User Guide - Profit Planner
Contents
1. rate no matter what level of commission generated the Upper and lower thresholds can be any amount providing the highest value for the last upper threshold well exceeds the anticipated settled commission amount for that salesperson Page 18 of 23 TEMPLATE 3a OTHER VARIABLE COSTS COST OFF SETS amp FIXED EXPENSES OTHER VARIABLE COSTS OF SALE 1 Property Adv per Listing This is an estimate of the advertising over run per listing based on historical When exiracting from the previous P amp L Statement equals Advertising Reimbursed less cot of property advertising including online print signs brochures etc ADMIN OR MARKETING FEE PER LISTING The alternative option is to enter one amount covering the total estimated over run 2 Other Provision for other variable costs entered as one amount 4GENERAL OPERATING EXPENSES SALES e g the cost of an internet subscription directly related Wages Administration ex statutory Property Advert after VPA per Listing Gifts for clients per transaction Property Advert after VPA p a sAdmin Fee per listing advertising property 3 Admin Fee per Listing In some jurisdictions it is allowable to off set advertising or administrative costs with an Admin or Marketing fee payable irrespective of a sale Ensure that this fee has not been accounted for in the estimation of advertising over runs per property 4 Gene2. Flat rate OR Structure Type Flat rate 76 hue perna n Rate Minimum p a p a OR 1 Enter O if maximum minimum Structure Type Variable 76 Incentive Structure SECONDARY AFFILIATION FEE NAME Structure Type Flat rate OR Structure Type Flat rate 76 mmu 76 Rate Minimum p a p a OR 1 Enter O if no maximum or minimum Structure Type Variable 76 Incentive Structure agentprofitplanner User Manual v2 1 Page 22 of 23 TEMPLATE 6 SALES ACTIVITY PERFORMANCE INDICATORS Average Commission per transaction Average conversion ratio 7 List to Sell ratio Listing Appointment Success Rate A Appraise to List ratio j No of contacts required to create Listing Opportunity The number of conversations the sales team must have to generate one listing Opportunity These will be people currently known to the business client database and new contacts This indicator is the basis on which marketing and promotional campaigns are developed and implemented including database management Communicating with existing past clients amp Customers and implementing activities that create new enquiry Note that there 15 provision for Sales Activity Performance Indicators within each salespersons individual Salary and Commission Summary page agentprofitplanner User Manual v2 1 Page 23 of 23
3. Ownership Structure Complete the work tab using information collected on TEMPLATE 4 Tab 5 Affiliation Fees Complete the work tab using the information collected on TEMPLATE 5 Click on the arrows to expand or collapse a section CRITICAL NOTE Complete only ONE Structure Type within the Primary and Secondary fee sections Tab 6 Key Performance Targets Using the information collected using TEMPLATE 6 complete the Sales Activity Targets located at the right hand quadrant of the Key Performance Targets page SALES ACTIVITY TARGETS Average Commission perSale Average Conversion Ratio List Sell Listing Appointment Success Rate No of contacts Required to create Listing Opportunity 13 200 95 76 42 10 CONGRATULATIONS you have completed the entry of the necessary data and vou are now ready to examine the status of the business agentprofitplanner User Manual v2 1 Page 11 of 23 Now that all required information has been loaded into the system the first stage of the analysis can be carried out The Calculate buttons on the KEY PERFORMANCE Calculate Break Even Point TARGEIS tab are the engine rooms for agentprofitolanner outputs The Calculate buttons initiate a series of instantaneous calculations updating all the information across each work tab via a series of back end equations Calculate NPT This button shows the change in Net Profit r
4. The manager should understand the reasons for any agentprofitplanner User Manual v2 1 Page 15 of 23 variation and effect corrective action if necessary For example an over spend on property advertising Each quarter all input variables should be checked against actual results and a new analysis conducted to establish amended targets if there is significant variation For example the average Gross Settled Commission achieved during the quarter may be significantly less than projected and will therefore have a direct effect on the key Sales Activity Targets Final Word Target and action focused Managers should understand that the compounding effect of failure to achieve monthly Sales Activity Targets results can have a significant impact on profitability over the year Successful real estate agencies are highly target focused and understand that secret to success is the discipline in consistently carrying out the actions that directly contribute to the achievement of the desired outcomes CONGRATULATIONS on your decision to use agentprofitplanner agentprofitplanner User Manual v2 1 Page 16 of 23 U gt e gt J Z z lt 2 c gt r 2 UJ c ES O 2 gt m e ESTIMATED 75 OF TOTAL SALES 10075 agentprofitplanner User Manual v2 1 Page 17 of 23 NAME Principal or Employed Salesperson P or S SALARY RETAINE
