There’s so much noise out there on how to navigate a challenging market. This April, let Inman help you cut through the clutter to make smart business decisions in real time. All month long, we’re taking it Back to Basics and finding out how real estate pros are evolving their systems and investing personally and professionally to drive growth.
Many brokerage owners are feeling a rapidly shifting market. Units are down, agents are nervous, and profits are suddenly thin (or non-existent). The ability to pivot, make tough decisions, and stay laser-focused on driving profit could mean the difference between survival or bankruptcy.
The truth is, you can fight back against a challenging market, but it’s unlikely you can avoid it. Here are some actionable strategies every brokerage owner must know to protect and grow what you’ve worked so hard to build.
1. Cash is like oxygen. When you’re out, you’re dead
When units and revenue are dropping at a rate faster than you can cut expenses, it could be burdening your cash reserves. It may be time to stop all distributions and retain as much profit as you can (if there is any). You may even consider opening a line of credit with the bank or expanding your existing line.
Do you have partners or investors? Nobody wants to talk about a capital call, but you might want to consider broaching the topic now, given your position.
2. Remember to cut expenses, now and later
You may not be able to cut expenses as fast as your revenue is diving but you do have to cut them now. No expense is too sacred, too small or too important to ignore. Everything gets looked at with a microscope. You have to cut skin, and you may have to cut flesh, but you are trying to avoid cutting bone. Try the Green, Yellow, Red highlighting exercise on your list of expenses, and see how much you can cut.
- Red: Cut Immediately
- Yellow: Continue Evaluating
- Green: Absolutely Must Stay
Ask these 3 questions about every expense:
- Does it generate income?
- Does it reduce expenses elsewhere?
- Does it enhance the broker experience?
You must answer “yes” to at least one question to remain, but No. 3 alone is not enough to remain. If the expense answers all three “yes,” then it automatically stays. Angie Mykel, a broker-owner out of Seattle, Washington, has mastered this method across multiple industries to hold every expense dollar accountable and create lean and mean profitable businesses including her real estate brokerage.
Remember, cutting expenses is like stretching a rubber band. Once you’ve stretched it once, you can go back and stretch it a little more without breaking, then a little more, and still some more. Make cutting expenses a regular habit until you get where you need to be.
Consider bringing in a trusted third party who doesn’t have the same emotion attached to the expenses as you might to help look at the full picture through a clear lens.
There’s a great podcast episode on “Think Like a CEO” discussing this topic. Check it out: Master Your New Model and Math
3. Drive both fast revenue and slow revenue — and drive them hard
You likely need more revenue right now. In a declining market, recruiting productive agents to your brokerage is the fastest way to get it. If you aren’t actively recruiting agents on a daily basis, you are hiding from your best solution. You need to get out from behind your desk and get after it.
After all, if you believe in what you are doing, why aren’t you shouting the opportunity from the rooftops to as many agents as you can?
Trust me when I say there will be plenty of agents seeking guidance in this challenging market. Everyone is a genius when the tide is high in the market, but now that the tide has gone out, some have been exposed as skinny dippers without a swimsuit on. They are much more interested in listening to you now that you can help them “cover-up.”
Now is also the time to get your existing agents into training. It’s the best way to help them develop or relearn the skills that will help them survive this market. Fundamental, skills-based training is their lifeline and, therefore, yours to drive revenue.
It’s a win-win scenario, and as the owner, it’s solely your responsibility to drive. Don’t act like a Peacetime CEO and suggest they take training. Act like a Wartime CEO and drag them by the collar if necessary to the training that will save their career — and your revenue.
Download the Peacetime v. Wartime CEO summary.
Whatever strategies you choose to enact in your brokerage, choose something. Because doing nothing in this challenging market is no longer an option. As owners, it’s our duty to not just keep the ship afloat, but steer the ship in the right direction. Onward!
Chase Williams is the co-founder of NW Wealthbuilders and growth leader for the Keller Williams Northwest Region. Connect with him on Facebook or LinkedIn.
