1. SHIFT Tactic 2: Expense Management
Remargin Your Business
Version: 3
Revision Date: August 2008
Note: For maximum impact all attendees should have their own copy of SHIFT Tactic 2: Expense Management.

2. SHIFT Tactic 2: Expense Management
Main Ideas
Perspective on Expense Management
Measure Your Market
Size Your Business
Cut the Fat
Make the Most of What You Have
The Bottom Line
My Action Plan

3. Perspective on Expense Management
SHIFT Tactic 2: Expense Management
Perspective on Expense Management
Protect Your Margin
When the market shifts, your margin becomes
your biggest issue.
Protecting your margin = saving your business.
It’s time to cut back on expenses.
Define what a margin is and why it’s so important to protect it. Use the examples of how Gary Keller, Martin Bouma, and Pat Hiban worked to cut their expenses.
“Live to Fight Another Day”—explain how cutting expenses will help agents reposition their business, giving them time to adjust their strategies.
“Unless it is nailed down—it goes.”
Gary Keller

4. Perspective on Expense Management (continued)
SHIFT Tactic 2: Expense Management
Perspective on Expense Management (continued)
Who Will Be Affected?
Question
Can I really thrive in a down market?
Answer
No and YES
In the short term, everyone in an affected market will feel the downturn equally. But by cutting expenses fast, anyone can thrive in the long term.
Make the point that while everyone will make less initially, those who react fast can thrive.

5. Perspective on Expense Management (continued)
SHIFT Tactic 2: Expense Management
Perspective on Expense Management (continued)
Get Your Money in Shape
Phenomenal opportunities exist, but you need to be fighting fit if you want to take advantage of them.
Follow these steps . . .
1. Measure your market Size your business Cut the fat Make the most of what you have
Show the sequence for the rest of the course.

6. SHIFT Tactic 2: Expense Management
Measure Your Market
Follow the Pendulum Swing
More inventory
Increased days on market
Fewer pendings
A smaller board
Lower production and/or volume
Fewer leads
Monitor these six market indicators carefully—if they are shifting, start making timely cuts in your expenses.
Be prepared with MLS data that shows pendings and Average Days on Market (ADOM). Ask participants if their own production has decreased or if they have fewer leads.
Explain that they should make cuts which are commensurate with the drop in business.

7. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Watch Your Pipeline
Track your income for the next sixty days.
Calculate how many closings you have and your projected income from those closings.
“A lot of people don’t keep their eye on the ball until they go to the bank and realize their checking account is empty, so they better get to work. But I constantly watch what is 30 or 60 days ahead of me for closed income.”
Martin Bouma
Ann Arbor, Michigan

8. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Watch Your Pipeline
How many closings are in the pipeline for the next two months?
What is your projected income from your closed transactions?
What will be your average monthly income based on your sixty-day projection?
Use sample numbers of your own to demonstrate. Assign this “Stop and Think” exercise as homework for participants.

9. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Size Your Business
It is time to take a cold, hard look at your financial situation.
Once you have a clear picture of your financial situation, it will be easier to see what adjustments should be made.
Look at two broad categories—your personal expenses and your business.
Ask these rhetorical questions:
Do you really know how much commission you need to generate in order to pay yourself a monthly salary that will cover your monthly expenses?
Are all your monthly expenses justifiable?
How much did you spend on your business last year, and how much do you spend now?

10. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Size Your Business
Your Personal Expenses
Your lifestyle may need some adjustments—it’s not the time for extensive vacations, redecorating your home, or buying a new car.
Categorize all your personal expenses so you know exactly where your money is going.
“Adjust your lifestyle costs to just below your projected income. That way you can be pleasantly surprised if you have extra.”
Dave Jenks Keller Williams Realty International

11. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Examine Your Personal Expenses
How much are you spending, and which categories are costing you the most?
Use sample numbers of your own to demonstrate. Assign this “Stop and Think” exercise as homework for participants.

12. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Size Your Business
Your Business
Follow a budget for your business.
What is the best budget to follow? The one you will follow.
Pinpoint how much you are spending.
Complete the P&L statement in the Chart of Accounts from The Millionaire Real Estate Agent.
Download the Excel spreadsheet from kwu.kw.com/expensemanagement.
Review the benefits of having a budget. Assign the P&L statement from The Millionaire Real Estate Agent for homework.

13. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Size Your Business
Find Your Margin
Tally up both your monthly personal and business expenses.
Subtract your personal and business expenses from your monthly income.
Use sample numbers of your own to demonstrate. Assign this “Stop and Think” exercise as homework for participants.

14. Measure Your Market (continued)
SHIFT Tactic 2: Expense Management
Measure Your Market (continued)
Size Your Business
If income is lower than expenses, or if the margin is tight, you must immediately take two steps:
Make cuts in your expenses.
Step up your lead generation.
Use your sample numbers to demonstrate.
Let’s see how to get your margin back under control . . .

15. SHIFT Tactic 2: Expense Management
Cut the Fat
Take Stock and Look for Results
Keep one question uppermost in your mind:
How does this expense help produce a buyer or a seller lead?
If the answer is “I don’t know,” or worse, “It doesn’t,” it is an expense that must be cut.
Agents must keep this question in mind every time they consider a cut.
“For every dollar we invest, we expect a multiple return.”
Pam Kiker Greenwood Village, Colorado

16. Cut the Fat (continued)
SHIFT Tactic 2: Expense Management
Cut the Fat (continued)
Take Stock and Look for Results
Try zero-based budgeting:
Cut every expense back to zero,
Reallocate funds to your justifiable expenses.
Recommend zero-based budgeting.

