Tuesday, June 23, 2009

Hanging Pictures On Your "Dirt" Wall

Nugget For The Noggin
By Jim "Gymbeaux" Brown, June 22, 2009
“First law on holes - when you're in one, stop digging!”
Denis Healey

“Don’t get comfortable in the hole you have dug.. Don’t hang pictures on the walls!”
Gary Keller

“The Dip”, written by Seth Godin discusses how everyone eventually finds themselves in “dip.” Some mistakenly identify the “dip” as a “hole” and some the “hole” as a “dip.” According to Godin the objective is to first recognize that your business and/or your life are not what you want them to be at this time in your life. If you are in a “dip” as defined by Godin, it is only temporary and happens to everyone. It is a time to regroup, recalculate, redefine and then because of the “dip”, grow.

Denis Healey said, “First law on holes – when you’re in one, stop digging!” Gary Keller, co-founder of Keller Williams Realty said during a live presentation this past week, “Don’t get comfortable in the hole you have dug. Don’t hang pictures on the walls!”

Gary Keller also said the market (economy) is what the market is at this moment, neither good nor bad, it just is what it is. I like to think in terms of WWW; WII; ICOTM! What was – was! What is – is! I control only this moment! Sounds more like Yota of Star Wars fame.

There is no question that the economy is as few people have ever experienced it unless you are 80 years old or older. The problem, as I see it, is whether you consider your current situation as a hole that you keep digging or just a dip in the road and facing an uphill climb. Without the proper attitude, almost every “dip” will “feel” like a hole. Some people fail to adapt and keep digging making the hole they are in deeper and thus more difficult to climb out of; they are comfortable in their hole and are hanging pictures. Worst, they find others who they “co-miserate” with and share their thoughts on just how deep or bad their particular hole appears to be – misery loves company – so it has been said. If you are on the receiving end of the co-miserating hole-digger, it is not fun and more importantly, the misery disease can be spread by casual contact and therefore should avoided it at all costs.

Keller’s presentation had another huge Aha, at least for me, when he made the analogy or linked the metaphor of the professional musician. Musicians spend hours upon hours practicing and rehearsing what they do. The hours spent practicing and rehearsing are WORK; HARD WORK! Not what you would call fun time. The time spent on stage before an audience is PLAY! It is fun! It is rewarding!

Therefore, if you want quality “play-time”, you have to engage in quality “work-time”; that’s it! That’s the secret since everyone seems to love the word “secret” as if it contains the ultimate path to success. The problem with most of us, at least as I have seen it, is that there is a difference between HARD WORK and SMART WORK. There is a universal law that explains that only 20% of the people do 80% of the work. If you are wondering why there are so many “holes” in your neighborhood it is because 80% of the people do what 80% of the people continue to do and all expecting different results and the results they experience are just deeper holes. Even some of the best people who find themselves embedded in a hole they have dug continue to do what they have always done failing to recognize that times change. People change. Technology changes. People who fail to recognize the changing times simply continue doing what they have always done like most others in similar situations.

Even in the worst economic conditions imaginable, 20% of the people will still do 80% of the work or get 80% of the results from their work. These are the people who WORK SMART! They adapt. They have a learning-based attitude. They seek information. THEY CHANGE! They also seek out and learn from the other 20% to find out what is working for them.

Gary Keller also said, “You can only grow your business in a down market!” Why? Because the business that remains will not come to you; you must go to where the business is. Only a few people, like you, realize this and adapt their business practices to go after the business instead of waiting for it to come to them. They “work” at attracting people. They “work” at developing relationships with people they know, people they have just met, and people they have not as yet met but have a goal to meet. They “work” at developing the relationship of caring because as someone once said, “People don’t care about you until they know how much YOU care about THEM.” It is NOT about YOU! No one said it as good as Bob Burg, “People will do business with AND refer people to those people they KNOW, LIKE and TRUST!”

Jeffrey Gitomer said in his book, The Little Black Book of Connections, “All things being equal, ... And all things being NOT so equal, people STILL want to do business with their friends.”

