Are you ready to exit your business? Bernice Ross is here to help you find out! Bernice is a real estate coach extraordinaire, a nationally syndicated columnist, and author at Inman. In this episode, she joins Renee Williams to ask important questions that will help you determine whether you’re ready to exit your real estate business. Get your notepads ready and assess whether you can sell your business today or in a few years! Plus, get tips to help you plan for your retirement and ready to enjoy life after business. Stay tuned!
Exiting real estate: Is your business ready for you to leave?
By Bernice Ross
1) If you were to die today, do you have the systems and support people in place that would allow your business to continue without you?
2) Do you have a written business plan that you follow?
3) Do you have a CRM that contains all of your clients’ most current contact information including a history of when you last contacted them and how many referrals each person has generated?
4) Do you have a system for staying in regular face-to-face contact with the people in your referral database, and have you seen at least 150 of them in person at least three times during the past year?
5) Have you branded your business with a brand that references real estate, your location and the types of clients you serve rather than using your name?
6) Does your business have a specific niche and/or client type, and do you have a website and social media presence based on that niche?
7) Do you have a lead generation system that creates a consistent stream of leads that convert into closed business?
8) If a CPA showed up tomorrow morning to check your books, would your books be in order?
9) Can you document your net profit for the past three years and would the documentation stand up to an IRS audit?
10) Do you have a specific plan for what you will do after you retire?
11) Do you have enough money in investments and/or passive income to meet all of your current financial obligations that are not business-related?
12) Do you have sufficient funds or resources to cover any potential health care costs for both you and your family?
If you answered yes for 10-12 questions: You are prepared to exit the business with a reliable income.
If you answered yes for 7-9 questions: You have a good foundation, but you still need to make some major adjustments before you are fully prepared to obtain the best possible price for your business.
If you answered yes for 6 or fewer questions: You have quite a bit of work to do to prepare for a successful sale of your business.
Mentioned on this episode:
RealEstateCoach.com - https://realestatecoach.com/
Bernice Ross, Author at Inman - https://www.inman.com/author/berniceross/
** Episode Website **
https://www.reneewilliamsgroup.com/post/how-to-know-when-you-re-ready-to-exit-your-real-estate-business-with-bernice-ross
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How To Know When You're Ready To Exit Your Real Estate Business With Bernice Ross
We're talking to real estate coach extraordinaire, Bernice Ross. Bernice is a nationally syndicated columnist, author, speaker and consultant. She couples her expertise as a Master Certified Coach with over 35 years of real estate sales experience. During her tenure as Executive Director of training for the 4,000 agents John Douglas company, they had the highest production per agent in the United States. With over 1,300 published articles to her credit and 4 real estate books, it's no wonder that Inman News calls Bernie's America's top real estate coach, and we get to talk to her now.
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We are here with Bernice Ross, the wonderful article writer with Inman. She has written books, she speaks, an author and an all-around wonderful woman. Thank you so much for agreeing to be on the show.
I'm delighted to be here. When you told me about what you're doing about how to exit the business, I first started speaking on that back in 2006. One of the things I've seen so often, women will build up these great businesses, and I love the fact that you are helping them to create an exit plan for their business. We’re going to talk about a few key issues. I taught Psychology for many years, plus I had a full-time business selling real estate and I ran the training for 4,000 agents, so I've seen a lot of people come and go in the business over the years. I got into the business when I was in my twenties.
I have seen ups and downs in the market, people exiting, and what breaks my heart is when someone is forced to leave the business because they're ill, can no longer work, had an accident or some things happen where they're not able to work again. All those years, those clients, and everything they built up has no benefit to them. Let's take a walk through this because this is something that's near and dear to my heart.
You've said so much right there. You have a few things that you've written that I'd like to touch on or hone in on but before we do that, I want to ask you about this. I've realized that your career has been multifaceted. Did you start as you were an agent?
Before you retire, you need to decide what you are going to do that’s really going to make you happy.
