:57 twice a year to make informed decisions 17:59 if you say should i make this expense 18:02 should i hire this person do i need to 18:04 fire this person should i do this 18:06 marketing my first answer is i don’t 18:09 know can you 18:11 pull a p l 18:12 so you call the account and get the p l 18:14 then we take then we spend five minutes 18:16 analyze it like i showed you 18:18 line it up with the budget and see if 18:20 we’re playing red light green light or 18:22 not 18:22 and that is all there is 18:26 to analyzing your financials it’s that 18:29 simple 18:30 it’s one 18:32 two 18:33 three 18:34 four 18:35 it’s that simple 18:38 with these two documents a p l statement 18:40 sample 18:41 and your own piano 18:43 and my budget sample 18:45 simple as that 18:46 solo agent team big team doesn’t matter 18:50 all percentages all very very easy so i 18:53 hope that helps guys so let’s get on the 18:55 horn with your accountant and get your 18:58 first p l and let’s analyze