The October financial numbers have come in and it is not pretty. Many brokers experienced their worst GCI numbers of the year in October. The market is frozen. Low inventory and low transaction volume. Smart brokers are hunkering down for a cold winter.
Reduce Spending
Brokers should have built up their reserves for the winter in the natural cycle of real estate. WAV Group believes that this winter transaction volume will be lower than expected. Cut any and all optional spending and delay any new projects.
Cut Agent Count
Brokers should sit with their low producing agents and make case by case determination around who they keep and who they cut. Remember, cutting a non-productive agent will reduce your SaaS and other variable expenses. They are also likely to go to competitors who will be burdened with their carry costs, weakening their P&L. This will also assure you that leads generated by the firm will go to the top agents with the highest likelihood of conversion.
Back to Basics
Rally your agent base to go back to the basics of the most effective business generation tactics. Get on the phone and call customers. Get on the street and knock on doors. Launch a heavy-up email marketing campaign to engage with customers around the holidays. Strengthen relationships to build a foundation for trades when the market returns to normal. Promote the buying opportunity as this window may not last long. After the mid-term elections we will know more about the likelihood of a strong spring selling season. Population growth remains strong and folks need housing. You cannot just shut off the real estate industry as it is a basic need.
Find Growth Opportunities
If your revenue is down, you can be sure that the revenue is down for small and mid-sized companies more profoundly. These companies are also more likely to suffer losses that accrue to a single owner. Using Terrradatum or TrendGrapics you can quickly look at broker transaction volume and make estimates on broker dollar. Knowing the estimate carry costs of the possible acquisition or merger target, you can highlight opportunities. Remember, many small and mid-sized brokers look like teams at large firms. Have a conversation with the owner and see if she/he wants to cut their losses and pile in with you. Some of the most massive growth of brokers happened during the last downturn. When people are making money, they are not overly excited about exiting their company. When it hurts financially, they become more interested.
Use Franchise Funding Where Available
Many franchise organizations offer programs that will provide you with the financial backing to roll in other brokerages. Speak with your franchise about those opportunities if you are unfamiliar with them. The Realogy program is very helpful.
If you need help shifting, WAV Group offers support. Sometimes having an outside perspective on how to streamline your expenses and find opportunities to recruit companies to merge works out great.
Timely article WavGroup! We already started preparing months ago thanks to having WavGroup as our advisers!
We prepay most everything in the 3rd Quarter and stop spending in the 4th Quarter as an Annual practice. We start spending again in March. We project cash flow on the 15th and end of each month. In the big downturn when the numbers and our cash reserves were low we borrowed on on lines of credit and saved that cash, because banks cancel or reduce lines of credit in a downturn.
This has helped us stay in business for 30 years.