I started teaching college when I was 22, and then I bought my first condo. I didn't know that you could go with a 10% down. I had put everything I had to get 20% down on this place. I even got some money from my folks. I had exhausted every resource, and at that time, you still could get away with pulling stuff off your credit card for a down payment. What happened was California passed Prop 13 and all of a sudden, they canceled summer sessions, so I had no money to make my house payments that summer.
The woman who sold me the condo had raggedy jeans before they were in fashion but she had Million Dollar Club on her card. I thought, “If she could sell $1 million worth of real estate, maybe I can sell 1 or 2 houses over the summer.” I sold 2 houses my 1st month, 8 in my 2nd month, and thought, “Why did I go to school?” The first downturn I saw was when rates went all the way up to 18% to 21%, and I thought, “I'm not going to quit my day job,” so I did both for many years. That's my background.
Let's start with the physical risk for you if you're female. The question is, “Do you have a job or a business?” You probably have talked about this many times. In a job, you'll only make money when you work. When you have a business, you can go on a cruise, take time off or sell your business and the business will continue to make money without you. Part of that, which I know that you coach people on and I was so happy to hear about the work you're doing, is that you’re helping people create businesses, and giving them the systems and tools that they need to be able to operate as a business and still make money. This is huge.
Those are some of the involuntary ways that people retire, but what if you're deciding, “I'm going to get this number, 60, 62, 65, 70, or 75.” Personally, for every holiday status, she was still going to the office when she was 100. If there’s always in my hands and my brain, I can write articles at least. One of the things that will determine how well-prepared you are to retire is your mindset. The question is, “how ready are you to leave the business psychologically?” That's huge. No one ever talks about it.
Here's another disturbing statistic out of psychology research. The death rate among people who are forced to retire at 65 against their will, that's the key thing or if you force one of your parents to move against their will, 1 out of 2 will die within the first year, 50%. If you plan to sit around all day and watch television, you're not going to have good health, and chances are, you won't live too long after retirement. I'm in a 55 plus community and this place has about 30 or 40 events every month or 4 or 5 every day on the calendar.
There's pickleball, bridge, they do wine tastings, and parties. There are so many different things that are going on here. They've got three different kinds of swim classes, exercise stuff, and chair yoga. There's something here for almost everyone. A lot of the active people here were into cruising. We're planning our next cruise. My next-door neighbor uses this expression. His name is John. John’s attitude is, taste the kitchen. He is a fun guy but that refers to, “I'm going to do as much as I can while I'm able to because when I look at the calendar for myself, how many more years am I going to be able to do an aggressive ocean cruise?”
I see people on these cruises that are in wheelchairs sometimes, so I'm thinking, “You can do that,” but I want to be the person who is out walking around, having fun, doing the wine tastings, and going to all the cool spots. We're going to Antarctica on January 23, 2022. We just got back on a cruise from Iceland down to Barcelona. Fortunately, my business lets me continue to work because I have passive income from other sources. A big source for me was my teaching. I taught for many years, so big source was that but the key thing here is you need to decide before you retire what are you going to do that's going to make you happy.
You may think you want to play with your grandkids. Your kids are so busy with their own lives that you're probably not going to see that often. One of the things I love about where we live and their parents to move into our community, then they say, “I never see my dad or my mama anymore. They're so busy doing stuff with everybody where they live.”
That's how you should be. You should have the quality of life. You should have plans if that’s what you want, to be running all over the country, cruising, RVing or whatever it is that you want to do. You want to make sure that you set up your business so that the money keeps coming in and you can do exactly that.
That is so valuable. Sometimes, I want to have a separate conversation with you about exactly what you're doing because I think there are a lot of stuff more people need to know about. I've got a little quiz for you that will assess how well you are prepared to transfer your business. What we're going to do is we'll go through each one of the questions, we'll do the scoring, and then we'll go back through the questions to talk about why each one is so important in terms of planning your exit strategy from the business.
Before you start, Am I going to take the quiz?
No. You don't have to take the quiz. Those of you who are reading this can take the quiz, but if you want to take it, I think you’re going to get most of these. I have a feeling I know how you're going to answer most of these.
