Remember we are not in business to be number one, we are in business to make money.  For 3 decades I have watched agent after agent try to get to number one and fail to follow a budget and end up on the streets.  In 2009 it is more crucial than we have ever seen to not only have a budget, but to follow it like a hawk.  I want get into too many details about budgeting to keep this concise, but I highly recommend reading Millionaire Real Estate Agent and Shift a minimum of 5 times so you thoroughly understand this business, how to make models and how to follow the models with detailed budgeting.  This is all a pain to put together, but it is a necessity for survival.

Here are my top 10 budgeting techniques for 2009 with the order changed because of our economic situation.

1) Determine what a listing costs.  This will take some time in finding out labor costs, photography, ads, internet costs, etc.  Next determine what your percentage of success is.  i.e How many listings do you actually close in 2008.  This number will naturally be lower in a bad economy than a good one.  Thus, I would continue to use the bad numbers in budgeting during the good years.  Once you have your cost of a listing, divide it by the percentage of successful closings and you will have you cost per listing.  If you do not know this number off the top of your head, you may have a disaster in front of you in the coming year.

2) Calculate the hours of a listing; This is really a sub item from number one.  This is also a number that you should know off the top of your head.  The industry average is 250 man hours.  Why is this important?  If you have a given number of hours for you and for other personnel, how many listings can you maintain with a given amount of personnel.  Though the average is 250 I personally believe that you should strive to get this under 200 hours to keep your costs down.  Once you figure out the hours involved, you will realize that you may not survive in a market in the price range you are working it.  In many cases there are price ranges that do not make economic sense to run a business, and many agent take years before they figure it out.

3) Calculate the hours of working with a buyer: This is crucial in your success of a business as it is economically better to have listings than buyers; but, there are times that we must eat and must work with more buyers than we planned or budgeted.  This too is a number that you should have on the top of your head.  You should now start to gain a picture of where I am coming from.  There are but so many hours in a year to work with a given amount of people; thus, how are you going to delegate it?  In time, your goal should be to delegate all buyers and listings and focus on management rather than hands on work.  This will only occur when you understand the hours available and how much time you want for you and how much you want for living life.

4) Calculate the success rate of your listing appointments.  Then determine how many closings you get from those listings. Once you have these numbers you can then back track from your income goal to determine how many listings you must take in order to determine how many listing closings you will have.  Most agent just try to get as many listings as possible and have no idea what there ratio of success is; thus, they are always out of control and are in constant stress.

5) Calculate the success rate of your buyer appointments, then detemine how many closings you get from these buyers.  This is even more important to know than #4 as one or two buyers can make or destroy your month!

6) Calculate the percentage of each source of lead that creates a closing from either a buyer or a seller.  Most agent do not have a clue what percentage a given source is and end up focusing way too much time on a source that they hope will be successful but has not proven to be successful.  This number will be different for most agents; but, the most effective sources always has been the same; that source is referrals.  Once you see the success rate of referrals versus any other marketing source you will understand where to focus your time.  For $51mm in sales 78% came from referrals.  I would love to put more time in other avenues, but reducing referral business would be ridiculous as our ultimate goal is to be completely out of the day to day business, and referrals is the easiest means to accomplish this.

7) Determine a market budget that truly works.  Do not develop a marketing budget based on what you think works, but what actually works.  So yes, you will have to track down your previous sales and see what actually does work.  So cutting back in 2009 becomes quite easy.  Cut back with what works least and keep what works best.  We have totally eliminated marketing that was used to impress clients in gaining listings about a year ago.  Oddly, this has actually increased our listing business over last year.   This was the biggest surprise to me as I thought that the public demanded certain mediums.  When we explain that we want to market in areas that work and do not in ares that do not work, our clients understand.  If they do want to be in avenues that we do now participate, the buyer pays.  So yes, I am in magazines and newspapers, but I have not paid a penny in over a year.

8) Find sponsors that will joint venture with you in avenues that will be a win win for all.  I never recommend taking advantage of those who help bring the success that I have.  So I have sponsors for items that make our relationship a win win.  I truly want to help make our sponsors succeed.  This could be marketing on internet sites to marketing on flyers.  Try to get your net marketing costs as close to zero as possible.  I have a marketing budget of around $100k and I pay about half of that.  Perhaps I should do better, but in times like these I am being soft on our sponsors.

9) Have a plan to bring your business down to a small operations within a 30-60 day period.  Have this written down in case of a major disaster, such as our economy moving into a true depression or a major event such as your or your partners or your broker's demise.  This may sound pessimistic, but you have to think smart.  I have watched an agent that had a $60mm year in 06 go bankrupt this year.  To me that makes zero sense.

10) Follow your goals each and every week.  Look at the number of listing presentations, buyer presentations, costs, etc...and make sure that you are on line.  Never ever step away from your budget as that is usually the kiss of death.  If your presentations are falling off line of your goals find a way to get back on line.  Do not accept failure.  Find a means to correct it....as there is a fix.  Either you will figure it out or your competition will.