- It's time to review monthly business expenses and determine which ones are helping your bottom line.
- People do not want to work with agents who are struggling; they want successful agents.
- Stay away from negativity and prepare for the future, no matter what the economy looks like.
Even though things are good right now, we are due for a recession. The next recession might not be a bad one, and maybe it won’t last long, but we should all be getting ready for it.
Getting through tough times
It sure is easier to sell a home today than it was in 2008, but it’s a little harder to find homes to sell. There seem to be plenty of buyers, and when I meet with homeowners who are interested in selling, most have enough equity in their homes that they won’t have to bring money to the closing.
Even though we are never allowed to say that business is bad, the last recession was a tough one for many agents. As home values went down, I had a few listings I just could not get sold.
We got through it all because we had some reserves and were able to cut back on a few things, like anything we didn’t need. As the recession ended, I was able to pay back our savings account, pay off the house and get a few things repaired or replaced.
Selling real estate and running a business is never easy, but it’s easier now than it was during the housing market crash.
When home prices plummeted, so did commissions, which are often based on a percentage of the sale price. At the same time, expenses and prices in general stayed the same or went up.
National Association of Realtors membership went from 1,357,732 in 2006 to 999,824 in 2012 as the number of real estate licensees declined. I remember seeing a former real estate agent working the front counter at a local store and another waiting tables in a restaurant.
Recession-proofing your business
Recessions are inevitable, and we are due for one. Now is the perfect time to start building up some reserves, maybe cut back on your spending and make sure you have the things you will need to keep your businesses running through the lean times.
It’s those fixed monthly expenses that drag us down during a recession. Now is the time to review monthly business expenses and determine which ones are helping the bottom line and which are just expensive.
Are you using all of those software subscriptions? Could you save money by going paperless? Do you use that fancy office you are paying for?
It doesn’t hurt to review personal and household expenses at the same time. We don’t need to make as much money if we don’t spend as much money. Now, while the checks are coming in, is the perfect time to get rid of debt.
Our industry is hung up on the number of sales a real estate agent has and gross commissions when it’s the bottom line that matters. It’s possible to sell less real estate and make more money by managing expenses and being smarter about what we spend.
Being able to manage money is key in good times and in bad. Have a budget and always put money aside. Money should be set aside each month to pay taxes, insurance, marketing expenses and for long-term savings.
It is super easy to keep cashing those checks that are coming in right now without thinking about a future that might include a slowdown in home sales. If people don’t have jobs, they don’t buy houses.
Accepting the inevitable
Real estate agents don’t get to say that business is bad. Business is always fantastic, and life is always wonderful — even when it isn’t. People do not want to work with agents who are struggling; they want to work with successful agents.
When the next recession comes, don’t beat yourself up if you don’t make your sales goals, but don’t stop setting goals. Keep them high, and always pay your taxes and health insurance.
It’s important to stay away from the negativity and to look for the new opportunities that others miss. Hanging out in the real estate office with a bunch of people who are not making any money and are complaining all the time isn’t a good idea. Stay positive, focused and busy.
There is always another recession, followed by a period of relative prosperity. Is your financial house in order? Can you survive or even thrive during the next recession?