In the midst of writing my new report titled “How Real Estate Agents Can Eliminate Negative Cash Flow in Their Businesses”, which will be released on Wednesday (January 6), I received a Men’s Journal magazine in the mail. The feature article titled What I learned from My Father, the Grifter – A lifetime of lessons on money from a con man”, by Pat Jordan, summarized various money lessons learned from his father, who was a professional con man.

Here’s an interesting quote from the article:

“I know he would not approve of my mortgage, my car payments, my credit card, my monthly “nut,” which I can sometimes cover, but which often overwhelms me. That’s a gambler’s term – the minimal expense he needs to support his family. My father has always kept his “nut” to a minimum – rented apartments, cheap secondhand cars, no frills. No matter what, he always told me, a man has to meet his “nut.”

Both of these examples reveal the same lesson – keep your fixed monthly expenses to the bare minimum. The lower your “nut,” the more freedom you have in your business. The higher your “nut,” the less freedom you have in your business.

What it really seems to boil down to is:

If your “nut” is lower, you own your business.
If your “nut” is higher, your business owns you.

Or I can put this another way…

If your “nut” is lower, you can work less and enjoy life more.
If your “nut” is higher, you must work more and enjoy life less.

Bottom line – Your “nut” ultimately dictates how much happiness and freedom you’ll have in life.

Another way to think about your “nut” is that for every dollar your business spends, you must generate $5.00 of revenue after factoring taxes and other related expenses. Eliminate the dollar spent and you’ll have to generate $5.00 less in commission income. Aka – less work & fewer homes to sell!

How to Lower Your “Nut”

Let’s analyze some common business expenses your business incurs on a regular basis and see how we can minimize, eliminate or offset them:

1. Real estate licensing/CED/e-boxes/signs
2. Rent/Desk Fees/Commission Splits
3. Advertising
4. Payroll
5. Business Utilities
6. Website
7. Auto-Related Expenses
8. Dues & Subscriptions
9. Business-Related Equipment

In my new report, I detail exactly how to handle these 9 expenses using the 5 strategies listed below:

  1. Eliminate: This is easy to understand. Simply stop using the service or product and eliminate the expense all together. An example from my business was a voice broadcasting service I used to use in my marketing. I would send automatic voice broadcasts to prospects marketing various items for my business. The “Do Not Call” laws virtually eliminated voice broadcasting. This expense became easy to eliminate.
  2. Minimize: Try and reduce your expense. You might be surprised to find that you could get a reduction in many of your expenses simply by asking. Or if you can’t minimize, see if you can use the product or service less and negotiate a lower rate. For example, I have a bookkeeper help out with paying bills, reconciling accounts and preparing financial statements. She works one day a week. I could change her schedule to one day every other week. This would cut this expense in half.
  3. Reversing the Negative Cash Flow: This is a profound concept and can literally change your business dramatically. The idea of reversing cash flow is to generate income specifically to offset the expenses you must incur in your business. I’ll give you a few examples of how to do this later in this report!
  4. Targeted Investing: Investing into an asset that provides you with income to cover a specific expense for your business. For example, let’s assume you pay $100 a month for utilities. Can you invest into something which pays the equivalent of $100 a month or $1,200 a year to offset this expense? There are many stocks available that pay dividends. A few examples would be Nike (pays a quarterly dividend of 27 cents a share) or Campbell’s Soup (pays a quarterly dividend of 27.5 cents a share) and Sysco (pays a quarterly dividend of 25 cents a share).
  5. Restructure Expenses to Pay When Income is Received: The last way to eliminate negative cash flow in your business is to try and restructure or renegotiate expenses so they’re only paid when income is received. Almost as if they are to be deducted from your commissions. This way you don’t have to pay for the expense before getting paid.

NOTE: I’m only going to sell 100 copies of the new Zero Negative Cash Flow report and 57 have already sold to agents who signed up for the pre-release notification list. Watch for an email from me on Wednesday January 6 with the subject line “Eliminate Negative CF NOW!”

    2 replies to "Financial Advice from a Con Man?"

    • backlinks

      You made some Good points there. I did a search on the topic and found most people will agree.

    • Gina Duncan

      Aloha Rob:

      Good twist on some ideas that we often forget in Real Estate. I try to run my business like a business with a written budget plan, etc. Sometimes to make money it is worth it for me to leverage to bookkeepers and assistants otherwise I won’t be able to get out from my desk doing the 12/hr work and generate more leads.
      Happy New Year and much success to you in 2010.

      Aloha, