Category Archives: Budgeting

Cash Flow Pressures

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Now might be the time (certainly in Sydney & Melbourne markets) where you might be discovering how strong the foundations of your Real Estate business are? When markets are strong and revenue plentiful, it can hide a multitude of sins. Got a problem, throw more money at it!

However for many, this may be the first time you’ve experienced such challenges in the real estate industry, especially if you’ve been in business less than 10 years, anyone remember the GFC….? Or more recently if you’re on the West Coast, the down turn that came via the mining sector correction, lots of listings no buyers or new managements, but no one to live in them.

It is now that your business requires strong leadership and financial management to push through the other side. First and foremost ask yourself these questions;

  • What is my businesses break-even point?
    • How many sales per month do I need just to keep the lights on?

  • Is my sales team being productive? Being busy and productive are very different, they’re not productive if they’re not listing and SELLING.

  • How does my cash-flow look for the next 6-12 months?

Two of these are financial, the one that is not, can have the biggest impact on the other two! Knowing your break-even is the barometer of your business. If you’re monitoring the productivity of your agents then you’ll know exactly when you’ve passed the “kept the lights on” moment. Your profit and loss report gives you great insights into where your money goes (and if you’re making any) and the trends of your business, a forecast cash-flow shows you where you are going! If you would like a break-even analysis done on your business or a forecast cash flow, then contact us now.

Now is the time for action, keep listing through Christmas up until the office doors close, if you stop so will your sales team! Remember your December BAS will be due for payment in February and March BAS in April, two big cash flow impacts in a short time frame, be prepared.

Outsourcing is a great way to protect cash during lean times, employing staff that are not busy or efficient is a drain on your business. By outsourcing you pay for only what’s required, by someone who specialises in that area. Think about this, if you had to go to court, you wouldn’t go get a law degree or employ a full-time solicitor, you go get a gun for hire to do that job that needs doing! Find out how we can help here.

EOFY Tip #2 – Finalise Your Budget, Completely!

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Okay, it might sound silly to add the word ‘completely’ to this EOFY tip, we all need to have a budget, but what I am referring to is this, is the budget signed off?

Factors that you need to address when preparing a comprehensive budget include; have you looked at your business costs? Does your budget take into account growth in your existing business and the organic growth available through recruitment and increases in your number of managements?

Have you looked at your businesses available capacity as it sits today, or are you bursting at the seams? All of these known factors should be reviewed and given consideration as you finalise the budget for the next Financial Year.

Finally, once the budget has been finalised and agreed has it must be entered into your accounting software (e.g. MYOB, Quickbooks etc)? If not, make sure it does otherwise it will be forgotten?

The budgeting process is a wonderful exercise to facilitate a regular review from ‘Bottom up’ or ‘Top down’ of all people, events, agreements and investments you have in place in your business. It should play a regular role in the sound management overview for any business owner that wants to achieve success. An old management truism makes the point, “if you aim for nothing, you’ll achieve it with great regularity”. I hope you aim for a little more.

If you don’t know where to start, speak to your accountant or trusted advisor. Our team at Live Business Services is also more than happy to help.

Happy budgeting.