17. Cut the Fat (continued)
SHIFT Tactic 2: Expense Management
Cut the Fat (continued)
Start Cutting
Snail mail
Office space
Vendor contracts
Print advertising
Office supplies
Go through each of the points on pages Be sure to point out the hidden benefits of each. Share your own suggestions here, and ask participants to add to the list.

18. Cut the Fat (continued)
SHIFT Tactic 2: Expense Management
Cut the Fat (continued)
Find Your Margin
Think of two areas where you can make cuts today.
Think of three more areas where you can commit to making cuts starting next week.
Have participants share what they intend to cut with the rest of the class.

19. Cut the Fat (continued)
SHIFT Tactic 2: Expense Management
Cut the Fat (continued)
The Big Two: Payroll and Lead Generation
The quickest way to cut expenses is to cut back on payroll. However, your staff is an investment. Before dehiring, try to slim down the payroll.
Cut hours.
Combine positions.
Offer a bonus rather than salary increase.
Offer a package.
Listen to what your staff wants.
Go over how to slim down a payroll.

20. Cut the Fat (continued)
SHIFT Tactic 2: Expense Management
Cut the Fat (continued)
The Big Two: Payroll and Lead Generation
It may not be possible to keep everyone on your team. Top grade your employees; let go of those who do not perform to standard. Look first at:
Part-time staff
New staff members
Borderline performers
Go over which staff to cut first.

21. Cut the Fat (continued)
SHIFT Tactic 2: Expense Management
Cut the Fat (continued)
The Big Two: Payroll and Lead Generation
In a shifting market, your lead generation should be focused on prospecting and enhanced by marketing.
Prospecting
Metwork!
Lead generate.
Prospect FSBOs and expireds.
Hold more open houses.
Get involved in the community.
Megas—personally reengage.
Marketing
Market for a direct response.
Drive customers to speak with you, rather than just build your brand.
Follow up your marketing with personal contact.
Make the distinction between prospecting and marketing. Point out the savings that can be realized by focusing more on prospecting. Emphasize that the marketing message should now be aimed at getting a direct response.

22. Cut the Fat (continued)
SHIFT Tactic 2: Expense Management
Cut the Fat (continued)
What Not to Cut
Not everything must go! Think long term—some people and services are worth keeping.
Don’t cut customer service Expenses that impact your reach with customers are more important than ever.
Don’t cut training and coaching This is an investment that will actually help you make money—and can more than pay for itself.
Discuss why it is important not to cut everything.

23. Make the Most of What You Have
SHIFT Tactic 2: Expense Management
Make the Most of What You Have
Use Human Energy
Put your creativity and your energy into working both harder and smarter.
Do the face time transactions yourself.
Get more assistance, not assistants.
Work with preferred partners.
Go through the three points on pages Make sure to point out the hidden benefits.

24. Make the Most of What You Have (continued)
SHIFT Tactic 2: Expense Management
Make the Most of What You Have (continued)
Maximize Your Tools
Leverage your yard signs.
Use your Market Center services.
Discuss both points.

25. Make the Most of What You Have (continued)
SHIFT Tactic 2: Expense Management
Make the Most of What You Have (continued)
Harness KW Technology
Take advantage of eAgentC.
Upload your listings on the KWLS.
Point out the advantages of using KW technology.

26. SHIFT Tactic 2: Expense Management
The Bottom Line
Downtrending markets are a huge opportunity to find better ways to run your business.
The degree to which you need to respond will depend on the conditions in your local market.
Your success will depend on how well you know and understand that market.
Recap the most salient points of the course.
“Question every assumption you have and every dollar you spend as a result.”
Dave Jenks Keller Williams Realty International

27. Productivity Boosters
SHIFT Tactic 2: Expense Management
Productivity Boosters
Track Closing Details
Build Trust Relationships
Use Premade Marketing Content
Automate Your Mailing
The ProManage/TOP PRODUCER contact management system has many tools to boost your productivity.
For more information visit the ProManage site on the KWU Intranet: Click on the eAgentC tab, and then click on ProManage/TOP PRODUCER.

28. SHIFT Tactic 2: Expense Management
My Action Plan
Don’t put away this guide without developing a plan to put what you have learned into action!
Refer to the Action Plan on pages of the guide to assess your strengths and areas for improvement.
Write down steps you will take to improve your skills—complete it, share it, and commit to it!
Direct participants to fill out their Action Plans on pages of the guide. Ask them to share their commitments with the class.

29. Take the other courses in the SHIFT Tactics series!
SHIFT Tactic 2: Expense Management
Take the other courses in the SHIFT Tactics series!
Gaining Mind over Market
Upshifting Your Lead Generation
Seller Pricing Strategies
Seller Staging Strategies
Lead Capture and Conversion
Internet Lead Capture and Conversion
Creating Urgency to Buy
Bulletproofing Transactions
Effective People Leverage 
Short Sales, Foreclosures, and REOs
Financing Solutions

30. SHIFT Tactic 2: Expense Management
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