Niches create riches.
If you're reading and you're multitasking, then try to stop what you're doing and write down the answers that Bernice is about to give us.
Number one, if you were to die now, do you have the systems and support people in place that would allow your business to continue without you? That's either yes or no, so mark each of these yes or no. Number two, do you have a written business plan that you follow? Number three, do you use a CRM, that's a Client Relationship Management system, that contains all your client's most current contact information including a history of when you last contacted them and how many referrals each person has generated?
Number four, do you have a system for staying on regular face-to-face contact with your people and your referral database? Have you seen 150 of them in person at least three times in 2020? With COVID, I think we can count seeing them on Zoom because we haven't been able to meet face-to-face. You’ve touch them at least once every four months in-person and you want to stay in contact with them on Facebook or on other social media. Number five, have you branded your business with a brand that references real estate, your location, and the types of clients you serve rather than using your name? In other words, you're not using something like Bernice Ross Real Estate.
Number six, is your business niche to a specific area and/or client type? Do you have a website and social media presence based upon that niche? It may be probate, seniors or first-time buyers. Number seven, do you have a lead generation system that creates a consistent stream of leads that convert into closed business? You're going to love this one, Renee. Number eight, if a CPA showed up tomorrow morning to check your books, would your books be in order?
No.
If you're going to sell your business, that's the big one. Number nine, can you document your net profits for the last three years, and would the documentation stand up to an IRS audit? I have been audited a bunch of times. I always had my records. I had one time where I had to pay and my accountant went back four times. She wasn't there one day and we got a different auditor. My accountant said, “I'm tired of coming back. My client is making more than she's going to owe you on this. Let's settle on a number. She'll write a check, so I don't have to spend any more for money coming down here.” We got rid of it that way.
We're on to number ten. Do you have a specific plan for what you'll do after you retire? Number eleven, this is one of the hardest ones but it's important. Do you have enough money in investments and/or passive income to meet all your current financial obligations that are not business-related? This can be a pension, a 401(k), anything that generates passive income where you don't have to go and work more for it.
Real estate investments are one of the best ways. Oftentimes with real estate investments, you do have to manage them depending on the kind of investment you have. Our final one, number twelve, do you have sufficient funds or resources to cover any potential healthcare costs for both you and your family? As an aside, the woman who runs my company, her sister has Stage 4 lung cancer. She has COPD on top of it. She became ill due to the work that she was doing but she has an Aflac policy that is generating income for her and has been, so that has turned out to be a great gift if you're of working age and you get disabled. I want you to go back through now and count your answers.
If you’re not able to write this down, answer these questions, either Facebook message me or email me AgentExit@ReneeWilliamsGroup.com. Tell me what your score is.
If you score between 10 to 12, you're prepared to exit the business with a reliable income. If you had 7 to 9, you have a good foundation but you still need to make some major adjustments before you're fully prepared to obtain the best possible price for your business. If you've got six or less, you've still got a lot of work to do to be prepared to sell your business successfully and to retire with sufficient income. Let's take a look at each of these questions and why they're important.
First of all, if you were to die now, do you have the systems and support people in place that would allow your business to continue without you? This is important. 1 out of 7 women gets breast cancer. If you're ill, can you still keep your business? The systems and support people are what will let you do that. Renee, I know you're working with women on that and it's so incredibly important.
Number two is, do you have a written business plan that you follow? If you're going to sell your business, especially if anybody is investment savvy, they're going to want to see what your plan is for your business and what that plan looks like going forward at least 3 to 5 years because if they're going to acquire the business, they will want to know what your plan was for keeping it going.
You need to start thinking about 3 to 5 years out. Nobody could have anticipated the pandemic. Nobody saw that coming to the level that it was but again, if you had a business plan that you are following, you are better equipped to handle it than someone who didn't. Number three is so important. Do you have a CRM that contains all your client's most current contact information and a history of when you last contacted them and how many referrals each person has generated? Someone who is buying your business will want to know the value of your referral database, and the way they can tell is by how much money each of the people in your referral database has generated for you.
