Break Even EARLY
How much focus do you give your Break Even Point (BEP)? How many sales does your office need to break even each month? This is a figure you MUST know. Once you know your BEP you can focus on:
- Reducing it – get your BEP as low as possible;
- Reaching it – by the 7th of each month. Break even early.
Some leaders say, “I can’t manage to break even by the 20th, let alone the 7th“, and they are right. This mission is doomed before it starts. It begins the moment they utter those fatal words, “I can’t…”
Many years ago we used to say that office’s should break even by the 20th of the month. We changed it to the 7th. At the time there were very few offices regularly breaking even by the 7th. Those leaders who succeeded at regularly breaking even by the new day did so because they had a leader’s mindset: they focused on breaking even sooner rather than later.
When the ‘goal posts’ were moved, winning leaders, who were already in the habit (and it is a habit) of breaking even by the 20th, reviewed their plans. If it took x amount of effort to reach BEP by the 20th, then 2.5 times the effort gets them to BEP by the 7th.
Winning leaders increased their effort
in the first seven days.
These leaders follow a plan. For them, BEP doesn’t just happen; it is a mission, an expectation. They reach BEP every month because they do the actions that make BEP a certainty.
- They fully expect to reach BEP. For these leaders, there is no, “Wouldn’t it be nice to reach BEP!“. They focus on BEP by the 7th and achieve it.
- They examine the sales their salespeople have ‘cooking’ as the current month comes to a close. If the ‘cookings’ are low, this greatly diminishes the chance of reaching BEP by the 7th of the new month.If you want to reach BEP by the 7th, most of those sales are going to come from last month’s cooking sales, and not from fresh sales. A general rule-of-thumb is to have twice your BEP in cooking sales by the 28th. From those ‘cookings’ will come the sales that should take you to BEP by the 7th of the new month. If winning leaders don’t see enough ‘cookings’, they create more. They put the focus on Substantial Price Reductions. They get their team members to visit their sellers and obtain price reductions.
- They ‘repair’ struggling salespeople. Any team member who struggled the previous month and fell behind target cannot be allowed to do it two months in a row. Winning leaders take remedial action early. It may be time to insist that strugglers follow a plan for the coming month. Winning Ways – Your Path To Mastery contains two plans: the Peak Performance Plan and the Win for Life Plan. Assuming knowledge levels are satisfactory, any struggler will succeed if they follow a winning plan.
- They increase the office’s marketing for new listings AND they monitor salespeople’s personal prospecting levels. You know that if you get your team to reduce stock prices and set buyer appointments, you will make sales. Making sales depletes stock. Winning leaders ensure plenty of seller presentations are taking place so that sold stock will be replaced – long before an emergency occurs.
Sooner, not later
Winning leaders look to next month’s BEP toward the end of the current month. They know that if they want to ‘hit the ground running’ next month, they need to have plenty of cooking sales left over at the end of each month. They also need a constant flow of incoming listings and regular Substantial Price Reductions being obtained by the team.
With this combination in place, the salespeople need only set appointments with qualified buyers and sales are assured.
Breaking even by the 7th of each month is like breaking even in April and having the rest of the year as profit. Too many leaders pay too little attention to their Break Even Points.
The first step toward profit is to break even.
The earlier the better.