Power Point presentation from recent breakout session at the 2009 Century 21 Leadership Conference held at the Atlantis Resort on Paradise Island, Bahamas. Jonathan D. Nicholas, Virtual CEO, was the session presenter.

1. Are You Running a
Non-Profit Organization?
Jonathan D. Nicholas, AECS
Virtual CEO, The Company CEO, Inc.
Toll Free: 847-881-6535

2. Non-Profit Organization?
• Is it all about the agents, not the bottom line?
• Handouts & Subsidies are daily occurrences?
• Are we really “broke-er” than everyone else?

3. Famous Last Words…
“I can match any compensation plan that any
of my competitors could ever throw at us!”

4. Famous Last Words…
“Recruiting more agents into the company will
solve my profitability issues!”

5. Famous Last Words…
“The brokerage doesn’t need to make a profit
if the ancillary services are subsidizing!”

6. Famous Last Words…
“No need for me to pour over the numbers; my
accountant will alert me if there’s an issue!”

7. Famous Last Words…
“A good manager will increase productivity,
performance and profitability – so we
shouldn’t hesitate bringing another one on!”

8. Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
% of GCI 4-5%

9. Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
% of GCI 8-9%

10. Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
# 8 No Administrative Watchdog

11. Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
# 8 No Administrative Watchdog
# 7 Failing to know your numbers

12. Top Ten Profitability Pitfalls to Avoid
# 10 Premium Facilities – Premium Expense
# 9 Too Heavily Staffed
# 8 No Administrative Watchdog
# 7 Failing to know your numbers
# 6 Lack of budget, goals, and benchmarks

13. Talk About the Numbers & Indicators
• Big Picture
• Per Associate:
– Breakeven
– Revenue
– Productivity
– Expense
– % per Side

14. Talk About the Numbers & Indicators
• Net Retained %
• Revenue per square foot
• Days of Cash
• Uncovered Expenses
• Market Share & Agent Share
• Churn Rate
• Performance Strategies

15. Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack

17. Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized

18. Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized
# 3 High Variable Cost – What’s True Cost?
Fixed/Assoc – Variable = True Cost

19. Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized
# 3 High Variable Cost – What’s True Cost?
# 2 Failing to Pass Through All Expenses

20. Common Pass Through Costs
• Training
• Technology
• Communications
• Postage/Courier
• Advertising
• Dues, E&O, MLS, Misc Fees
• Pass Through or Charge Flat Fee

21. Top Ten Profitability Pitfalls to Avoid
# 5 Budget Line Items Out of Whack
# 4 Compensation Plan is not Customized
# 3 High Variable Cost – What’s True Cost?
# 2 Failing to Pass Through All Expenses
# 1 Company Services are not Profit Centers

22. The Gold Standard
• Set Up a Financial Management System
– Back Office Accounting & Software
– Financial Consultant
– Review Executive Reports Monthly
– Watch Dashboard Indicators Weekly
– Know Cash Position Daily
– Budget/Goals

23. The Gold Standard
• Implement Performance Strategies
– Minimum Standards
– Individual Performance Plans
– Re-introduce Non-Performers to Market
– Recruit Volume/Production not Agents

24. The Gold Standard
• Pursue the Elusive 6+% Profitability
– Keep your Eye on the Goal
– Amongst Profitable, 2% is Average
– Compensation Plan is Key to Success

25. Questions & Answers