One of the things you'll need to do when you sell is to have a plan. I see a lot of different versions of this. Sometimes, they'll bring in a younger family member or a younger person, and start working with them and bringing them into the business and then sending them off. You leave and they go ahead but they've been introduced and take over the business over a period of time. Also, when you sell, plan on getting your money out in 2 to 3 years. I'm going to give you another tip here and this is not on the quiz. Don't ever let them change the name of your company until you've gotten your money.
If you're branding with Bernice Ross Real Estate, that’s going to be a problem but if you are branded by QR and you've got agent exit strategies, you've got something that you can sell. You don't let somebody change that until they've paid you the money for it, and then if they run the business in the ground, that's their problem. A lot of people I know have had to go back and take their business back over because that did happen, so that’s a heads up.
Number four, do you have a system for staying on regular face-to-face contact with the people in your referral database? You can manage about 150 people in terms of regular contacts beyond that, so you want to be constantly looking at your referral database. Who are the 150 people who are most likely to be angels who will send me business or who will do business with me? if I have investor clients, they buy 1 or 2 properties a year or 1 every 2 years. The typical residential consumers only buy once every ten years now.
I'm going to put more emphasis on my investment client because they transact more often and probably at higher prices generally but in terms of the 150 people and contacting them three times, what you can do is each month, go to their social media feeds. Facebook is probably the best one, and look for comments that they have made and then you comment on their comments. You want to respond to them on something that matters in terms of what they posted. That's the secret. You can do five of those a day, and 30 days a month, so that gives you the 150.
If you’re going to sell your business, you need to have your financial house in order.
Are we considering this a face-to-face contact or are we considering this a touch?
It's a monthly touch but then you want to add the face-to-face contact at least once every 3 to 4 months. This can be going for a cup of coffee or it could be doing a client appreciation. I saw something where somebody shipped all this ice cream. They delivered and cold packed. They went out and did those touches in person. This is why it's important. Seventy percent of the sellers hire the first agent they see face-to-face after they decide they're going to transact.
That's a NAR number. Sixty seven percent of the buyers hire the first agents they see face-to-face. Make that appointment. Even if they tell you they are going to sell a year from now, you still want to go get that face-to-face, and then you want to stay in contact with them because that's the thing that's going to make that deal happen. Number five, we've already referenced this. How do you branch your business with a brand that references real estate, your location, and the types of clients you serve? One of my friends had the best URL. It was LA Probate Buyers. She got that. Does that say what she does?
Absolutely.
People don't remember names very well but they remember functions. If you were to meet me at a party and I say, “I'm Bernice with AustinProbateSellers.com,” you might remember the blonde lady who sells real probate real estate but if it’s like, “Austin probate,” and then sellers, my URL, if I brand it properly, should come up. You have an opportunity to tie into digital real estate and get things like the Facebook business group that has that name and get the dot-com. You can use your ZIP code and the dot-com because people search by ZIP codes but the idea here is that you can be found without your name and it's based upon the function rather than searching on your name.
Number six. If you have a niche-based business, it’s niches create riches. I cannot compete with Zillows, the Realtor.coms, and the big brokerages for Austin real estate but what I can compete for is a specific market segment. They don't have the resources to go after tiny slices of the market, so this is where your brand is based upon a subdivision or a topic client. I live near Lake Travis and Austin. Lake Travis properties are live on the lake and the ZIP code but the idea here is that's niched very specifically. Make sure your niche has enough people in it to be profitable but again, that's a way to go on that.
I had episode number eleven and it's talking about Getting A Grip On Your Real Estate Operations. In that, the production piece or I have a pillar called Production, and we want to talk about niching either to a group or to a location. Groups would be teachers, first responders, military or seniors. Those are the ideas for groups, and then locations, pick a subdivision. In Houston, much like Austin, you've got some divisions that have 2,000 homes and 7,000 houses in an area. Become the goddess of that area. They see your signs in every yard and there you go. It's very doable to a niche.
