1. Learning the Finances Behind Runnng a Succesful Business!
Budget Workshop
Learning the Finances
Behind Runnng a Succesful
Business!

2. Keller Williams Culture
Turn cell phones off - if it rings, be prepared to donate to KW Cares
Respect your classmates, no side bars
All questions are important; parking lot questions if outside of the scope of the training will be answered outside of class in the interest of covering all the material.
Respect the time constraints of the class

3. The Starting Point
Are you an agent at a company? Or, do you own a BUSINESS?
What are you working towards?
What does your business look like?
Begin with the end in mind The Checkbook and Capitalization
Capitalization is - The sum of a corporation's stock, long-term debt and retained earnings. Also known as "invested capital".
Are you just working for a paycheck or are you the owner of a business?
How do you know you are the owner? What are your responsibilities from an income and expense perspective?
Do you have an idea of what you are working towards? If the answer is a paycheck, you may need to relook at what your doing.
What does your business look like today? What do you expect next year?
Real Estate is a business, and all businesses have to begin somewhere.
What was your beginning? (remember we are talking about money)
Capitalization - The sum of a corporation's stock, long-term debt and retained earnings. Also known as "invested capital".
This is the initial investment to your check book, and sets your initial equity in your business. This is the amount you deposit to your operating account to fund your business.

4. Setting-up Your Business
Operating account, Reserve account, Retirement account! The BIG THREE
Operating Account - what is it used for? what do you deposit? why? When do transfer?
Reserve Account - why do you need reserves?
Retirement Account - SEP vs IRA
You have three basic accounts to plan for: Operating, Reserve, and Retirement Accounts.
How many of these accounts do you have set-up for your business? Remember, your business is different than your personal accounts.
The operations account is where you do what -? Deposit incoming commissions, pay all expenses, including salary, taxes, reserves, retirement etc… buying Starbucks is not a business expense in most instances, use your personal accounts for living. If you mix the accounts you cannot determine your profit!
The reserve account is for when you do not have a closing. We all know RE is not consistent month to month, but your expenses exist every month. By budgeting for reserves you can plan how to handle ups and downs in your business.
The retirement account is for your future. There are multiple vehicles for retirement planning, as a business owner you should understand them all.
SEP VS IRA (Roth) What is the maximum amount you can place in these instruments to defer taxes?

5. Revenue Budget What is your revenue budget?
How many sales? How many listings?
Is the goal realistic? Does it meet basic expense requirements?
Have you established your revenue budget ? What does it look like?
How many buyers, how many listings do you need?
How to calculate:
What is a realistic conversion rate on each side. Are you in a position that you have to make every appointment into a closed sale, is that realistic?
Plan to succeed!

6. Expense Budget What are your expenses? Fixed cost vs Variable cost
Red Light vs Green Light
What is a fixed cost?
Office dues, MLS, Supra, accounting, office supplies, office equipment, phone,
What are controllable expenses?
Marketing!!!!
Lead with Revenue!
Keep your fixed costs as low as possible

7. Fixed Costs These are the costs you incur for being in business:
MLS Dues; Office Dues; Licenses; Vehicle Operations; Accounting; Communications; Office Supplies; Legal Expenses; Designation Expenses; Domain Names(?); Salaries
What is your monthly fixed cost? $$$$

8. Variable Costs What you have to have vs what you want!
Variable costs should have a strategy and plan.
Marketing
Domain Names; Mailers; Contact Programs; Websites; Print; Flyers; Signage; Associations
Can marketing programs create a fixed cost?
Do you know the difference?
What you have to have vs what you want!

9. Red Light vs Green Light
How do you detrmine when you can spend money?
What should be your target expenses?
Source
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Totals
Print $ $ $
Seminars
Radio
Internet and Mailers
Mailers
Flyers
Total Marketing
Training
Accounting
Auto Maintenance
Client Entertainment
Computer Support
Dues & Associations
Fuel
Legal
Networking
Office Equipment
Office Supples
Phone Expense
Shipping
Travel
Total Expenses
Month total

10. Did you make a profit What is a P/L? How do you set one up?
How often should you run one?

11. What is Net Worth What is an Assest? What is a liability?
What is considered equity?
Do you know your net worth?