Change isn’t easy. In fact, sometimes it can be downright unpleasant. However, in uncertain times like these, you’ve got to be willing to be a leader and accept that change — especially when it comes to your team’s financial commitments.
In his best-selling book The 4-Hour Work Week, entrepreneur and author Tim Ferriss wrote that “many a false step was made by standing still.” I have to tell you: I know this to be true. It’s particularly true in times like what we’re experiencing right now.
The past decade or so has been good to so many in real estate. If you look back at most of the podcasts, classes, coaching programs and talks in the industry, you’ll see that they’ve been all about growth, selling more homes and hiring more agents. More, more, more.
I get it. We’re a part of it all. But the reality is that there’s serious financial stress going on behind the scenes for so many people. Maybe even for you, too. If you don’t act now, there might not be a tomorrow for your business. So, here are my three steps for tightening your team’s belt right now.
Step 1: Know what to cut, and take immediate action
I know it’s easy to overspend — especially when times are good.
But do this little exercise this week. Take account of all business expenses over the last 180 days. I mean, every single expense. Hopefully, you run all of your business expenses through a business account, and it’s easily accessible.
On a routine basis, my business partner and I log into our business bank and credit card accounts and literally review every dollar that went out the door the previous week. Notice I didn’t say get out your P&L statement. I want to see the line items for each expense. We ask ourselves, is this out of the ordinary? Is this a one-time charge? Could we live without it? Would production go down if we didn’t have this?
I was talking to a friend of mine, Leo Pareja, a few days ago. Pareja — who is not only the former No. 1 Keller Williams agent in the world, but is also the co-founder and CEO of Remine — is no stranger to recessions. He’s also no stranger to making tough choices. His advice to me (and all agents around the world) was: “Figure out what you need to cut. Then, cut fast, and cut deep.”
Now let’s get out the marker and look for fat to trim.
Step 2: Consider going virtual
Often times a real estate team spends a lot of money on physical space. Especially in up markets, and when the team is growing in size, it’s easy to justify more office space than is needed.
But let’s get real for a moment. Do we really need all that space? Does everyone on the team need a desk? My gut and my experience tell me the answer to that question is no.
If you’re subleasing from your broker, it’s likely that you can get out of your lease with 30 days or less notice. My suggestion is to give it a try. With so many tools out there like Zoom for video conferencing, Slack for messaging and Facebook Workplace, there’s no reason to take up so much space in an office.
Step 3: Communicate with people
Time to have the talk with your people. When I say “your people,” I mean both the people you employ via W-2 and the agents who aren’t technically employed by you.
It’s time to get more from what you have. I suggest you sit down with your team. Be honest and open with them, and tell them what is going on. (By the way, I suggest doing this in good times and tough times.) Don’t leave it to them to guess.
Make sure they know where the business stands and where they stand. If you have team members who aren’t clear on what their job and mission is, now is the time to get crystal clear. If someone isn’t pulling their weight, now is the time for them to fix that or go elsewhere. You can’t afford to have too much staff on payroll or have independent contracts/agents who aren’t giving their full effort.
I was reading a blog post from my friend Brandon Green the other day. Something he wrote stuck out and resonated with me. He wrote: “Entrepreneurs who are moving quickly right now to lead by right-sizing expenses, adjusting their model, changing their offerings will be rewarded and take serious market share in 2021 and beyond.”
I know times are hard right now, but you have to know that this is actually an opportunity for you. It most likely doesn’t feel that way, but it is. If you can and do take these steps, and then take these same steps again and again, what you’ll find is that you’re capable of so much more than you ever realized.
You’ll look back and realize that, not only did you survive the tough times (and trust me, the tough times are coming), but that you have a much more secure and stable businesses, with more market share than you ever knew possible. And here is the kicker — it’s actually these tough times that make that possible, it just isn’t pleasant in the interim.
Kevin Kauffman is an agent with eXp Realty and the host of the Kevin and Fred Show, a podcast for the real estate industry.