By the way, use your ZIP code. This comes from a company called Oodle, which hosts companies like Walmart, and they hosted the Facebook marketplace for many years. They are a big deal. Most agents have never heard of them but their data shows that people search on three things. They search on city, street and ZIP code. On the listing videos, I can't tell how many people don't put the towns on them. They don't put where they live, their ZIP code or phone numbers. It's like, “What are you guys thinking?”
I've seen that, and then you got to hunt, ”I don’t even know who you are.” I see the beautiful listing but I don't know how to buy it. If I want to buy it, how do I buy it?
Let's go on to number seven. Do you have a consistent lead generation system that creates leads that convert into closed businesses? This is the system's question we talked about before. Systems can be transferred. You can't transfer your charisma or your personality but you can transfer the systems. If you've got a lead generation system that has a chatbot tied to it that converts leads, that's something that you can sell as part of your business. Technology has value. Now, the next two. If a CPA showed up tomorrow to check your books, would your books be in order?
My clients would say no but that's okay. There's no judgment. We can get it fixed.
The thing that people are going to do, they're going to look at your balance sheet or your numbers with a fine-tooth comb and maybe fine glass. If you're going to exit the business, you need to have your financial house in order. This one is about the CPA and your books. If you're being audited, can you document your net profit for the last three years? The price of your business is based upon how much net profit you make, not the amount of revenue. It's your net after expenses.
Somebody new coming in may have fewer expenses or more depending on what they come in with. You might get someone who already has a great business who's acquiring yours and they wanted to add that to their business but in most cases, that's not the place. You'll be the person who will be making perhaps more money than the person buying the business.
I always like to reference other episodes that we've had because people will look at multiple episodes. On episode number seven of the show, I had Rick Krebs, CPA. All he does is help you sell your business. The name of that episode is getting top dollar for your real estate business. He said exactly what you said. It goes without saying that you're hearing multiple experts giving you the same advice or the same information, then we need to heed that advice and listen to it. That's excellent.
I've been training this since 2006 so I've had some experience with this and I've watched people do it who've sold their businesses successfully and those who haven't. Number ten, do you have a specific plan for what you will do after you retire? We've already talked about this in the previous one. You need to make sure you've got a plan and put together a meaningful life for yourself. You do not want to spend your time staying parked in front of the TV. It gets boring, old, and it's not healthy for you.
Number eleven, and I love what you're doing with this because you are helping people create money, investments, and passive income that can cover all your financial obligations. The good news is you won't have the cost of your business. One of my husband's friends for many years, he has a property management business. It’s very successful here in Austin and it’s a pretty big company.
He talks about being bulletproof. The idea is if you're bulletproof, your house and car are paid for and you can cover all your expenses on your passive income. You do not have to work to keep your lifestyle pretty much at the same rate it is now. I'm working to keep my lifestyle doing all those cruises I need.
We're bulletproof now. I can live on a pretty thin margin. My Austin property, the state income taxes are very high, so I'm good. That's the place you want to get. Finally, number twelve. Do you have sufficient funds from resources to cover any potential healthcare costs for both you and your family? Probably the biggest challenge, especially if you're paying for your healthcare, takes place between the ages of 55 and 65. This is considered the down at where your healthcare costs are very high and it's before you get on Medicare.
If you have something seriously wrong, then you'll be able to get Medicare if you get disabled. There may be some Social Security disability but it's not enough to live on. If you think you can live on your Social Security, all I can say is look at the inflation rate. It’s 5.4% this 2021. Your $100,000 now is going to be worth $94,600 in 2022. That's the effect of inflation. That's the scoring on that. Renee, I suspect you've got a great piece of advice or two to wrap this up. Given that you've heard this, what would be your takeaways that you would advise your clients to do?
I appreciate the brilliance of everything that you said in the quiz because it is a perfect encapsulation of twenty episodes for me. In those twelve questions, you have touched on every single item that we've discussed on this show. This is a great summary episode for everybody to go back to multiple times. If you get this one with Bernice, you don't have to read all the others. You can but you don't have to.
Plus, it'll give you the details. I hit the highlights.
