Firstly, let’s talk about your profit.
Imagine you’re running a typical independent estate agency in the UK. If you’ve been in the game for over three years, your turnover is likely hovering around £200,000 to £300,000. Let’s settle on a nice round figure of £250,000, with an estimated profit margin of 20%. This gives you a pre-tax profit of about £50,000. While this figure may not be precise, it serves our purpose well.
Now, let’s consider a scenario where you find yourself in a bit of a financial pickle. Perhaps your bank is knocking at your door for a loan repayment, or maybe you’re facing the prospect of a house repossession. What if you need to buy out an ex-partner? The question arises: how can you generate an extra £50,000 in profit within the next year?
Let’s explore five effective strategies to help you achieve this goal.
Discovering Your Hidden Gems: Tapping into Your Database
Take a moment to reflect on your database. How many contacts do you have? If your agency is reasonably established, it’s likely you have anywhere from 3,000 to 5,000 names in your database. Statistics indicate that roughly 3% of properties are on the market at any given time, with an additional 12% of people contemplating a move.
From a database of 3,000, that translates to about 90 properties currently for sale, plus another 360 folks who are thinking about it. Your mission, should you choose to accept it, is to unearth these hidden treasures.
Here’s How to Do It:
- Create Engaging Content: Develop two pieces of content—one focusing on selling for the best price and another on strategies for selling in a slow market. Start by emailing the first piece to your entire database to attract those actively selling, then follow up a month later with the second piece. Don’t forget to send letters to those whose addresses you have, directing them to a landing page where they can download the content.
- Reach Out Personally: Call everyone on your database to offer them one of these downloads. This three-pronged approach—email, letters, and phone calls—ensures you leave no stone unturned. Even if the call simply updates your database, it’s time well spent.
- Nurture Your Leads: After the download, implement an email nurture sequence filled with valuable content, including videos. Each email should include a call to action, alternating between softer prompts like “Let us know what you think” and stronger ones like “Click here to book a chat with us.”
Expected Results:
By the end of this campaign, you could generate at least one new market appraisal for every 250 contacts in your database. With 3,000 contacts, that could mean around 12 market appraisals. Assuming a 50% conversion rate and an average fee of £3,000, you’re looking at an additional £18,000 in revenue. A fantastic first step!
New Revenue: £18,000
Expanding Horizons: Exploring New Market Opportunities
What’s your niche? Are you primarily focused on mid-market properties, like three-bedroom semis? If so, have you considered branching out into a new market while still maintaining your core revenue? Research shows that approximately 14% of properties on the market are priced at £500,000 and above.
To identify your new high-value home market, take a look at Rightmove and see how many properties are listed in your area. In most locations, this number ranges from 300 to 500. Check how many of those are priced over £500,000. If your area follows the trend, you might find 42 to 70 high-value homes waiting for your expertise.
Here’s Your Game Plan:
- Create Stunning Marketing Materials: If you haven’t already, it’s time to develop bespoke marketing materials. Design a beautiful, magazine-style brochure featuring stunning lifestyle imagery. Ensure it’s printed on high-quality paper by a local printer—avoid larger companies, as your competitors may replicate your work.
- Reach Out to Homeowners: Write a personal letter to each homeowner on your list, explaining that you’re trialling a new designer and printer. Enclose your brochure and offer to create a similar one for them at no cost. If they love it, they can choose to work with you; if not, they can stick with their current agent.
- Follow Up Relentlessly: From a list of 50 high-value homes, you might expect five responses. If you don’t get enough, don’t hesitate to follow up. Persistence pays off!
Expected Results:
Assuming you receive instructions from two properties at £10,000 each, you could generate an additional £20,000 in revenue.
New Revenue: £20,000
Unlocking New Revenue Streams: Hidden Profit Centres
In his insightful book, 80/20 Sales and Marketing, Perry Marshall highlights that 4% of your clients are willing to pay four times your standard fee, while 1% may pay a staggering 16 times more. What does this mean in practical terms?
Consider this analogy: a pack of paperclips from a standard store costs around £0.71 for 100, while a luxury silver paperclip from Tiffany’s might set you back £155. There are homeowners willing to pay premium fees for a VIP experience when selling their homes.
Here’s How to Tap into This Market:
- List Additional Services: Brainstorm all the extra services you could offer—think concierge-style services, like garden tidy-ups, cleaning, fresh flowers for viewings, and maintenance support.
- Elevate Your Marketing: Take your bespoke marketing to the next level. Hire a top-notch photographer to capture stunning lifestyle shots and local imagery. Aim for around 200 photos to choose from for your marketing materials.
- Create a Premium Experience: Instead of a simple brochure, design a hardback book that showcases the property beautifully. Include at least 24 pages of high-quality content.
- Produce a Promotional Video: Collaborate with a professional film company to create a captivating video showcasing the property and the local area. This should include models enjoying local attractions, adding an authentic touch to your marketing.
Expected Results:
You only need one client a year to opt for this premium service to make it worthwhile. If you’re marketing a property over £1 million and charging a fee of 3%, with £5,000 in promotional costs, you could net £25,000 from each sale.
New Revenue: £25,000
The Bottom Line: Your Path to Profitability
Let’s recap the potential revenue streams:
- Opportunity 1 – Low-hanging fruit: £18,000
- Opportunity 2 – New Market Revenue: £20,000
- Opportunity 3 – Hidden Profit Centres: £25,000
Total New Revenue: £63,000
So, can you double your profit in just a year? Based on an existing profit of £50,000, we’ve certainly exceeded that target.
Are you ready to take action? Let’s explore how you can also double your profits in the coming year. With the right strategies and a proactive approach, your agency can thrive year-round!
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When you’re ready, here are 3 ways we can help you:
1. Reach out for a call with Sam – choose from three different calls to help you overcome your specific challenges. All free and without strings. Grab a coffee and let’s get to work.
2. Come and spend the day with Sam and Phil, at AshdownJones’ HQ, in our beautiful Lake District. Meet the team, check out our systems and marketing, and enjoy meeting like-minded (non-competing) agency owners. We’ll even put on lunch! Book your place here.
3. Join our Facebook community of super-ambitious independent agents.
Hope to catch up with you soon and find out how you’re growing your business!
Till then,
Sam and Phil
