8 - Surviving & Thriving in a Market Shift
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Joe Rodriguez:
Hello. My name is Joe Rodriguez. Your listening to Get The Money Right with Todd Butzer. Todd has decades of experience in giving real estate agents the training and resources they need to get their finances on track. In this episode, we'll be discussing something that's very relevant to the changing markets; how to survive and thrive in a shift.
And now here's Todd.
Todd Butzer:
Thanks, Joe. Welcome to episode eight, everybody of Get the Money Right. We're excited to have you with us today. As Joe mentioned in the intro. We are going through what many real estate experts, if you will, would say is a is a shift. And in some parts of the U.S., it is maybe not hit yet as we do this recording. And in other parts of the country, it's already here in a very pronounced way. And really, what a shift means in the market. And we go through them periodically. They go up, the market goes up, the market goes down. Really, what we've been seeing in the real estate market is no news to any of you listening, that we've had a very pronounced seller's market for quite some time and we've had extremely short days on market and extremely aggressive buyers trying to actually get a home. And in many cases, we're competing with dozens of offers, sometimes enormous amounts over list. So there's been this ferocious demand. Sellers could kind of name what they wanted, and that is changing as it changes. Many of you know that when a market shifts, it actually shifts fairly rapidly to a different direction. And what we're going to see most likely is a shift toward what many would call a balanced market or even what could become a pronounced buyer's market. And there's several factors which we're really not going to get into now when a shift occurs in anyone's business, there are some things we can do, and one of the things we can do is nothing. And frankly, I think there's a fair amount of associates in real estate, and it's just from years of talking to them that simply Joe kind of turned their head at this. And I'm not being critical of that. It's just what they do. I think what might feel better for you if you are experiencing a shift as you listen to this, whenever you're listening to this, is you're going to feel better, I believe, if you take action.
All right. So there was a a good friend of mine who a few years ago, this person, she sells luxury, luxury homes and luxury condominiums. And she was experiencing in her particular market a fairly significant shift for a variety of reasons. So we were having a talk and I asked her a very simple question. I said, How much cash do you have on hand? How many months of expenses, so to speak? And I'm going to be truthful. I thought the response would be, you know, not enough or I've only got a month or two, something like that. That's what I was figuring the answer would be. And here's what she said. She said, I've got about 14 months of cash available based on my current expense load. Wow. That gives her some some staying power. Okay. There was a quote attributed to Jack Welch and many of and many of you know who Jack Welch was. He was the CEO of of G.E. for 20 some years. And he widely credited for, you know, bringing on many, many pronounced CEOs around the around the globe under his guidance. And Jack Welch was attributed with a phrase of cash is king. Now, we've all heard that phrase. Many people have said cash is king when we're thinking about business. But the quote I heard that Jack had said at this at this conference was cash is king because it gives leaders time.
So as we start looking at. What moves we can make as the market starts to shift. The very first thing that I would recommend we do is to take a look at your current cash position. How much cash do you have available? And what I'm really looking for here or what I would recommend is let's take the amount of cash that we have and divide it by the monthly expense load, if you will, the expenses that go out every month for our business. Let's take our cash and divide it by our monthly expenses and see how many months of cash we have available right now. That would be the first step. Now, here's a quick little check. Do we know that number? Have we reconciled our accounts so that we truly know the amount of cash that we have on hand? Incidentally, if we don't know that number, that's a signal that there's some other things we we might want to be working on. So it's just a it's just an indicator that we might have some challenges elsewhere in our business if we are not sure how much how much cash we have available. That's the first step. I think the second step would be to literally if you have to just get out a pad of paper and list all your expenses. And for this exercise, I'm going to recommend it. Normally, this podcast has been specifically dealing with your business. I'm going to also recommend for this type of a potential shift in the market or actual shift that could be happening. Where you are is to list all of your business expenses. And then list all of your personal expenses as well. Now. What do you do with those? Well, first of all, how do you do it? And and I'm going to recommend that what you do is you go through your bank statement, your checking account, if you need to, or your credit card statements and find out every little expense or big expense that's leaving any outflow, if you will, that's leaving your your checkbook on a personal basis or on a business basis.
So look at list all the expenses. Now. The technique on this would be to start with the lowest number. And you're just going to play kind of a head game with yourself and you're going to say, Is this absolutely necessary right now? For my business growth and my business thriving in this particular market. Is this necessary? And you're going to you're going to see things. Most of us are going to see things that I call expense creep Joe, which is. Over time, we start to add things into our budgets, so to speak, that we've kind of almost forgotten about, maybe were maybe we're doing some advertising on the back of a book or something. And I don't know, we're just we're just putting money somewhere and we've kind of forgotten about it. Maybe we have a subscription. Maybe you have a music subscription that you don't even use anymore, things like that.
