If you’re judging your real estate success based purely on the number of sales, you’re making each month, you’re doing it all wrong.
Okay, sure – your bottom line is undoubtedly the most important part of the process, but that doesn’t mean there aren’t other areas that should be commanding your attention, too.
If you’re only judging your business performance based on one sole metric, you’re not just shutting out the bigger picture – you’re also massively limiting your potential. In this post, we’ll walk you through 4 metrics we know you need to watch to get the most out of your sales and marketing efforts.
1) How Much is Your Revenue Growing by?
In real estate, revenue is the money you make from property sales or rentals. Pretty simple, right? Sure, but there’s more to it than meets the eye.
Obviously, your target should be to grow your revenue as much as possible year-on-year, but the best way to assess your business’ financial situation is by looking at its growth from one year to the next.
Whilst you might be the big fish in town burying your competition, if they’re seeing more revenue growth, you need to know about it. Else, it could sneak up on you, leaving you with less market share.
2) What’s Your Break-Even Point?
Understanding your break-even point in business is absolutely crucial. You can work it out as the amount of money you need to make to cover any expenditure. Your break-even point is essential, because it’s acts as a guideline for the minimum amount of money you need to make within a certain period. Anything beyond this can be classed as a profit.
3) Do You Know Your Gross Profit Margin?
You can calculate your business’ profit margin by subtracting from your overall revenue. This doesn’t just show how much money you’ve got to take away and do with as you see fit, it also gives an interesting look into your efficiency.
Even if your revenue growth declines, if your operating costs go down too your profit margin can still go up.
4) Any Ideas About Contribution Margin Ratio?
It’s less complicated than it sounds. You can work out your contribution margin my subtracting the variable costs of getting a sale from the revenue that you brought in from that sale. This will be easier if you work on a fixed fee basis, as that number will remain the same.
With your contribution margin, you’ll be able to see exactly how profitable you are at any one given time and assess whether your profit margin is increasing or decreasing year on year.