The One Number you must know
The late Brian Warnes, GCHQ Cold War spy and author of The Genghis Khan Guide to Business, suggested that in every business there’s one critical number that will define the growth opportunity.
For restaurants it’s the total number of covers X maximum spend. For corner shops, the limiting factor is shelf space. They need to juggle the balance between low margin necessities, that customers initially come for, with higher margin products that might be spontaneously purchased (this will give a £/sq.ft number). Hairdressers are restricted by “chair hours”, as are dentists, they both have the critical number of average gross profit per chair per hour.
On October 2nd at Leadership Summit we will discuss the critical number for estate agents (for both Lettings and Sales). To whet your appetite, a key component is the average gross profit per transaction. What’s yours?
I bet the majority of you have no idea; by the way, that’s based on my asking one hundred estate agency owners and just three knew – and I reckon possibly two of them made it up on the spot!
The average gross profit per transaction for sales is, the total income from the sales fee plus any additional income from conveyancing and FS minus the average cost per transaction. What’s your average cost per transaction?
Once again, I bet the majority of you don’t know! We’ll expand on this more at the Leadership Summit, but in simple terms, it’s the commission you pay your team plus all marketing costs divided by the number of transactions.
Many estate agency owners focus on driving the top line; more MA’s equals more listings equals more sales – true – but the One Number you need to know includes the variable costs and also another set of variables we will discuss on October 2nd. At the time of writing there are just 7 tickets remaining, check here to see if any are left.
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