THAT’S IT! You can’t make friends in a hole unless it is a HUGE hole. You can make friends in a “dip” in the market and should make as many new friends as possible. If the size of your market (the pie we oftentimes hear about) is no larger or maybe even smaller, you want your unfair share of the market (pie). Therefore, the solution to the hole and/or the dip is to WORK SMART by contacting the people you already know; meet new people everyday; learn more about the people you know and meet. Develop the relationships and make it about them rather than passing gobs of information about you and what you do because frankly, at this point THEY DON’T CARE about you or what you do. But the day WILL come as it does for everyone, that people who KNOW you, not to mention LIKE and TRUST you, WILL have a need for what you do. And when that day arrives, you want them to think about you or refer their friends who have a need for what you do to refer them to you.

So here you are folks, the secret! It IS that simple! If it is that simple why do not more people think and act in the very “certain way” (Wallace D. Wattles, The Science of Getting Rich) that is required to generate more business? Now that is a question for the ages. Why do real estate agents have round shoulders and flat foreheads? Because when you ask them a question, they shrug their shoulders and when you tell them the answer, they slap their foreheads! My guess is the noise you just heard is the result of the palm of your hand slapping your forehead.

To get out of the hole you’ve dug:

  • Take down the pictures from the wall!
  • Work on developing a positive attitude – at all times – forever!
  • Learn and MASTER the concept and difference between WORK & PLAY (PERFORM) TIMES! When you WORK, work smart; when you PLAY, play with passion!
  • Contact the people you already know!
  • Get them talking about them; not you talking about you!
  • Meet more people and get them talking about them; not you talking about you!
  • Ask, “Do you or someone you know want to buy (or sell) what I am selling (or buying)?”
  • Ask, “Who do you know that I should be talking to?”
  • Ask, “What can I do to make your day/life better?”
  • Tell them, “Oh, by the way, whenever you or the people you talk to think of (whatever you are selling, offering or buying), think (insert your name)!”
    Send HAND WRITTEN Thank You Notes as often as possible and then some!
  • Read “The Dip!” by Seth Godin
  • Read “Endless Referrals” by Bob Burg
  • Read “The Shift” by Gary Keller, Dave Jenks, Jay Papasan
  • Read “The Little Black Book of Connections” by Jeffrey Gitomer
  • Read “The Little Gold Book of YES!Attitude” by Jeffrey Gitomer
  • Read “The Science of Getting Rich” by Wallace D. Wattles

Wednesday, June 10, 2009

Income Insurance; Or Not

Nugget For The Noggin
By Jim "Gymbeaux" Brown, June 9, 2009

What is the first question you ask yourself or a coach might as you when establishing goals; you do have goals, don’t you? “How much money do you need to make?” The emphasis is on the word “need”, meaning you have a number in mind that you MUST make in order to pay the bills you have and maybe put a little aside for that “rainy day” we hear so much about.

Well Breaux, the rain hasn’t stopped in several months – or put another way – the rainy day has become what one might call a “normal” day. Look at these example numbers:

Economy drops 20% (that is just a number it does not represent a factual number).
Agent A’s income for the previous year was $68,000 and that was Agent’s A break even point where Agent A had sufficient income to pay all of her business expenses, pay all of the living expenses and as stated above maybe put a small amount aside for the rainy days.

Along comes the rain. Now Agent A’s income, keeping in line with the economy, has also dropped 20%. 20% of $68,000 is $13,600 for a net income of $54,400. If Agent A was not saving at least $13,600 a year for rainy days, there is a deficit and Agent A is spending more than Agent A is making.

Now look at Agent B who the previous year earned $250,000. Agent’s B’s income also dropped 20% over the same period in time maintaining pace with the economy or $50,000 for a net of $200,000. The question then becomes was Agent B saving $50,000 a year for rainy days?

Here is another very serious thought to consider. If Agent B’s average sales price was $400,000 and the average Board’s sale price is $200,000, do you think that Agent’s B’s income might be affected a bit more than the economic average? Hmmmmmmm?

