You can increase your profitability by working harder, but have you ever thought of “spending smarter?”
One of the greatest challenges any business faces is how to create and sustain profitability. As an agent, you can increase the number of hours you work or attempt to increase the average sales price of properties you represent. A completely different approach, however, is to rein in your spending. To make more profits from your business, incorporate the tips below.
1. Monitor advertising and results
Agents pour millions of dollars each year into ineffective newspaper, magazine and Web advertising. Does it work? Unless you have a method for tracking results, you will be unable to answer this question. Even when your advertising does work, most offices lose more than 90 percent of the incoming leads because the floor broker is unable to obtain the caller’s contact information. The solution to both problems is an 800 call-capture system. First, you always receive a valid callback number because you paid for the call. Second, because the system uses a series of mailboxes to identify which ad generated the call, you can track where your advertising is working and where you are wasting money.
2. Smart “Snail Mail”
Are you still sending out thousands of “snail mail” postcards each year? If so, have you bothered to see which ones cause people to call you back? Or are you “trying to build your farm”? If you are relying on mailing only, there’s a high probability you are wasting your money. Mailing works best when coupled with face-to-face contact. If you have been using “snail mail” to prospect an area for 12 months or more, how many listings have you obtained from your marketing efforts? If the answer is two or less, you are bleeding profits. Change your campaign, add face-to-face prospecting, or create some other strategy that allows you to connect personally with those individuals on your mailing list. If you are unwilling to do this, stop throwing your money away.
3. Use e-mail marketing whenever possible
Our industry has plenty of excellent e-mail marketing programs from which to choose. E-mail can save you thousands of dollars each year and it allows you to personalize your correspondence as well. While it is difficult to conduct targeted marketing campaigns using traditional mail, e-mail programs tied to an electronic database make it simple. My two favorite resources are “Sharper Agent” and “My Homeowner’s Club.” Type in your contact data, point and click, and you’re ready to go for an entire year.
4. The $1,000 cup of coffee and the $2,500 lunch
My niece jokingly refers to one of the major coffee chains as “four bucks.” If you buy your favorite “four-buck” latte five days a week, 50 weeks a year, your cost will be close to $1,000. The same is true for eating out. A $10-per-day lunch translates into a $2,500 cost to you. These seemingly minor costs add up to big dollars. This is especially true if you are carrying credit card debt. For example, if you place that $3,500 on your credit cards and pay 20 percent interest, the interest charges add an extra $700 in annual fees. You can trim these costs by paying cash for what you purchase. Better yet, brew your own great coffee at home and bring it in a thermos to enjoy all day. Look for less expensive lunch alternatives or minimize the number of days you do eat out.
5. Limit vehicle costs
Do you lease a new car every three years? Would it be wiser to invest in a great car and drive it 100,000 miles or more? Each time you buy a new vehicle, you have sales tax and other assorted “transfer” fees. Check with your accountant to see which option makes the most sense for you. Read “Consumer Reports” to see which cars provide the best value and the cheapest maintenance. Air up your tires, remove all the junk from your car, and have your car serviced regularly to increase miles per gallon and decrease expenses. Another great tip is to shop for the best buys on insurance.
6. Buy quality, and bargain shop
I recently “invested” in two additional pieces for my public speaking wardrobe. I paid full retail, but not before I checked several outlets to see if there was something I liked as well on sale. Long-lasting, quality items are often a better bargain over time than the poorer quality item. Best of all, of course, is finding that great item on sale at a bargain price. Discount membership warehouses and online resources such as eBay can also save you thousands each year on everything from office furniture to special client gifts.
7. Clean your closet and your garage!
In addition to literally attracting more business, cleaning your closet and garage can be a high-profit activity. Specifically, you can take a tax deduction for what you donate to charity. Alternatively, you could also have a garage sale that will turn your junk into cash.
8. Control your bills
Credit cards are easy to abuse. If you must use a card, pay it off each month. Even more importantly, withhold your taxes when you earn the commission rather than scrambling at tax time. A huge number of agents are behind on their estimated tax payments and end up paying interest on their tax bill because they file late. If you are unable to control your desire to spend your entire commission check, have your CPA or some other qualified professional manage the “disbursements” from your business.
Saving money doesn’t have to be onerous. Instead, make it a game. Look for ways to trim costs and watch your money grow and your bills shrink. Enjoy the process and better yet, enjoy the extra money you’ll have in the bank.
Bernice Ross is an owner of Realestatecoach.com and can be reached at bernice@realestatecoach.com.
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