5. the Members Resources section Follow the instructions for entry of the collected information Save each page after data entry Run the Calculation button on the Key Performance Targets once all pages have been updated Calculate the point at which revenue covers all fixed and variable costs and provides you with your desired level of Net Profit Based on the outcome is your business capable of achieving its BEP Copy the BEP version then create and save different scenarios to test the effect on outcomes For example you could reduce fixed expenses change commission structures add or remove salespeople Once you have arrived at a scenario that satisfies the desired Net Profit outcome and is achievable in terms of costs and required GCC for each salesperson then you are ready to develop your Action Plan Page 6 of 23 Prior preparation is the key to the ease and Assemble enjoyment of use of the program PRINT the required information templates on pages 17 to 23 or download the Excel templates from the Members Resources Section and record the required information TEMPLATE 1 Sales Contribution Estimate the proportion of total GCC settled commission that each salesperson will produce based on historical records the last twelve months with adjustments as deemed appropriate TEMPLATE 2 Individual Sales Remuneration Structures Prepare a template for each salesperson detailing current remu
6. 20 of 23 TEMPLATE 4 OWNERSHIP STRUCTURE IPROFIT PROFIT SPLIT PERSONAL 2ADMINISTRATIVE 3TOTAL INCOME SPLIT S PRODUCTION SALARY TO OWNERS S OWNER SALES PRODUCER Automatically Automatically Automatically OWNER NON SALES PRODUCING TOTAL 100 THE NOTION OF ADEQUATE COMPENSATION The calculation of the true Break Even Point of the business should include adequate compensation for the roles owners fulfill in the business This represents the opportunity cost of time soent in one or more of the following roles Salesperson 50 of personally settled gross commission Manager Administration Allowance for the time spent in this role Net Profit A margin of profit return to compensate for the risk taken as a business owner The reality is that many selling agency owners return significantly less income from their sales efforts than their employed salespeople 1 PROFIT SPLIT 76 The percentage of total profit that each owner will receive Must total 10076 2 ADMINISTRATIVE SALARY Allowance for time spent in management administration 3 TOTAL INCOME TO OWNERS For a particular scenario this is the total income receivable by each owner including a proportion of selling commission administration management fee and the specified percentage of net profit agentprofitplanner User Manual v2 1 Page 21 of 23 TEMPLATE 5 AFFILIATION FEES PRIMARY AFFILICATION FEE NAME Structure Type
7. R Salary Allowances Workers Compensation COMMISSION STRUCTURE 2Deduction trom Agents Gross 4Commission Thresholds Debitable Non debitable agentprofitplanner User Manual v2 1 TEMPLATE 2 INDIVIDUAL SALESPERSON REMUNERATION STRUCTURES SALESPERSON PERFORMANCE INDICATORS Average 5 Commission per transaction Average conversion ratio List Sell Listing Appointment Success Rate of contacts required to create Listing Opportunity 1 Debitable or Non debitable In a Debitable structure the Salespersons Net Commission is offset against the amount of the Salary In other words the salesperson receives the higher of the Net Commission or the Salary over the period In a Non Debitable structure the salary is paid over and above the salespersons Net Commission 2 Deduction from Agents Gross The percentage if any deducted from the Agent s Gross to arrive at the Agent s Net upon which the Salespersons Net Commission is calculated 3 Over rider The percentage of total employed salesperson commission less the proportion of settled commission anticipated for the person receiving the over rider Typically used to incentivise a sales manager NOTE Principals commission is excluded from the calculation 4 Commission Thresholds This facility enables the structuring of up to six tiers of commission rates for the salesperson If a salesperson is on a flat
8. agent budgeting and forecasting solution for estate agents User Guide Brief TABLE OF CONTENTS INTRODUCTION Purpose Break Even Point Signing In Program Structure Preparation Saving the Data PROCESS SUMMARY STEP BY STEP 1 Assemble Required Information Enter the Information 2 3 Calculate the Break Even Point 4 Investigate Alternative Scenarios s The Desired Achievable Scenario TEMPLATES Page COO N N O C A A Bh WO CQ na d N 17 TEMPLATE 1 ESTIMATED INDIVIDUAL CONTRIBUTION TO SALES TEMPLATE2 INDIVIDUAL SALESPERSON REMUNERATION STRUCTURES TEMPLATE 3a OTHER VARIABLE COSTS COST OFF SETS amp FIXED EXPENSES TEMPLATE 3b STATUTORY COSTS TEMPLATE 4 OWNERSHIP STRUCTURE TEMPLATE 5 AFFILIATION FEES TEMPLATE 6 SALES ACTIVITY PERFORMANCE INDICATORS agentprofitplanner User Manual v2 1 Page 2 of 23 This manual provides an abridged guide to the use of the agentprofitplannero program A detailed version of this guide including a conceptual overview and expanded discussion on aspects of the program and information input is available in the Members Resource section PAGE SIZE You can adjust the size of the screen by holding down the Ctrl key and pressing the or keys Break Even Point BEP Calculation of the Break Even Point BEP is an important step in the system process and forms the basis of further analysis In simple terms the Bre