So you're going to go from the bottom up, meaning you're going to look at those smaller expenses and you're going to just ask yourself a very simple question Is this necessary? Do I need this right now for the thriving of my business? Now, I had mentioned just a few minutes ago, take a look at the personal side also, and here's why. Your personal demands, your personal financial needs, put pressure, obviously, on your business. So if you're looking at your personal expenses, you're doing the exact same thing. You're going line by line through it. Now, here's a caution. Be very careful on the business side not to cut essential elements that drive your business. For example, the rent in your office that you're going to, that's where you're most productive. You don't want to cut that. You're in a coaching program. Don't cut coaching. It would be my recommendation because we need that accountability and those ideas and that creativity to thrive in in the in the market we're in.
So watch lead generation, things like that, watch. Cutting things that are essential to your business. I would bet many of you listening today have seen a restaurant that you like to go to. And you noticed over time that the food quality was starting to go down. And they're cutting costs on the product. Because they might be in trouble financially and that and yet you're eating this thing and you're saying this is. This isn't like it used to be. The quality is going down quite a bit. So now you don't go anymore because they've stopped providing that kind of a quality experience for you.
So we don't want to mess with the quality experience as you look at these expenses, but look for things that. Have been added into your world that we may no longer need. Now, on the personal side. You're going to look at it all. You know you're going to look at it at. Just the tip. Are you buying foo foo coffee drinks and are you buying a couple of them a day? Do you have any other habits like that that are expensive every single day, that are really, really adding up? Not to mention you're eating five candy bars with sugar when you do it. Do we need do we need a $7 coffee drink twice a day? I don't know. I'm not judging you. Not at all. I'm just saying that might be an area that we can look at. So we want to get lean. The Bob Dylan had a great line in in his song Forever Young. He said, may you have a strong foundation when the winds of changes shift. So let's let's build the strong foundation. And the strong foundation comes from low demands on our outflow of cash and cash reserves and assets that allow us sustainability. My friend that I told you about, who sells luxury. This is what we talked about. As I said, you have staying power. So go aggressive into the market because you're going to see agents jump from the market because they don't have the staying power.
They don't have the cash as reserves. So you're going to go through these these these expenses and where you need to you're going to make some cuts. Now, Joe, you and I were talking right before we started, and you've actually done this on a personal basis just just recently.
Joe Rodriguez
Yeah. Growing up, my dad would always try to categorize my actions in my activities in two categories. There's a nice to have and there's a need to have. And that's kind of influenced a lot of how I look at things in my life, like, okay, rent, I need to have bills and need to have groceries. I need to have, you know, getting out Starbucks every week. That's a nice to have. It's nice. But if we're struggling, it's not the most important thing. And I've gone through my expenses with my wife and we've kind of just like started to cut away at things that we didn't even know we were still paying for. Like we bought a subscription to some streaming service, like, a year ago, and here we are for that one show. And then here we are a year later and we're still paying for it. It's oh, wow, that show cost us $70 to watch.
We didn't know.
Todd Butzer:
That sounds like my $40 tacos that I bought. But you're right. And so and it's a great exercise for for all of us. So now there are some other steps we can take. You could look at your outflow and and I'm not telling you to do this. I'm just saying in severe times, it requires sometimes severe measures. You may look and you might find that you've got some payment flexibility to maybe a relative, maybe you. I know during the student loan deferment payments, there were many that continued to make payments. And that's that's fine. That's that's their choice. And they get to do that. But there were others that said it helped them substantially during the COVID crisis by being able to defer those payments or not pay those payments for a little while. You might even look at your outflow and say, are there any of those that you could you could step back on? What we're trying to do is reduce outflow and increase our cash positions. All right. So if you have a team. And that team is supported by our staff. And I'm not telling you to lay off staff. I am telling you, though, to take a close look at the staff. I'm going to tell you two or ask you to take a very close look at who we have on the team and are they doing all they can do during this particular shift? So because we have to analyze everything now, again, we don't want to cut essential staff members if they are essential to the building and growth of our if our company. Step number seven, I think we're on is stay current on all your other obligations to avoid penalties and late charges. Stay current. Stay current on your taxes. Like Ashley was talking about the other day when we interviewed Ashley on our interview with the CFP, a certified financial planner. Avoid major financial commitments, avoid making major purchases or or again, anything major that's going to increase your fixed expenses in your business right now, you're going to want to maybe table that for a little bit. And and again, take a look at your lifestyle choices. Take a look at things that every day you're you're consuming or adding to your to your world that maybe, maybe we don't need to.
