I am just putting my finishing  touches on my budget for 2008, and early on in the process I got a serious wake up call. Yes the last two years have been difficult in Michigan, yes I haven't quite hit my targets the last two years, but what became a crystal reality was that if I ran 2008 like I did 2006, and 2007 I was going to be out of business come 2009!

   A couple of choices came to mind, I haven't looked at the classifieds for a job in 15 years and that wasn't a real consideration (although I do plan on going into my third career in another few years) but I decided long ago that I would never be chased out of Real Estate, I love this business, and it has been good to me - When it is time to leave I will leave it on my terms - so what to do? It was simple, I rolled up my sleeves and got serious about what I had to do to assure my self success in a down market. It didn't mean just writing down that I will  do more sales next year. I looked at the expense side of my budget and made hard choices about where the fat was. 

   By the time the cutting was done I have removed $56,000  from my expense line for next year. It is easy to give a number it means nothing without perspective  and where those cuts came from. I will only gross about 130,000k this year so cutting 56,000 in expenses will go al long long way towards making next year a much better year even if I don't sell one home more than I did this year. What did I actually do to make those cuts? I will be happy to share with you in hopes that you can experience the same joy I am feeling now over having made some decisions that should have been made awhile ago.

    1.) I took 2 homes I renovated anI had for sale (one for 18 months one for 1 year) and I have put an ad in the paper to rent them out. Rented they will go from being a loss of 26,000 a year to a net gain of 3 or 4 thousand. (as of this writing I rented the second home out tonight YEAH!)

   2.) I cut my home magazine advertising down (again) from a picture and a small ad for each home to just a 1/3 of a page ad telling about my great website and how everyone can see 24 high def color pictures of all 70 of my listings at my website www.SouthwestMichigan.helpusell.com and then I list all 70 of my homes, mls number price, location, bedrooms and baths. That is it just a list of my homes and directing people to my website. I will go from 4 pages on average in the home magazine per issue to 1 - a savings of 14,500 for next year

  3.) I advertise a 5 x 7 list of my open houses in the newspaper every Sunday, I am going to have a local lender put a 2 inch tag on the bottom and advertise what ever he wants and charge him the cost of 1/2 the ad. What does he get out of it? My appreciation and his message attached to a list of homes that people actually look at every month. This idea will save me 2,500 per year.

4.) My office is located in the only enclosed shopping mall in my area, it receives about 8 million visitors a year (considering our town is only about 65,000) thats a lot of feet. So I am going to rent out a piece of my storefront window to a lender and help with my rent to the tune of about another 1,500 savings a year

5.) IDX Referrals: I receive many requests to see homes from people off of my IDX (other Realtors listings) many in cities that are too far away for us to want to work. For next year I have implemented a process where my office manager contacts these folks and asks them if they would like the Agent who has the home listed to show it to them? (I know, I know - this is a whole different discussion) If yes I get their information pass it on to the listing agent and ask for a referral fee. If they say no I am happy to pass them on to a buyer agent if they are a qualified buyer. Either way if it is a true interest with a real buyer I will get a referral by just asking a few questions and passing it on instead of ignoring these leads that are out of my area. conservative expected revenue for next year 10 referrals with expected referral fee of $1,200 each, or a net gain of $12,000

6.) Adjusted my phone system relying entirely on vonage (on line - Internet phone system) and cell phone savings approximately $1,000 per year.

7.) Cut out miscellaneous print advertising I do every year (creative ads I write more to make me feel good than actually generating any business) savings approx $3,000 per year.

8.) Enforce policy of only one trip to a home (for listing) Owners come to me after that. Savings in gas, time, and paperwork (when they come to me I only print what I need and don't print anything unnecessary, saving ink and paper. Savings per year approximately $1,000

there were a couple of more misc. smaller things but you get the idea. Easy to have a business plan and talk about what might happen but these are real costs to me this year that I have Promised myself I will not have next year and have already put the wheels in motion to make everything I have just listed in this blog happen.

It is impossible to explain the free feeling I am experiencing knowing I am going to have a good year next year even if I sell LESS than I sold this year - I wish you all a great 2008 and to ensure It you might try the same exercise that has assured me a great 2008 - look at the expense side of your ledger and try to see where the fat really is!