9. ak Even Point BEP is calculated as Revenue Variable costs Fixed Costs O The agentprofitplanner philosophy suggests that the calculation of the BEP must include adequate compensation for the agency owner The agency owner may wear one or more of the following hats and should therefore be compensated for these roles within a break even scenario This is an allowance for the opportunity cost of fime spent in each of the roles Role Compensation Business Owner Margin of Net Profit for risk and reward Business Manager A management fee for the time spent in this area Salesperson Selling owners should receive 50 of personally generated sales commissions The program is set up to account for these inputs agentprofitplanner User Manual v2 1 Page 3 of 23 Once you have subscribed and received your password enter the program via the Sign in tab on the top right hand side of the page or simply click the Members tab Once signed in click the Members tab and click the Create Edit Scenario tab Program Structure The program comprises seven work tabs The first six tabs allow for the input of information necessary for the production of the KEY OUTPUT REPORTS contained in the Key Performance Targets and the Budgeted Profit amp Loss tabs Key Analysis Sales Staff Expenses Ownership Affiliation Perfomance Budgeted Description Structure Input Structure Pro
10. esperson Tab 3 Expense Input There are five sections in the Expense Input section Click on the arrows to expand or collapse a section Use the information collected in TEMPLATES 3a and 3b to complete each field Section 1 Other Costs of Sale Property Advertising after VPA per Listing Enter the estimate of the advertising over run per run in the third data entry field Gifts for Clients per Transaction isting or alternatively the total estimated over Property Advertising 200 after VPA per listing 200 Property Advertising after VPA perannum 200 Gifts per transaction 100 Section 2 Administration or Marketing Fee per Listing Enter the amount if applicable Administration or Marketing Fee of the ADMINISTRATION OR MARKETING FEE PER LISTING In addition to VPA many operations charge fee designed to offset costs Section 3 General Operating Expenses Sales Division Enter the fixed semi fixed operational costs each description and amount field is editable with the exception of the Wages Administration description field agentprofitplanner User Manual v2 1 Page 10 of 23 Section 4 Payroll Tax Enter the Payroll tax threshold percentage and wages other than those from the sales division which will already be pre populated in this section Section 5 Statutory Cost Rates Enter the current rates for Superannuation and Workcover Tab 4
11. esulting from any change in expense input while holding the Gross Commission Required field constant Calculate GCC This button shows the change in Gross Commission Required to maintain the specified Net Profit Target for any change in expense input Break Even Point BEP Definition agentprofitolannero defines the BEP as The total revenue required to cover variable and fixed costs PLUS the owner s required margin of Net Profit The User may wish to exclude the margin of Net Profit in the initial calculation and continue with the steps outlined below Step 1 Calculate the Break Even Point 1 Enter the desired amount in the Net Profit Target field Net Profit Target 165 000 2 Click on the Calculate GCC button to run 3 Net Profit Target 96 179 95 the Calculation then click the Save button Total GCC Required To to update the Net Profit Target 76 and all 919 380 Produce Net Profit Target other page calculations CACULATENPI CALCULATEGCC agentprofitplanner User Manual v2 1 Page 12 of 23 Alternatively arrive at a particular Net Profit target as a percentage of gross commission by incrementally changing the Net Profit Target amount until the Net Profit Target 76 matches the desired result NOTE that the percentage field does not change until the page is saved following runni
12. fit amp Loss Targets Once entry of the required information has been completed the user completes Break Even Analysis for the business then commences the process of what if analysis during which various scenarios are tested until the final desired and achievable scenario 15 established Diligent prior collection of required information Business is never so healthy than using the TEMPLATES available at the rear of this when like a chicken it must do a certain amount of scratching guide will maximize the user s value and armis e aes EE on ai enjoyment Henry Ford agentprofitplanner User Manual v2 1 Page 4 of 23 Saving data CRITICAL NOTE Once all the information has been completed on a page save the page When you have completed changes to all pages run either of the Calculation buttons in the Key Performance Targets page then Save the Key Performance Targets page to ensure that all linked work tabs are updated with the new information agentprofitplanner User Manual v2 1 Page 5 of 23 Assemble required information 2 Enter information Calculate Break Even Point Investigate Alternative Scenarios The Desired Achievable Scenario agentprofitplanner User Manual v2 1 Prior preparation 15 the key to the ease and enjoyment of use Record information on the Templates available in Annexure 1 or download the Excel templates available in