I hate to tell you the answer. In most cases certainly not yours, neither Agent A nor Agent B were saving $13,600 or $50,000 respectively. Income can best be compared to the storage space in our homes. The more storage space you have, the more stuff you collect to fill it. Purchase more storage space like a shed or off-site storage and you guessed it, you collect more stuff. Being in the Military for 20 years had one very definite advantage over most folks. Every 2 or 3 years we moved and when we move you guessed it, we got rid of stuff. But if you don’t move, the stuff overwhelms you. Then one day, one or more of your children leave home. Wow, I have more room now that Johnny has moved out. Yes and you have more room for more stuff. The unplanned cosequence is that Johnny does not have enough room in his new place so he still uses your home for some of his “stuff.” And this vicious circle seems to go on forever. “I can’t get rid of that; I might need it some day!”

Income and expenses are no different. The more money people make the more money they spend and I know this because……. We are in very odd economic times and while I am not an economist, I think I know enough about past economies that would lead me to believe that the world is in for a very rude awakening when future revenues fail to make up the difference between what was spent today and what comes in tomorrow as revenue or lack thereof. That is a formula for inflation. I can only hope I am wrong but I don’t think so. Financial planning becomes essential for survival.

A great many people do not control the amount of their income as people in sales have the ability to do. Need more money? Make more sales! The formula is that simple. There are other ways to make more money and they are, (1) cut your expenses to the bone – that effectively increases your disposable income. (2) Earn more money on the sales you make – that also effectively increases your disposable income. (3) Be more selective regarding the quality of probable buyers and probable sellers you work with meaning you work with fewer people but the ones you do work are ready to buy or sell and waste less of your time on those who are not. While that does not directly increase your income it does increase your dollars of income per hour worked and that is always good thing. (4) Become an expert on the Federal Income Tax Code or hire someone who is and take advantage of tax savings, especially for Independent Contractors. Saving more on taxes is effectively earning more to save or spend. (5) A combination of all four.

This is what I know. Correct that, this is what I positively know! The following is a plan and any plan is better than no plan just in case you do not have one:

Review your expenses for the past 12 months. Every expense, not just the car payment, house payment and utility bills – EVERY KNOWN EXPENSE! While you track them, try to identify if there are any seasonal increases/decreases like spending more on electricity and gas during the summer months. Here are some expenses that most people should think about:

  • Insurance premiums like annual Flood Insurance. Semi-annual, or quarterly payments like various insurance premiums. Health insurance or supplemental health insurance. E&O.
  • Christmas, birthday, anniversary, wedding and shower gifts, Mother’s Day, Father’s Day (this is typically a great deal more than you think it is)
  • Annual dues to trade organizations like the Board of Realtors, MLS, personal designations like CRS, or groups such as the Women’s Council of REALTORS®, etc.
  • Personal development like attending Family Reunion (convention for those not with Keller Williams), off-site training (travel, food and lodging), books, CDs, DVDs for your personal growth library (you do have one don’t you?)
  • Unscheduled repairs to our car(s), home, tools and equipment.
  • Personal loan payments
  • Student loan payments
  • Credit Card payments
  • Charitable donations and church donations
  • Political donations
  • State income taxes as applicable
  • Federal income taxes as applicable
  • Property taxes
  • Telephone service
  • Internet service
  • Cable Television
  • Co-pay medical payments
  • Gas for the car
  • Tuition for the kids
  • Emergencies (especially evacuations due to storms)
  • Unscheduled trips to visit relatives due to family emergencies
  • The cost of pets (much higher than you might think)
  • Date Nights (entertainment in general)
  • Cost of hobbies, golf, crafts, photography, etc.
  • Cost of smoking
  • Cost of drinking (and that does not mean milk and water Breaux!)
  • Expected or unexpected increases in any of these categories (requires planning)
  • Accounting expenses
  • Legal expenses
  • Advertising and marketing expenses
  • Customer gifts and entertainment
  • Tools and equipment required for work (or still needed for work)

You hopefully get the idea and here is a way to fine tune the list. Get some of your co-workers and form a mastermind group. Ask them to bring their check books with them and then using the above list, work towards improving the list by reviewing what they have spent money on over the past year. A side benefit of this activity is that you just may identify more deductable expenses than you had realized were available.

