Is Your Business Prepared for a Major Economic Shift?

Welcome back to Real Estate Team Builders. Lars Hedenborg here, the founder of Real Estate B School. And we're in part two of a four part series. So the last podcast episode, if you missed it, was on, you know, what might actually happen in the real estate market. You know, there's the thought that inventory is at a level where, you know, all the homes are going to sell. Right. Even if half the buyers went out of the market because of affordability or hesitation around what might be happening in our economy or any of that stuff, we're still going to be finding real estate. That's one school of thought. The other school of thought is that real estate is cyclical and there are some things going on in our economy in the US and globally that might have a profound effect on the real estate market. And the that was last episode, so I kind of gave my perspective on all of it and the next three parts. So that was part one. Part two, we're going to talk about how to prepare for an economic event or shift. And I'm talking major economic event, how to prepare in your business. So part two is business prepping. Part three, I'm going to talk about how do you personally prepare? So personal prepping. And then part four is where you guys are going to think I am completely crazy because I am going to talk about like prepping, prepping. The thing that most people don't talk about is like, hey, if it all hits the fan, like, what are you doing to prepare your family to be able to perhaps, you know, exist and thrive with, you know, a food supply crisis or energy outages or you can't get clean water or like, I'm talking like apocalypse, end of world type prepping. So that's part four. So stick with me even if you think I'm crazy for even mentioning that, stick with me for part two and part three. If you missed part one, go back one episode. So let's talk about how to prepare your business for an economic shift. If you would only know that things are squirrely with our economy. I feel like, and this is politics aside, if you had your head under a rock, like if you just buried your head in the sand. And that's not a hopefully, actually, I'll say it differently. Hopefully there are some of you that have taken my advice to get out of the 24 hour news cycle. So it's not so much a 24 hour news cycle, but there are just things going on and there should be some resources that you're following to know that we're Going to head towards something that may impact us economically. And I want you to be prepared from a business standpoint. So there's three things I want to cover today in terms of our topic. Number one is to review and cut unproductive expenses. Number two is what's the weekly daily monthly cadence that you need to follow in your business. And then number three is delegating non productive activities. And we're going to talk a little bit about passion versus pay. So let's talk about expense review. This is natural when you go through some tough times. So let's say I got Into Real Estate 2007, 2000, mid-2007, three months after I got into real estate, the market completely dropped out where buyers just said no. It was the full on mortgage crisis and inventory shot straight through the roof starting in June 2007 probably for 12 to 18 months like nobody was buying. And it was just a weird time. And foreclosures were big in our market and all of that stuff. And I continued to not let any of that affect me. I sold more homes every year for like the six, seven years that followed. But what the good times allow you to do that, the bad times don't. The good times allow you to spend money on a bunch of stuff that is not, you're not holding your expenses accountable. When I say you, I'm preaching to me just as much as anyone else. So when the market is going well, you're making more money than you ever have. We have a tendency to look at the money in our account and want to spend it. We have no way of moving money around in a way that you're net seeing and you're storing, you know, hopefully not cash. I think cash is, you know, it's not king. I think cash is trash right now. I'll get to more of that in part four of this series. But you have to be constantly looking at your expenses and this is the exercise you need to do. Print out, hopefully you're running your business expenses through, you know, a business credit card that you're paying off every month just as convenience, not for consumer debt. Print out, you know, three, but really six months worth of business expenses. On the one hand, print it out physically and staple it. And then your personal expenses do the same thing. Actually personal is next week. Sorry. So we're just talking business, but I'm still going to make you do the same thing in your, in your personal. And I want you to go through a line by line. This could be your bank accounts or credit card statements. Go line by line and ask yourself if this expense is producing a 10x return. Pick a number, right? A multiple of the actual expense. We tend to try a bunch of things. We tend to forget that we have all these monthly recurring debits set up on our bank accounts or our credit cards. We tend to just be really loose with our finances when things are going well. So that's number one, is to hold your expenses accountable. Number one a is that have a system for moving money around in your business to account for savings, to account for taxes, to account for, you know, feeding money back into the business in a premeditated pre calculated set of criteria. The system that I use, I've modified it a little bit, but it's based on Mike Michalowicz profit first book where essentially I do it weekly, he does it twice a month. I just look at all the money that came in and I sort of put all that money in different buckets. And as a result, I just systematically am increasing my net worth and I'm always aware of how much money I'm spending in the businesses that I have. So that's number one, be keen on your expenses, do an expenses review and hold your expenses accountable. Number two is the cadence that you follow. So literally I'm talking your calendar here, you know, and it's very, very simple. It's a weekly planning session followed by how your daily cadence