13. ivity targets have been established detailed plans for Achievable Scenario the achievement of these outcomes can be developed and implemented Visible Targets and Daily Actions It is desirable for the manager to share the targets established from the analysis with all staff including an explanation of the basis of the calculations Individual performance targets based on the projected contribution of total Gross Settled Commission by each salesperson should be reviewed with each sales team member and a monthly review process established Targets should be displayed prominently in the office and used as the basis for the regular sales meeting during which specific daily actions are set to achieve the key Sales Activity Targets Strategic Objectives Once the financial and sales activity targets have been established for the year ahead then the strategic objectives such as those related to recruitment client management and new business creation can be detailed For example the manager may have identified that the optimal number of sales staff requires the employment of two additional salespeople and implements an action plan to recruit one new salesperson within three months and a second before the end of the sixth month Review amp Adjust Each month the budgeted monthly revenue and expenses scheduled on the Cash Flow Forecast should be compared to actual revenue and expenses from the Profit amp Loss Statement
14. neration structure You will note that there is provision for up to six tiers of commission for businesses that use this type of incentive structure TEMPLATE 3a Other Variable Costs Cost Off sets amp Fixed Expenses This information is extracted from the Profit amp Loss Statement in the previous period Other Variable Costs Cost Off sets ae MOKROG Pee anticipated advertising over runs either as cost listing or total annual allowance In addition to commission and Vendor Administration or Marketing Fee Paid Advertising or as an alternative to part or all of the vendor contribution businesses in some jurisdictions charge an Administration Fee to off set These costs NOTE Ensure that you have not already factored in Administration Fees in your calculation of estimated advertising over runs specified in Section 1 agentprofitplanner User Manual v2 1 Page 7 of 23 Fixed semi fixed operational costs including administrative Fixed Expenses wages rent communication general promotion etc It is recommended that non cash expenses appearing in the Profit amp Loss Statement e g depreciation should not be included in the analysis TEMPLATE 3b Statutory Costs Superannuation Workcover and Payroll Tax information REFER TO YOUR ACCOUNTANT for guidance in this area TEMPLATE 4 Ownership Structure This information is used to produce a summary of total anticipated reven
15. ng of the Calculation To calculate point at which revenue exactly covers fixed and variable costs enter in the Net Profit Target field and run the Calculation saving the page at the completion of the calculation Step 2 Review the Sales Staff Structure page FINANCIAL TARGETS Net Profit Target 5 193 200 Net Profit Target 20 Total GCC Required To Produce Net Profit Target 968 291 FINANCIAL TARGETS Net Profit Target 0 Net Profit Target 0 00 A Total GCC Required To Produce Net Profit Target 644 244 QUESTION Is it likely that each salesperson including the selling Principal s will achieve their contribution to the total GCC Settled Commission YES If the answer is yes continue to Step below NO If the answer is no move forward to the next main section in this guide to Examine Alternative Scenarios Step 3 Review the Budgeted Profit amp Loss page Examine the Budgeted Profit amp Loss Statement to identify any areas in which there may be the need for adjustment If you are happy this is achievable move to Step 4 following Step 4 Review the Ownership Structure page Ensure you are satisfied with the allocation of administrative salaries agentprofitplanner User Manual v2 1 Page 13 of 23 If you are satisfied with the structure Congratulations You have arrived at your desired scenario and you c