You could look at your subscriptions. Now, you heard Joe mentioned that he found a subscription that for a streaming service that he purchased like a year ago and forgot all about it. You heard our certified financial planner last week say that she doesn't have any subscription services in her in her life because they add up to such a degree. And there's a lot of other little things. And these might seem for some of you, they might seem over the top. And I'm I'm cool with that. I'll just bring them up to you, though. There was a woman I knew who was a master networker and still is, by the way, and in real estate.
And what she would do when she was first starting in the business, she was so strapped financially that she would arrange a meeting to go have coffee. With you. And she would meet you at the at the coffee shop. She would get there first, though, and sit down. And a lot of times I know the sounds way over the top. But she was really strapped. She would just grab water. And she'd go sit down. And then their guest would come in and just get their own coffee, because that's kind of what we do. And then they sit down and they would have their coffee or in her case, her water. And she she then didn't have to buy two food drinks. She just got some water and they bought their coffee and that was it.
Now, again, for a lot of us, we might say, well, that's kind of over the top. Well, maybe, except that she was extremely strapped and she needed to watch her outflow very, very carefully because the small things turn into the big things and just be creative.
Look for ways to build cash. Oh. All ethical, all moral and all honest, of course. But look for ways to build build your cash. Now, the thing I would just add up here is. This isn't a practice. Just. Just for a shift. This is a practice that we just do running a solid business financially as we just watch. For those expense creeps. And we watch for things like late charges and so on that we really don't need to be incurring. Okay. And then finally, what I would do is I would highly recommend that you go get the book. And this is an expenditure. But go get the book. Shift. By Gary Keller, Jay Pappas and and Dave Jenks. And read that book. Incidentally, if you're listening to this podcast and you're not in real estate, I'd still recommend reading the book because most likely there are quite a bit of strategies in that book that are going to apply to the current business or current industry that you're in today.
Joe Rodriguez:
The only follow up question I would have is a lot of these strategies and practices that we're doing just to survive a shift can feel very stressful and very overwhelming. And how would you respond to people who are just feeling overwhelmed with a sense of hopelessness?
Todd Butzer:
Joe, I'm really glad you brought that up because folks, the biggest shifts in market share. For agents and businesses occur when there's a shift in the market. This isn't a time and I don't want to sound Pollyannish to you, but I do want to sound this is a time of opportunity. It's like my friend that I said had 14 months of cash. That's an enormous opportunity for her because she can stay and thrive and drive in that market while others are or may be stepping out or stepping back or burying their head in the sand a little bit.
This is not a time for doom and gloom. This is a time for saying, look, I've got to get real about this for sure. I've got to make some moves for sure, and I'm going to go for it. No, this is a shifts can be a tremendous opportunity. So to put a ribbon around this, Joe, here's what I'd say. Shifts occur and you can thrive in that shift and survive in that shift, or you can kind of turn your back to it and then let the market do what it will. And I do believe that if you go in and start taking some action steps, look at your cash, look at your outflow of expenses, look at your recordkeeping. By the way, if you're not sure where you are in any of those areas, start looking at your recordkeeping and take a look at those expenditures and see which of these do I absolutely have to have to continue my business to grow and which of these are just kind of a little bit fluff and we're going to make some cuts. And then finally, I would just say, take action right now.
Joe Rodriguez:
That concludes this episode of Get The Money Right. To stay up to date on the latest in Get The Money Right, follow us on social media and be sure to subscribe on your podcast platform of choice. If you want to support the show, please leave a five star review and if you think what we’re sharing is valuable, we encourage you to share with your colleagues. If you are a real estate agent who is getting their money right and want to be a guest on the show, please submit all inquiries to getthemoneyright.podcast@gmail.com. Thank you for listening, and have a wonderful day.
In this episode of Get The Money Right, Todd will be discussing something that is very relevant to our changing markets: How to survive and thrive in a shift.
Shift: How Top Real Estate Agents Tackle Tough Times
by Gary Keller, Jay Papasan, and Dave Jenks
Subscribe to stay tuned for more real-time financial strategies that will improve your real estate business!
If you are a real estate agent that is getting their money right and would like to be featured on the show, please email getthemoneyright.podcast@gmail.com
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Hosted by: Todd Butzer
Produced by: Joe Rodriguez