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I know that something is keeping you up at night – your real estate business’s bottom line. You may be hustling, closing deals, and seeing those commission checks roll in. But at the end of the day, are you really making money? If you’re not sure, you’re not alone. This confusion is the number one thing that might be holding you back from true success.

The Revenue Trap: Don’t Fall For It!

Let’s start with a hard truth: Revenue is NOT profit. Simple as that. I know it sounds obvious, but you’d be shocked how many agents don’t get this. Let’s break it down.

Revenue is all the money that comes into your business. That $10,000 commission check? Revenue. That $5,000 referral fee? Also revenue because all of that money is not yours to keep.

I had an agent come to me recently, excited about a $15,000 commission check. She was so eager and ready to start buying leads, but as her coach I advised her to hit the brakes hard. Why? Because that $15,000 isn’t all hers to spend. It’s revenue, not profit. And if she started splurging without accounting for expenses and costs of sale, she’d be in the red before she knew it.

Understanding True Profit

So what is profit? Profit is what’s left after everything and everybody gets paid. And I mean everything:

Your cell phone bill, car insurance, office fees, broker fees, MLS fees, transaction management fees – the list goes on. These are your expenses, the costs you incur just by being in business.

Then you’ve got your costs of sale. These are the expenses tied directly to each transaction – things like referral fees or transaction coordination costs. You only pay these when you close a deal.

Here’s a real-world example: Let’s say you get a $10,000 commission. Sounds great, right? But let’s break it down:

• $3,000 goes to your broker (30% split)
• $1,000 for marketing expenses
• $500 for office fees
• $300 for your cell phone and internet
• $200 for gas and car maintenance

Suddenly, that $10,000 has shrunk to $5,000. And we haven’t even talked about taxes yet! This is why understanding profit is crucial. It’s not about how much money you make, it’s about how much money you keep.

Profit is what’s left after you deduct all of your expenses and costs of sale from your revenue. Profit is what you’re going to pay taxes on. It’s also what you have left to build your life.

Why Profit Matters More Than You Think

Understanding profit isn’t just about knowing your numbers. It’s about building a sustainable business that funds your dreams, not runs your life.

I didn’t leave my corporate job working 80 hours a week to come into real estate and work 70 hours for a little more money. I bet you didn’t either.

More than likely you got into this for time freedom, right?

But when we don’t pay attention to what’s profitable, we end up spending a lot of time doing things that don’t make us money. That’s when we end up with a business that runs our life instead of funding our life.

The Spiritual Side of Profit

Now, I know this might sound a little out there, but stick with me… Profit isn’t just about money – it’s a spiritual principle. The Bible talks about giving an account, and guess what? ‘Account’ is an accounting term!

In the parable of the talents, the master doesn’t just ask, “Did you make money?” He asks, “What did you do with what I gave you?” He’s looking for multiplication and for stewardship. And when you apply these kingdom principles to your business? Baby, it’s game over.

Building Systems for Profitability

There’s a reason why I’m always preaching about building systems in your business. Systems allow you to generate revenue with fewer expenses. When you’re just starting out, it’s tempting to throw money at things like Zillow leads or other expensive platforms, but that can eat into your profitability fast.

Instead, focus on building systems that are profitable for your specific business. It’s not about what you’re good at right now – it’s about what’s going to make you money.

The Bottom Line

If you’re a new agent, or even if you’ve been in the game for a while, understanding profit is something you can’t afford to put off. It will dictate every decision you make in your business, from how you spend your time to where you invest your money.

When you truly understand profit, you can make clear decisions without hesitation. You’ll know exactly what kind of deals you need to hit your income goals. More importantly, you’ll know when you can afford to invest in your business and when you need to tighten the belt.

Remember, real estate isn’t just about selling houses. It’s about building the life you want. And that starts with knowing your numbers.

So, are you ready to solve the profit puzzle in your business? It’s time to stop playing small and start thinking like the CEO you are. Your dream life is waiting, and it all starts with understanding profit.