Real estate professionals thrive on human interaction, but as a small business owner, the ability to manage your finances can mean the difference between failure and success. The good news is that you don't need the financial prowess of Suze Orman—you just need to familiarize yourself with some fundamentals of smart business management. The following tips are an excellent start.
Determine Your Return on Investment (ROI): Track your leads—once you identify the source of your most lucrative leads, you can estimate your ROI for each marketing activity. Keep in mind, however, that multiple marketing activities may play a role in capturing one qualified lead. For example, when someone who has received your newsletter for years stumbles across your website, they will probably recognize you and may be more likely to contact you. The website will get all the credit for the lead, but the newsletter played a supporting role as well. In other words, don't discount awareness campaigns that might not show obvious results.
Budget for Marketing: The cliché is as tired as it is true—it takes money to make money. One common rule of thumb is to allocate 10% of your commission to marketing to keep your pipeline of prospects flowing. Of course, those starting out will need to invest some money to build name recognition before they being receiving commissions. James Kimmons, real estate specialist at The Balance, warns “It can be a career death knell to allocate nothing to marketing until you get a commission, as it may be too late by then.”
Find a Great Accountant: Engaging the services of a savvy accountant is a bit like investing in a metal detector when you've got gold nuggets buried in your backyard. Qualified accountants will likely save you more money than they cost, and they'll stand by your side if you're ever audited.
Use Financial Management Software: If you're using Excel spreadsheets to manage your business—or, gasp, a manual ledger—please, come join the rest of us in 2018! Learning anything new can seem overwhelming at first, but once you master a software program like Quickbooks or a cloud-based platform like FreshBooks, you'll never go back. You'll be able to see exactly where your money is going, make adjustments to your budget, access your profits and losses at a glance, and quickly generate reports when filing taxes. This not only simplifies your job, it can simplify your accountant's job as well, potentially saving you money in both deductions and hourly accounting fees.
Participate in Business Training & Mentoring Programs: The Small Business Administration (SBA) and SCORE (a non-profit resource partner of the SBA) offer mentoring and training to the self-employed and small business owners—most of which is inexpensive or free. They've got training courses and online classes on everything from bookkeeping to social media marketing.