Master Your New Model

Gary Keller’s highlight video on the market shift encourages agents to master your new model and your new math.

But what does this mean?

During a market shift:

Your math no longer works
Lead generation efforts do not prevail
Expenses no longer coincide with income

Ultimately agents must address these issues and look at the new math that their new model business requires.

For more on this specific topic, listen to Gary Keller:

Ways to Master Your New Model

Focusing on expense management and re-margining your business is a lesson taught in Shift Tactic #2.

In the simplest terms, what you need to do is this:

Reduce your real estate business expenses to match the income you are generating

Important: Remember to include a profit margin in your calculations! You run your business to make a profit, right? So keep that in mind as you look at your expenses.

Your New Math

No, this isn’t a “common core horror story” or really anything to do with the 1960’s fad of “new math.” What YOUR new math actually is relates to what your business shows. And what does your business show now? How can you use math to master your new model?

If you are like many agents during a market shift, what was working may no longer working. As a result, you have some expenses built into your business that you should direct to more useful activities.

Variable Expenses

Take a look at your variable expenses. These include a variety of things such as office supplies, postage, upgrades, fees, and subscriptions. Any expense that varies based on the amount of leads or work you are doing is variable. These may be easy to shift over to more productive lead generation activities.

Fixed Expenses

In looking at fixed expenses, you will notice they tend to be longer term. For example, rents and leases usually come with specific terms. Payments on your automobile loan last for a specific timeframe. Fixed fees tend not to change whether you have one lead or 100 leads.

To Master Your New Model, Follow This New Plan

If you’re ready to move forward, say this line: “What once worked…no longer works.” Repeat this mantra a few times. When you have accepted this as a business fact, follow this new plan:

Reduce or eliminate your business expenses
Spending more on advertising will not work so avoid the urge to spend your way out of the shift
Determine what your new profit margin is
Find out what actually works now for your business
Focus your efforts and resources on what is actually working

Look at your business with a critical eye. If you can do this, then you will be able to determine if you are getting the value you need from what you are doing.