Let me give you an example of just how out-of-control expenses can be. How much do you spend at Christmas? Do you know? Do you really know? A lot of folks buy Christmas presents all year long which if they are bought on sale may not be a bad idea. How many birthday gifts do you buy? How many flowers to you buy? Wedding Shower gifts? Do you spend $3,000 a year on gifts? You might at first say, no way. But if you have a family of 5 (3 children) that is $630 a year per person. But wait, do you have parents to consider? Now we are down to $428 per person. Add in a niece, nephew, an aunt or uncle, someone getting married, etc, and suddenly $3,000 is an insufficient amount to budget. Tell me I am wrong on this. But wait, if you divide $3,000 by 12 months that means you have to budget $250 a month in order NOT TO OVER SPEND during the year. If you think you are spending $3000 a year on gifts, are you saving $250 a month for that purpose? If you are like most folks, I doubt it.

Before you can set a financial goal for the year, you MUST absolutely identify every penny that you know you will spend and even might spend. How can you just pick a financial goal out of thin air if you really do not know how much you are currently spending? I would wait for the answer but unless you are independently wealthy, there is no answer to that question.

At this stage in creating your financial plan, take time to analyze your expenses and cut them where you can. When you identify exactly how much you are spending in the various categories, it becomes very obvious that you may be spending entirely too much on several categories. Cut and consolidate where you can. Do your homework on what is most cost effective like hard line telephone service in addition to cell phone service. Consider the new technology available like Vonage or MagicJack to cut phone costs. Where else can you make cuts? Do you really need that “new car” car payment?

If you are in real estate sales, how can you “cut your commission” on a sale or listing if you do not know how much on average working a sale or listing REALLY costs you? Do you know?

If you have children, are you planning NOW for them to attend college LATER? How much does it cost for a college education? Let’s say for argument purposes that it costs a frugal $25,000 a year (at some time far into the future and that is going to probably be a very low estimate). That is $100,000 for a four year college education PER CHILD. Let’s say you have only one child who is 5 years old and you have thus far saved nothing. Therefore you have approximately 13 years to put away $100,000. Without considering the effect of earning interest on your money, saving monthly with the goal of saving $100,000 for when your child reaches 18 and goes off to college would mean that you would have to save $641 a month times the number of children you have. Here is the good part; if your child receives a scholarship, you can use the money to implement Plan B – buy a boat! J

Then you must account for the things you do not know and the big one is the rainy day. Let’s go back to Agent A who said she “needed” to make $68,000. If Agent A did not go through the expense part of this Nugget, I would suggest that $68,000 is an insufficient amount and that $75,000 would be a more conservative estimate. If you then calculate a percentage over and above that amount for your “rainy day” contingency, you have a more realistic goal. How much more would be sufficient?

Well Breaux, there is yet one more step. If you read the Nugget “The SECRET is in the BAG”, you know that everyone should have a BAG (Big Ass Goal) and that would not be a financial goal. A BAG goal would be more like putting all your children and maybe even your grandchildren through college – now that is a BAG! Or being financially independent but to know that, you would also need to know what your future expenses will be and then how much money you would need to maintain an income and life-style without working, another huge BAG! You decide, what is your BAG?

Once you identify your BAG, you need to estimate just how much longer you intend, must, and/or be required to work to attain it. Therefore, your annual financial goal needs to include (1) what you need to make to break even, (2) money for a rainy day, (3) an amount that will insure you attain your BAG and, (4) paying yourself 10% FIRST! Where did number 4 come from? Read The Richest Man In Babylon by George S. Clason. Clason suggests that you take 10% of whatever you earn and pay yourself before you pay anyone else. Of course you still need to pay all your bills but imagine the nest egg you could build yourself by paying yourself 10% FIRST! Keep in mind, we all tend to spend what we make. Therefore get in the habit of spending only 90% of what you make!

Using Agent’s A’s numbers, Agent A NEEDS $68,000 annually (based on the upcoming 12 months and obviously this will change from year-to-year). Agent A calculates that she needs to earn at least 15% more for that “rainy day.” And not knowing what Agent A’s specific BAG is, let’s add in another $15,000 (that would be conservative for most BAGs). Now we have a financial goal:

$68,000 – Need to have
$10,000 – Rainy Day Fund (equal to 3 to 6 months of income in reserve)
$15,000 – BAG account
TOTAL $93,000 (Remember it was once only $68,000)

Now we are talking!

