We are back with Real Estate Trainer and Coach Joe Quattrucci. He is sharing more about the real estate market shift with his discussion of Shift Tactic #2: Re-Margin Your Business. Joe and Jacqie Stone presented a series of classes on Beat the Shift at the Keller Williams Arizona Realty market center. Joe is continuing his teaching with this series of blog posts. In Shift Tactic #2, Joe dives into an agent’s relationship with money.
Why be in real estate if you are not profitable? A market shift presents the perfect opportunity to right-size your real estate business costs.
What is Your Relationship With Money?
Did what you hear as you were growing up shape your beliefs around money?
Try this exercise: Fill in the blanks below:
1. Money is the root of all ____________________
2. Money can’t buy you ______________________
3. Money doesn’t grow on ____________________
4. More money, more _______________________
So, what did you place in the blanks? Is this what you heard as you were growing up? Who taught you how to think about money? Something for you to ponder.
How about now–how do you think about money? Is it helpful? Easy to manage? Does it help your business grow?
More importantly…how do you WANT to think about money?
Shift Tactic #2 Helps You Work From a Position of Profitability
Remember, you are responsible for your real estate business–all of it. So, as the market shifts, you must examine your income and expenses. You’re in this business to make money, are you not?
As the real estate market shifts, do this:
Create a Budget That Matches Your Revenue
This is known as “re-margining your business.” You are taking a look at the profit margin in your business to ensure you are running a sustainable enterprise.
Shift Tactic #2: Protect Your Margin
In simple terms, all you need to do is:
Reduce your expenses to match your income plus an acceptable profit margin!
Examine your expenses in detail. Are all of them really necessary? Which of these expenses serve your clients, and which of these expenses serve you? Figure out which expenses you can live without, and those expenses you can reduce.
Expenses to Examine During Shift Tactic #2
The first set of expenses is “Variable.” These expenses often change depending on business or client needs, level of activity, or choices you have made in the past such as subscriptions. Items under variable expenses include:
- Nice to Haves
- Office Supplies
- Unnecessary Work or Projects
The second set of expenses is “Fixed.” These expenses do not often change, and are sometimes difficult to reduce or eliminate. They are often built-in to the base of a business budget. Items under fixed expenses include:
- Advertising Contracts
- Car Payments
- Phone Costs
- Rents and Leases
- Technology Fees
By looking at both variable expenses and fixed expenses, you should see ways that you can re-margin your business. Ultimately, reduce what you can in these expenses, as best as you can.
This re-margining should help you focus on what needs to happen for you to be successful during the market shift.
Make Your Money Smart Again With Shift Tactic #2
“What once worked…no longer works.”
Repeat the line: “What once worked…no longer works.”
End of quote.
There is no arguing here, as the market is shifting. Or we should note the market has shifted, in fact. We are just now catching up. What can you do?
Follow this plan, step by step, and you will find success:
- Reduce expenses
- Do not try to spend your way out of the shift
- Re-establish your profit margin
- Discover what works now
- Put your money behind what is working
Remember: the key to re-margining your business is changing the way you think!
Shift Tactic #2 Exercise
Step 1: Print a copy of your business credit card statement for the last three months.
Step 2: Use a GREEN highlighter to highlight all of the expenses that are critical to your operation. These are the “bones” of your business that you just can’t live without. These you will keep.
Step 3: Use a PINK highlighter to highlight all of the expenses that you know you can cut. This includes any unnecessary expenses that aren’t making a difference in your profit, or other things you’d “like to have” but just don’t need. These you will cancel.
Step 4: Use a YELLOW highlighter to highlight everything else. With these items, you’re going to do one of two things: either cut them, or re-bid them. Re-bidding your expenses means asking yourself the question, “Am I getting the best value/product for the cheapest cost”? As an example, we all have a cell phone bill. When is the last time you called your cell phone provider to see if you’re on the best plan for your needs?
Complete this exercise now, and you won’t regret it. In the best case scenario, you continue making lots of money and simply improve your profit margin. In the worst case scenario, your business income decreases over the next few months, and this exercise could make the difference between surviving…or not.
Real Estate Market Shift Tactic #2: Re-Margin Your Business with Joe Quattrucci
Joe’s insights for Shift Tactic #2: Re-Margin Your Business come from his own experience. As a successful real estate agent himself, Joe practices these principles in his own real estate business. By taking action now to re-margin his business, Joe has set himself up for success as the market shifts.
Contact us to hear more about the many benefits you can expect for your real estate career by joining Keller Williams Arizona Realty. KWAZ is a top Scottsdale real estate brokerage. Our coaching team provides superior training and support, and can help you with a specific coaching program to fit your needs. Do you need assistance taking a look at your real estate business? Contact anyone on our leadership team and we will be glad to speak with you!
Feel free to call right now: 480-767-3000