16. onsider it achievable Now it is time to develop your Plan of Action detailing the things that need to be done in order to ensure that you achieve the desired financial outcome Go to Step 5 The Desirable Achievable Scenario on page 22 4 Having completed the Break Even Analysis many managers will realize that it is not possible to achieve their Investigate Alternative financial objectives given the current structure of their Scenarios business The choices are a accept that as a business owner you will realize an acceptable return on your input and the risk you take as a business owner b commit to making changes over time that enable you to move the business into the desired state Should you elect to explore alternative scenarios the next stage of the analysis process is to examine alternative structures that may lead the business owner to a more desirable outcome Changes in the following areas will have an impact on profitability e Reduction in operational fixed expenses e Adjusting general marketing expenditure e Adjustments to the sales team structure Performance review Adjusting the size of the sales team Adjusting remuneration structures Improving key indicators e Adjusting other variable cost of sales costs Property advertising Client gifts agentprofitplanner User Manual v2 1 Page 14 of 23 Once the desired set of achievable financial and sales The Desired act
17. ral Operating Expense These are the fixed semi fixed operational expenses such as administration staff wages rent amp outgoings general marketing communication legal and accounting etc It is desirable to remove property management expenses only those expenses that would not be incurred without a property management division 5 Wages Administration Exclude statutory costs such as Superannuation amp Workcover These automatically calculated agentprofitplanner User Manual v2 1 Page 19 of 23 TEMPLATE 3b STATUTORY COSTS For a particular scenario these costs are automatically calculated in the program and appear within the Budgeted Profit amp Loss Statement The calculation of Payroll Tax includes wages paid in any related company If the business operates a property management company associated with the sales division it should include the wages amp commission paid to employees IMPORTANT NOTE Users should consult with their Accountant to ensure the correct information is provided STATUTORY EMPLOYMENT COSTS Superannuation rate Workers compensation rate PAYROLL TAX CALCULATION Payroll Tax Rate 76 Sales amp Administration Wages Incentive POPULI Property Management Wages Incentives estimate 1 The program automatically populates this field with the amount specified in the General Operating Expenses section agentprofitplanner User Manual v2 1 Page
18. ue for each owner including the distribution of profit TEMPLATE 5 Affiliation Fees Information relating to franchise fees or marketing group fees if applicable TEMPLATE 6 Sales Activity Performance Indicators This information is used to calculate the Sales Activity Requirements e g number of Listings for a particular scenario 2 Enter Information This section provides instructions on the entry of information from the Templates into the program CRITICAL NOTE 1 Click the Save button at the bottom of the page after the entry of new data When all pages have been updated run the appropriate Calculate button on the Key Performance Page to ensure linked calculations across all pages are updated the save the Key Performance Page to update all pages Data entry is required in the first six of the seven work tabs the majority of entry occurring in the Sales Staff Structure page CRITICAL NOTE 2 Ensure that the work tabs are completed in order commencing from the left hand side agentprofitplanner User Manual v2 1 Page 8 of 23 Key Budgeted Performance Profit amp Targets Loss Analysis Sales Staff Expenses Ownership Affiliation Description Structure Input Structure Fess Tab 1 Analysis Description Describe the scenario e g Current as at or Proposed 6 salespeople and specify the period for the forecast Save the page Tab 2 Sales Staff Structure The majority of the data entry occ
19. urs in this work tab Each salesperson is listed in the first column By clicking on the salespersons name the user is taken to that salespersons individual Remuneration Structure page Specify the No of selling Principals Owners and the No of Salespeople This will automatically populate column 1 of the page No selling Principals Owners No of employed Sales Producers 5 Using information collected on TEMPLATE 1 Step 2 enter the contribution of total sales commissions anticipated to be generated by each sales producer including the selling Principal if applicable this must total 10076 Step 3 Using information collected on TEMPLATE 2 complete the individual Salary and Commission Summary for each sales producer To access this page for each sales producer click on each name in the SALARY AND COMMISSION SUMMARY first column names will initially show as Principal Se 1 or Salesperson 2 etc once you have specified the number of each in Step 1 Once the page is opened rename in the name of the salesperson then enter the necessary information from the pre prepared TEMPLATE 2 Complete this process for each sales producer agentprofitplanner User Manual v2 1 Page 9 of 23 CRITICIAL NOTE Commission Thresholds For all structures ensure the highest commission threshold well exceeds the anticipated gross commission generated by the sal
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