I want to say too that it's very thoughtful and inspiring to see you where you are traveling, enjoying life and having had that real estate career. You're the gold standard for what I'm trying to get to in my real estate career. The intellect, the experience, the intelligence, and the wisdom that comes with everything that you shared in the quiz, I'm certainly hoping that everybody takes the quiz. Once you take it and you look at your score like I'm looking at what I wrote in, I'm going to go back in and flesh out my answers like, “Why don't I have some of these things in place?”
My brand for my business is myself. It's Renee Williams Group. That’s something to think about because I do teach people as you move towards your exit, you may want to consider five years before you exit your business maybe to change the name to the location instead of you but that all becomes a part of your strategic plan. There are some episodes you can go back and read to get details on those types of things but everything that you said in this quiz is spot on. I'm so glad to have you on, Bernice. It has been such a blessing.
Thank you so much. I really appreciate the opportunity to be here. I wish all of you tremendous success as you prepare to go to your next chapter in life. I'm having more fun now than I've ever had in my life. Getting older doesn't mean you have to be miserable. Take care of yourself financially, physically, emotionally, psychologically and you’re good to go.
Before we wrap up, I want to say two more things. One, I love that you are so intricately involved in technology. I'm a Gen X, so Gen X and Baby Boomers, we skim the surface of technology like Facebook but it sounds like you have a good firm grip on what's going on inside social and some of the technology.
When I was doing the training for 4,000 agents in California, I worked for a man whose name is Jon Douglas. He went by Jack Douglas. I spent a year writing our training manual for the company. It’s a whole program that I put together. It’s two weeks of training plus all this other stuff. Within three months, our biggest competitor had ripped it off and I was in tears. I put a year of my time into that.
Jack said to me, “Brenice, all we need to do is be six months ahead of the competition and we will own the market,” and he was right. We have a 50% to 70% market share. Beverly Hills, Brentwood, Bel Air, and Santa Monica, and we were selling a billion dollars a month in sales in the 1990s. Many years ago, those numbers are probably $25 billion to $50 billion now. We were kicking butt and taking names. I worked for two ex-Marines.
Getting older doesn’t mean you have to be miserable. Just take care of yourself financially, physically, emotionally, and psychologically.
How do we follow you and stay in touch with you? If we want to glean more of your wisdom, where do we go do that?
Go to my site at RealEstateCoach.com and subscribe to our free Newsletter. That'll get you my Inman columns for each week. We have a wonderful program called Listen and Learn Real Estate. For $97 a year, you'll get a podcast and two of my articles every week. The one that's published in Inman, and then another one that’s exclusively for our members, this is the part that's great. I started doing podcasting back in 2011.
I have somewhere between 250 and 300 5 to 8-minute training podcasts, you can access that library of all of those as part of this, and it's $97 a year. Let’s say you need something on doing a listing presentation, you want to create a prospecting idea or maybe you need some cold calling help, we've got that all categorized and lined up.
Prospecting, appointments and negotiations, scripts overcoming objections, and you can go and hear that 5 to 8-minutes while you're on the way to that appointment, you're walking or jogging. We used to talk about the Rowan University. You put the tape deck or the CD into the car and play it, now it plays on your iPhone. It’s those two places. RealEstateCoach.com and look for the Listen and Learn program. It’s $97 a year and it's got all those tools in it. You won't find a better value in the business.
Thank you, Bernice, for encouraging us, and thank you for being on the show. I really appreciate it.
Thank you. It's been a great opportunity.
Important Links:
Facebook - Agent Exit Podcast
Getting A Grip On Your Real Estate Business Operations - Previous episode
Selling Your Real Estate Business For Top Dollar - Previous episode
About Bernice Ross
Nationally syndicated columnist, author, speaker, and consultant, Bernice Ross couples her expertise as a Master Certified Coach with over 35 years of real estate sales experience. During her tenure as Executive Director of Training for the 4,000-agent Jon Douglas Company, they had the highest production per agent in the United States. With over 1,300 published articles to her credit and four real estate books, Inman News called Bernice “America’s top real estate coach.”
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