How Expense Management Can Help You Survive a Market Shift

Gary Keller’s book “Shift” is a master class in creating long-term real estate success. We’re taking a closer look at the second key tactic from that book today.

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Tactic No. 2 from “Shift” by Gary Keller, which was written during the last market shift, is called “Re-Margin Your Business- Expense Management.” We’re going to take a closer look at this concept today.

Gary says that anybody who expects change to be comfortable hasn't been challenged enough, yet long-term success requires it. What I took from that is that if you want to stay comfortable, long-term success is not possible. Change and comfort normally don’t go together. I often see that being in a place of comfort is one step away from being complacent. If you're comfortable bordering on complacent during a market shift, you are putting yourself at risk.

I hope this is your wake up call to know that staying in a comfortable place with comfortable things can actually be the worst thing that can ever happen to your business and your profit.

The No. 1 determinant of thriving through a shift is lead generation. What we’re going to talk about today is more on the side of surviving. Surviving through a market shift is done through expense management. If the market is shifting faster than you can see or faster than you can catch up with, generating leads can be a solution, but it’s 60 to 90 days away at best. Surviving by expense management is all about making changes right now.

One thing we teach our agents is to always work from a position of profitability. We call it leading with revenue. In fact, Keller Williams became the dominant real estate company during the previous market shift by focusing on this philosophy. You may have noticed that most KW offices, especially when they start out, aren’t fancy or frilly. The goal isn’t comfort here. The goal is to be profitable, to stay open, and to ensure the agents that are part of the company survive and thrive in the business.

As you know, market forces in our current climate are moving faster and faster and it’s becoming harder and harder to become profitable as a real estate agent. One way to look at this is to compare the salesperson mindset to the business-owner mindset. A salesperson’s mindset is to focus on the top line. It’s a revenue focus on how you can make more and get more incoming business. A business-owner mindset, on the other hand, is focused on the bottom line and profitability, as well as what the return is on the investments being made.

"A salesperson mindset is dangerous in a down market."

Up markets allow agents to be sloppy and have a salesperson mindset. This is dangerous in a down market, which will expose the weak, the bad decisions, and the people who are working off of luck and charisma instead of systems, models, and proven tools.

If you’re reading this and realizing that you have some work to do, I promise that you’re not alone. Step one is to determine whether you have a profit and loss statement for your business. If you don’t, please reach out to me so I can help you get started and point you in the right direction to get that going. When you gain clarity on your business and seek reality, you can begin to make business decisions.

Stay tuned for our next blog, which will cover the next shift tactic from Gary Keller’s groundbreaking book. If you have any other questions for me in the meantime, don’t hesitate to reach out and give me a call or send me an email. I look forward to hearing from you soon.

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