Cash ebbs and flows are inevitable in the real estate industry, but many of us struggle to manage these highs and lows as well as we could. So what are some strategies to put in place that will lead to better money management in your agency?
1. Setting a budget
Putting a budget in place is crucial to ride out the ups and downs of real estate. It allows you to plan how you will keep things running when cash is tight, and will also provide some great insights into where your money is actually going ‒ so you can press pause on unnecessary outgoings if needed.
Setting up a proper financial tracking system will give you an overall view of your current cash flow at any one time, meaning you can make better, more informed business decisions.
2. Know your agency’s break-even point for better financial goals
If you don’t know what income is required to keep your agency running for a profit, then it’s time to get serious. Because once you can see what income needs to be achieved for day-to-day costs, you’ll gain greater insight into how your business is actually performing. Is it running at a loss? Or will it in six months’ time if you continue the way you are?
Some business owners may prefer to keep their ‘head in the sand’ when it comes to this type of information, but it’s about taking back the power. Understanding this figure is crucial, not just to keep your business afloat, but to also set better growth and financial goals. If you know what you want to achieve, you can work out how long it will take you to get there.
3. Save everything above your target
Many real estate agencies tend to fall into the trap of spending money when they have it, without much thought to the future. But this is dangerous territory.
It is important to set a realistic budget, stick to it, and save any surplus. This is because we can often lose sight of those ‘lulls’ when everything is going well. But it actually makes better financial sense to keep it set aside for quieter periods. Not only does it help you to cover your financial obligations, it also means you can reinvest back into the business.
During downturns, a lot of agencies close ranks ‒ reducing any marketing spending, promotions or advertising. But this is usually the time these aspects are needed most, in order to keep our business in the spotlight, and gain the confidence of potential clients.
