With tougher conditions putting pressure on real estate businesses, Tom Panos has shared the financial disciplines agents can use to protect cash, control costs, and stay positioned for the recovery.
With market conditions shifting, Real Estate Gym founder Tom Panos has urged real estate businesses to take a closer look at their finances, drawing on nearly four decades of experience navigating challenging markets.
“I’ve lived through downturns in my own businesses, and here is what I have learned,” he said.
On Instagram, Panos said that businesses have been shutting their doors across the country at an extraordinary rate at the moment, with owners increasingly just trying to stay afloat.
“Most of my Monday to Friday isn’t being spent talking to sales agents coaching; it’s being spent talking to business owners about survival,” Panos said.
He said that with the property market in a downturn, businesses needed to understand that while they could not control what was coming in, they could control what was going out.
By paying close attention to their expenditure and trimming the fat where possible, Panos said they could give themselves the best chance of survival.
Panos said that to survive a downturn, businesses needed to know their own financial position in detail, from cash inflows and outflows to break-even points and what is left in the bank.
“Not once a year when your accountant tells you, every single week,” he said.
“Turnover is vanity, profit is sanity, cash is king.”
“Nobody ever went broke because they were making healthy profits and keeping cash in the bank.”
Similarly, Panos said that real estate businesses should examine their figures with a fine-tooth comb and cut excess expenditure.
He said it was better to begin the process when they felt the pinch, rather than waiting until they were desperate.
According to Panos, the simplest way to determine excess spending is to ask one question.
“If I were starting this business today, would I spend this money? If it doesn’t produce, gone.”
“A downturn is when you cut out the fat before you are forced to cut out the muscle.”
Additionally, he said it was essential for businesses to protect their cash and their profit.
“Cash buys you time, time gives you options, and options stop you from making desperate decisions.”
He said that while it was important to limit spending where possible, businesses had to be sure they weren’t doing so in a way that would be detrimental to performance.
If something brings in leads, generates revenue, retains clients, or improves productivity, Panos said businesses should be very hesitant to cut it in pursuit of savings.
Panos said that, to survive the downturn, real estate businesses needed to check their egos and do everything they could to ensure they could continue operating.
“In a booming market, everybody talks about growth; in a downturn market, the smartest businesses talk about survival, because your first job isn’t to look successful; it’s to make sure you are still standing when the good times return.”
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