That means Agent A needs to earn $7,750 a month. What does Agent A need to know to insure that she earns a gross $7,750 a month?

Not just the Market’s Average Sales Price but HER average sales price; they are not necessarily the same. For the purpose of this Nugget, HER average sales price is $175,000.

Now Agent A needs to know what HER average commission percentage is on each sale and how much of the total commission does Agent A get to keep. This is a bit more complicated for agents on a 100% plan where part of the commission is earned on one percentage and the balance for the year on a 100% plan. To make this easy, let’s say the first $36,000 of earned commissions is on a split of 70/30. And for calculation purposes, let’s say the gross commission on a $175,000 sale is $4,500 and therefore the agent’s net would be approximately $3,150. If you divide $36,000 by $3,150 you discover that Agent A would need to close 12 sales on a 70/30 split to reach the point where Agent A would then receive 100% of the commission. If Agent’s A’s goal is $102,000, subtract $36,000 from $98,000 and that leaves $62,000 to be earned at 100%. Divide $62,000 by $4,500 and you discover that Agent A needs to close an additional 14 sales to reach her goal. 12 Sales at 70/30 plus 14 Sales at 100% equals a total of 26 sales for the year. That equates to 29 Sales equals 2.1 Sales a month or .5 Sales each week

This is where it gets interesting. Gary Keller’s The Millionaire Real Estate Agent (MREA) book indicates that you should expect to close 2 sales for every 12 people you put into a MET Database and who you touch 33 times a year FOREVER! But let’s be conservative and say it is 1 sale for every 12 people. This principle works for real estate sales. If you are in another form of sales like car sales, there are numbers that work for you as well; find out what they are! Using the above numbers, how many people would you need in a MET Database in order to reach Keller’s numbers? 348. Does Agent A know 312 people? How many do you know? Keller also stated that you should expect to close ONE sale for ever FIFTY people you have in an UNMET Database PROVIDED you contact them ONCE a MONTH FOREVER!

Therefore, first put everyone you know into a MET database. Calculate how much money you established using the formula above as your financial goal. Then calculate how many people you need to put in an UNMET Database to make up any shortage.

You must then become disciplined to your goal. Gary Keller suggests that you play red light – green light with your money. Simply put, is what you are about to spend money on going to help you reach your big life’s goal (BAG)? If yes, green light – spend it. If no, red light – don’t spend it. I like Joe Tye’s Direction-Deflection-Question (DDQ) to help you in this regard.


Use the DDQ every time you contemplate spending a dime! The one category that should never be cut is education. Remember, “Education” is what you get when you read the fine print; “experience” is what you get when you don’t.” If you want to get better at what you do, create a self-education plan and stick to it!

One more suggestion from the book “Somebody’s Gotta To Say It” by Neal Boortz. Neal suggests that from this day forward, NEVER SPEND ANOTHER DOLLAR BILL. Spend only $5.00 bills and larger. When you receive your change, do what you will with the loose change but put the dollars in a jar on your dresser. These one-dollar bills collect in a hurry and it would be very easy to save $1,000 a year or more from your loose one-dollar bills. This is a great savings technique that provides you with emergency funds, date-night funds, etc. Try it, you’ll like it!

If the economy shifts for the better – you are in fabulous shape. If it turns further south, you should be okay. Remember, the market is what the market is and it never stays the same. You must reevaluate your financial goal every year based upon REAL numbers from the year(s) before. Now that you know, what are you going to do about it? Do they teach this stuff in our schools? I don’t think so.

Tuesday, June 2, 2009

Want More Sales? Have SEX With Your Customer!

Nugget For The Noggin

Based on a concept created by Joe Tye, America’s Value Coach
This Nugget written by Jim “Gymbeaux” Brown, June 2009

The following is an excerpt from an article by Joe Tye that got me thinking:

I was once having lunch with the CEO of the nation’s largest producer of corporate training videos. We were discussing the most effective communication techniques when he said, “Joe, if you really want to reach an audience, you have to have sex with them.” I almost choked on my noodles! “All of them?” He went on to explain that effective communication begins by creating a Significant Emotional eXperience.

Joe was talking primarily about speaking in front of an audience and is that any different than speaking in front of a probable buyer or probable seller of real estate or any other commodity for that matter? I think not!

