Re-Margin Your Business: Expense Management

When KWU’s top-rated trainer, Jordan Sibley, visits our group to teach us about expense management, it’s in all of our best interest to sit up and listen. Money management is important in any market and any industry. And rest assured, every industry experiences shifts, whether it be due to seasonal cyclical, or economic changes. However, when inflation is up and real estate transactions are down, understanding how to maximize our own profit opportunities is critical.
Jordan shared so much valuable insight that it’s essential you watch this class for yourself. However, read on for four key pieces of advice you can take action on right now.
Change your mindset to change your approach to money
Whether we realize it or not, our mindset has a significant impact on the way we approach our opportunities and challenges around money. So take stock of how you’re feeling before you take on any changes. You’ll have the best outcome if you approach your budget on a day when you’re feeling positive and open to making the changes. On the other hand, a less than stellar day doesn’t set you up for success for making budgetary changes stick. Be accountable for the changes you plan to make and be open to determining a realistic budget that can help you achieve the goals you set.
Project your potential income
Do you know what your pipeline looks like? In other words, do you know what buyer and seller opportunities exist in your business for the next 30, 60, 90, and 120 days? Knowing things like the number of active signed buyer and seller agreements and the potential budgets of these future clients can help us to calculate our upcoming income. This isn’t a calculation unique to real estate. All industries take stock of their prospective business opportunities. In fact, it’s a must-do for any business person. In order to make responsible decisions around your business, you need to know what income to expect, or worse, what income you can’t expect. Projecting your potential income can be a real motivator for financial change.
Examine your expenses
Expenses are an aspect of your financial well-being that need to be checked frequently. In fact, Jordan recommends looking at your expenses on a weekly basis—at the least! To do it correctly, start with your personal expenses and see what you can cut. Then, move to your business expenses. We know this can feel stress-inducing, but the work you put in is well worth it in the long-run. Don’t know where to begin? Categorizing helps. Itemize each personal (and business) expense into A, B, and C categories, where As are essential to have, Bs are nice to have, and Cs are what you can truly live without. Something like a mortgage payment would be placed into an A category, whereas streaming subscriptions would likely be labeled as a C category expense. Then, cut from the B and C categories. Jordan challenges us to cut the B category expenses in a week and the C category expense over the next 48 hours.
Set a realistic budget
Cutting the fat from our personal and business expenses may seem harsh, but it’s not meant to take away your quality of life. Lowering expenses and setting a realistic budget for our personal and business spending is about getting real about what is nice to have and what we can’t live without. This may look different for everybody. Take the time to talk to the people who matter in your life and business to figure out what’s most important to keep in both personally and professionally. Jordan recommends using a spreadsheet that she made available to the class and you can find . This spreadsheet is based upon the Economic Model of The Millionaire Real Estate Agent and incorporates the book’s budget categories as well as Jordan’s personal expense categories as well. As she tells us, it’s essential we know how much it costs to live our lives each and every month so that we can then determine how much business we need to generate to fund it.
Re-margining your business can feel overwhelming, so do the best you can. It’s important to know what you’re spending month-to-date and year-to-date so that you can hold yourself accountable to the spending patterns that can add the most profit to your bottom line. Remember, the purpose of our business is to fund the life we want. This is possible when we maximize our profit opportunities.
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