Make Financial Plan for Real Estate Business Cycles
Realtors® who have been through previous up and down cycles understand the COVID-19 pandemic isn’t the first change to the industry and it won’t be the last, according to Adorna Carroll, a 35-year Realtor® and nationally known real estate speaker.
“When you understand this business, you have to hedge your bets regarding this business. People who view real estate as a career and profession, plan long term so they’re not caught with their knickers down,” said Carroll, a real estate broker in Connecticut and the president of Dynamic Directions, Inc., an international sales training consulting firm. “Markets can change in a moment and it’s out of our control. What you can do is look at the factors in your business that you can control and learn to pivot when the market changes.”
She continued, “In any business, there are cycles, some are seasonal, some are from circumstances that are beyond our control. Climate changes and weather factors are something we don’t have direct control over, and yet it affects our business seasonally all the time. What is in your control is being financially positioned to weather the storm and how can you proactively work to get your business ready for when things change.”
Carroll advises a few steps:
- Manage your bills. “Have a financial target, manage your expenses, limit your debt exposure and always build savings into your plan. You can make a lot of money, but you have to save a lot of money as well to ensure you have the necessary cash flow to adjust to market cycles. View being a Realtor® as a business,” she said.
- Plan on saving and retirement. “Every time you receive compensation, a portion should go toward your retirement and savings. I trick myself, my savings, mortgages and rents are first, then utilities, insurance, credit. I separate things out. If you have the discipline to do that, when your business takes a pause, you’ll be ready to weather the storm,” Carroll said.
- Make a plan to hit the ground running. “Take time to ‘set the table’ for when your business is back up and running,” she added. Now is the time to set your future business up and invest the time necessary to do so.
“It’s intriguing to me that people don’t stay in contact with their sphere of influence. That’s business 101,” Carroll said. “You still have family, friends and colleagues and you can leverage your contacts to expand your business if you stay in touch with all of these people. This is basic and necessary step to building and leveraging your business by, continuing a relationship with the people you already know and remind them that you aren’t going anywhere. That keeps you at the top of their mind, reminding them that you’re a trusted advisor because you’re keeping in touch.”
“Right now, a lot of your clients are primarily worried about their families and paying their bills. If there are local programs and services that they can take advantage of that you can help them that would be a welcome piece of information that you can provide which will continue to demonstrate your value as that trusted advisor,” she added. “Touch base with members of your sphere virtually, through social media and teleconferencing. Whether you use FaceTime, Zoom, Skype or some other teleconferencing method – that personal approach will be appreciated as you convey your concern for their well-being and articulate that you understand their struggles. What you may realize is that many of the virtual tools that we have relied upon during this time of social distancing will continue to come in handy even after we have migrated through this situation. Our business will forever be impacted and virtual engagement will find a permanent spot in our business toolbox.”
“In the end, what we have to remember is business is not our life. Our family and friends are our priority,” she concluded. “It’s times like this that that comes to the forefront. Business is a function that provides us with an income stream to be able to be with our family and live our lives.”
“Have patience, stay home, enjoy your family, work your business and use this as a wonderful opportunity to reinvent yourself and your business going forward,” she adds.