Therefore, if you want to make more sales, have S.E.X. with your customers! It is that simple!
When was the last time you had a truly enjoyable or satisfying and emotional buying experience? I’ll wait…..

If you are like most people, you probably did not have a really enjoyable or satisfying and emotional buying experience but you bought anyway correct? Some people shop because they love to shop and they buy what they see as compared to what they want or need. Other people shop only to buy what they intended to buy before they started shopping. In both cases, people bought. Imagine how successful you could become as a salesperson if you made this process a Significant Emotional Experience (S.E.X.).

What was the last item you purchased that cost over $200? Can you remember the name of the person who sold it to you? As you think about that question, here’s another question for real estate agents: Who was the last person you sold a home to or for? Do you think they remember your name?

For example, think about someone who bought a home from you three years ago. Who would those folks say sold them their home? If you think they named you by name you may want to think again. But…you say…I send them a Christmas card every year. Probably with no hand written notes on it and maybe with a pre-printed name on it or worst, an advertisement for what you do on it.

I received six pieces of mail today and thankfully none were bills. There were six solicitations for me to buy something someone was selling. Two did not require opening, they were self-explanatory flyers but still, only 2 hours after receiving the mail, cannot tell you who they were from or what they were selling. The other four were in envelopes two of which where quite thick. For the record, all six pieces found the bottom of my trash can and the four in envelopes – not even opened. Sound familiar?

Question: Did I have a Significant Emotional Experience looking through my mail today? Nope! How much did it cost the sender to send the pieces? Who knows? Was it money well spent? Not in my case. You-know-who may have opened them and read them but not yours truly. Frankly, I am too busy to read about something I most likely have no need for and therefore just ignore them. How about you?

Before you send to or call one of the names in your database think outside the box. You can do what everyone else has done for years and you will probably get the same or similar results which is nothing. If that is true (and it is), then why do so many people keep doing what everyone else has done and still expect different or better results? There is only one answer – because everyone else is doing it. Whoa Breaux have you forgotten the Praetor Principle that 20% of the people do 80% of the work (or get 80% of the results)? If that is true, and it is, then why would you want to do what 80% of the people continually do and who receive 20% or less of the results? Again, I’ll wait for your answer...
Bob Burg said that people will do business with and refer business to those people they KNOW, LIKE and TRUST. Jeffrey Gitomer said that all things being equal people will sill prefer to buy through people they KNOW, LIKE and TRUST. Jeffrey Gitomer also said, “People (that probably includes you) love to buy but hate to be sold!” Now just how profound is that statement?

I cannot speak for sales other than real estate but in regards to real estate I know from my own personal experience that sellers have listed their home with a complete boob in the business – me! The first several homes I listed, I had no idea what I was doing and I dare say if you were to ask those sellers who their real estate agent was they would be unable to tell you (even thought I managed to sell their homes, go figure). How sad is that? Here is another statistic provided by several National Association of REALTOR® studies, when it comes to sellers, almost 80% of all sellers interview only one agent to list their homes.

A lot of folks in sales have and will make a lot of sales - more by accident than by design. More people who have bought and who will buy in the future will still be unable to name the person doing the selling given a lapse in time from the date of sale. Joe Tye had it right. If you want to make more sales, make absolutely certain that your probable buyers and probable sellers are having S.E.X with you and the result will be more sales by having your customers talk about their “S.E.Xual” experiences. To make that happen be certain that you care about the customer and the customer knows you care! Your thoughts and actions should be on SERVICE, not the commission!
This is true whether you are talking with them on the phone (that would be “phone SEX” for you-know-who), through the mail (that would be “mail SEX” not to be confused with “male SEX”) and most importantly IN PERSON (that would be face-to-face SEX; the best SEX by far!)
If you would like to know more about the works of Joe Tye, go to http://www.joetye.com/. He is a fabulous teacher, writer, speaker and friend.
If you would like to know more about the works of Bob Burg, go to http://www.burg.com/. He is a fabulous teacher, writer, speaker and friend.
If you would like to know more about the works of Jeffrey Gitomer, go to http://www.jeffreygitomer.com/. He too is a fabulous teacher, writer, speaker and friend.