Are You Guilty of "Business as Usual" Budgeting?

How many of have been informed that you need to spend the rest of your budget or it's going to be reduced next year? How many times have you blindly hit copy and paste and then added a bit for inflation and an unexpected project, and then called it a day on your budgeting process? If you're walking somewhat blindly through your budgeting process, then you're practicing what we call "business-as-usual budgeting."

What's that? Well, if your typical budgeting practice is to look at last year's numbers and think, "Okay, I spent $X on technology, salaries, support, IT and marketing this year. Let's add 3 percent and call it good to go," then you are, in fact, engaged in business as usual budgeting.

And maybe this is the year you should admit it and reform yourself (and your budget).

Business as Usual Budgeting Is Very Dangerous

If all you're doing is looking at last year's expenditures and adding a little bump to each, then there's a high likelihood that you may be spending money on some things that just don't make sense anymore. You're locking up dollars that could be used for more important items that you may be ignoring.

Brokerages, associations and MLSs are under attack today. There are tons of people that would like to see you simply go away so they could take over the industry.

If you're going to remain a leader for the long haul, you need to think fundamentally EVERY year about where you're spending your money and WHY.

Do You Have a Strategic Plan?

Have you completed a strategic plan this year? I don't mean a business plan. I mean a deep, fundamental look at your business' strengths and weaknesses – opportunities and threats. If not, then how do you know where you're going and what your key priorities are? If you have not done a self examination of your business, then it's going to be VERY difficult to build a benefit-based budget.

Tie Your Budget to Your Strategic Plan

If you have completed a strategic plan, then your budget should line up side by side with the key priorities that you have outlined.

Make sure you set aside budget and resources to pursue every strategic goal with vigor – even those longer-term, less well-defined and scary ones. After all, there is no time like the present to pursue your larger dreams as a company.

Do You Know What Your Customers Think About You and Your Offerings/Programs?

If you haven't asked your agents or customers about the services and benefits they know about, understand and use regularly, then before you make your budget is an ideal time to do it. You can survey them to discover what they know you offer (and what they clearly don't know you offer) and what they like and dislike, then base your budgeting decisions on their responses.

If there's a tool that they simply don't like, or don't find valuable, then it may be time to drop that one in favor of something that will help them succeed. Tools that can help generate more buyer leads, for example, should definitely be considered in your plan for 2018.

Are You Locked Into the WRONG Programs?

Sometimes we get locked into programs that aren't working because we sign onerous, long-term contracts that limit our organization's flexibility. Think about trial periods, one-year contracts or even month-to-month arrangements to give you the room in your budget to drop some programs in favor of newer programs designed to meet the needs of today's REALTORS® and their clients.

The Power of Benefit-Based Budgeting

Think about building a budget from scratch, not using historical norms. If you come at it with a clean slate and open mind, you may prioritize your spending differently. Don't be afraid to think about getting rid of outdated programs that aren't cutting it anymore.

Are You Spending Enough on SERVICE EXCELLENCE?

Real estate organizations are fundamentally service organizations. Brokers provide service to their agents. Agents provide service to their clients. MLSs and associations serve the needs of their members and subscribers.

If you dissect your budget, how much of your energy is being dedicated to supporting, delivering and measuring quality service? While every organization in real estate will SAY they are completely focused on service, only a true self-examination will reveal whether your organization is TRULY committed to providing amazing service. If you're honest with yourself and you admit that it hasn't been a priority in the past, then it needs to be in 2018. Without amazing service, the real estate industry will almost certainly die a painful death. Consumers are simply too savvy today.

For example, sending an MLS service representative to a broker's office to teach them about all of the new features and efforts your organization is putting together on their behalf, demonstrating them — and asking for feedback and input while they're there — is one of the most valuable things you can spend money on as an MLS or association.

Is that a line item on your budget? If it's not, then your journey into benefit-based budgeting might start there — with money set aside this year for new hires or internally promoted positions that will help connect your organization to your members.

Brokerages need to focus on quality service as much as GCI. Take a look at the amazing stories of these 35 brokerages who made service quality a priority. Their businesses are thriving because of their service disciplines!

If you need help getting started on your own Benefit-Based Budgeting program, call me. I will be happy to get you started down a more productive path for your 2018 budgeting process!

To view the original article, visit the WAV Group blog.