RISMedia's Real Estate Magazine

FEB 2019

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/1073841

Contents of this Issue


Page 39 of 110

RISMedia's REAL ESTATE February 2019 35 pendent contractors, so we 1099 them each year." Teams have different approaches to tracking their finances. Many new - er or smaller teams prefer to take on more responsibility themselves. Abbe prefers to take on a por - tion of the financial tracking, as it is manageable for his team of three selling agents and two support staff members. However, he delegates the accounting responsibilities to a professional. Cleve Gaddis, broker/manag - ing partner of Gaddis Partners of RE/MAX Center, believes it is neces- sary to seek professional help with some components to ensure the business stays profitable. "We have a part-time bookkeeper/accountant who also keeps the books for our property management company," says Gaddis. "I had owned several businesses in the past myself, so setting up payroll and other financial systems wasn't really different than other businesses. We used a payroll service for the first few years and now we handle payroll in-house." The real estate industry can be unpredictable at best when it comes to making sales throughout the year; therefore, most teams are committed to monthly business tracking. "It's not a yearly plan; it's a monthly plan. We need to know exactly what we are projecting per month and what we have actually closed," says Collette McDonald, president of Collette McDonald & Associates at RE/MAX Around At - lanta. "My company holds a mini- mum of six months of operating ex- penses so that we can adjust when market conditions fluctuate." Of course, determining what the numbers are is not enough. Once spending and revenue are tracked on a monthly basis, teams must for - mulate budgets and business plans based on the trends they see in their financial history. "We try to use percentages as much as possible in setting budgets. As an example, we want our market - ing, lead generation and conversion costs for buyer clients not to exceed 25 percent of the company dollar," says Gaddis. In addition, adjusting to changes in the market and changes to the team's spending should be part of everyone's business plan. "Real estate is a little bit differ - ent because one year can have very little to do with the next year," says Abbe. We found that we are con - stantly adjusting our budget. In real estate, the budget has to be a 'liv - ing document.'" And with more experience comes increased elasticity in business plan - ning and budgeting. "My budget evolves with the mar - ket," says McDonald. "I know exactly what I have to close in order to pay the bills based on the last four years of expenses. Expenses change, but from experience, I know the range we have to make in order to stay at the level we are at and grow 5 percent per year." Successful Marketing and Profitable ROI Every new marketing product intro- duces a learning curve, not only to use the service, but also to deter - mine how many leads it generates and if those leads turn into profits. The real estate industry heavily relies on lead generation and conversion, and so marketing sources must be analyzed carefully, or business own - ers risk losing money and time—two of the most valuable assets for a real estate team. But how is the value of a product "Selling members are given a percentage of every deal and support members are paid hourly, plus bonuses on each listing and each closing." STEVE ABBE CO-TEAM LEADER ABBE/MULLINNIX DISTINCTIVE PROPERTIES COLDWELL BANKER GLOBAL LUXURY "We try to use percentages as much as possible in setting budgets." CLEVE GADDIS BROKER/MANAGING PARTNER, GADDIS PARTNERS, RE/MAX CENTER "My company holds a minimum of six months of operating expenses so that we can adjust when market conditions fluctuate." COLLETTE MCDONALD PRESIDENT, COLLETTE MCDONALD & ASSOCIATES RE/MAX AROUND ATLANTA

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