happens in the time blocking that ensues in your calendar. And I've done lots of training on this, so I'm trying to, I'm trying to, you know, I don't want to overkill this, but every week you need to decide like what are the key priorities in my business that have to happen this week so that I can achieve my one year plan or you know, my 90 day world one year plan through your vision. I've talked a lot about that on the podcast. But then every day, you know, are you time blocking every day new business development? That's new conversations with buyers and sellers. Are you time blocking for follow up? Are you super diligent about those time blocks when the market shifts and buyers and sellers sort of have that stalemate? Could be three months, could be six months where less homes are transacting. And you want to make sure that you're in the core activities of generating new business. Even if you need more conversations to be able to generate the same amount of business. That time is coming. It has to. Whether it's in 2022 or 2023, the market will go back to a More normal market. We're not just businesses, not just as crazy as it is today. So that's cadence. And be very specific about on a weekly basis. What are the key things that need to happen on a daily basis. Time block your sales activities. But then also the top three things that have to happen every day to feed into those weekly priorities that feed into the quarterly projects that feed into the one year plan. Right. You can go back and listen to different episodes where I talk about the 3193 year vision, one year plan, 90 day world. But when it hits the fan and something happens that impacts things in the real estate market, you want to make sure that you're super diligent about only spending your time on the things that matter. And you have a natural cadence. Right. You don't just all of a sudden not show up for work because stuff is happening in the economy. You need to make sure the cadence guides your activities and your calendar and those time blocks guide your activities. So that's number two. Number three is what I am most passionate about. I think that the thing that made me successful in spite of all the mistakes I made, every mistake I've ever made in building a business and my journey, if you don't know, my journey is I started out as a solo agent in 2007 just before the market shifted. I sold 27 homes in 10 months in that first part year. Then I went to sell 44 homes, hired my first administrator, 58 homes, 118 homes. A buyer agent or two 178 transactions. 248 in 2012. I did one of those 248 transactions, went on to 312 and then 420 or so transactions in 2014. That year, 2014, over 400 homes sold. I was only in the office for 42 days. So fully leveraged business. And I did it via this one thing. And you got to be really keen on this because it's going to take twice the amount of dollar productive activities, meaning new business development and lead follow up to be able to generate the same amount of business if the market shifts in a major way. So delegate to elevate which is a conversation around things that you're passionate about in your business and things that pay well in your business. Showing homes. You could be passionate about it, but it's not a highly paid activity in my market. I can hire a world class showing agent for about 25 bucks an hour. I want to make $1,000 an hour. Or maybe you want to make $250 per hour, right? You need to decide what you want to make per hour. If you want to make $500,000 a year clear after taxes and you want to work a 40 hour workweek in real estate, which was. These were my first declarations, about dollar per hour was 500,000. I want to take home working 2,000 hours, which is 40 hours a week, that's $250 per hour. So. So I got to work on everything in my business getting everything off of my plate that I possibly could that I can get someone else to do for $50 or less per hour. And a series of these delegations and elevations over time where I was just honest with myself. Where am I spending my time? Is it dollar productive? Am I passionate about this activity? Does it pay well? There are things that I wasn't passionate about that didn't pay well, that I was doing and that's insanity. I can get someone for 10 or 12 bucks an hour to run signs around town or pick up checks at attorneys or do all this crazy stuff, right? And so passion versus pay. Every 90 days we do an exercise called delegate. You must delegate to elevate. And it's a passion versus pay. In fact, if you want a copy of that, it's a simple two page document that you put side by side and just put all your activities. If you want to copy that document, just email me@larsealestatebschool.com and I'll send it right over. Those are the three things that I have. Something is coming. I promise you that there is some ripple effect of either global economic stuff or just us based economic stuff that is going to impact the real estate market. And from a business standpoint, you must be diligent about where you spend your money. That was number one. You must be diligent about where you spend your time. That's your cadence, the weekly and daily. And you must be diligent about getting stuff off of your plate that you can't succeed at a high level if you're doing those certain things as a real estate agent. So if you want to have a bigger conversation about your real estate business and look to partner with me personally, personally partner with me where I'm going to help you grow and scale your real estate business and build out multiple streams of income, go to partnerwithrebs.com that's partner with R as in real, E as in estate, B as in business, and S as in school. So partner with Rebs.com and you can see exactly how to partner with me. You can learn more about this opportunity. You can check out some videos you can book directly into my calendar. We'll see you over there. Be good. Much love. And next week is part three of the series, which is how do you prepare personally for what might be coming? And part four is just like outright, like, if it all hits the fan, how are you going to make sure you can sustain yourself and your family and with what might be coming? So we'll talk to you on part three. Much love. Be good.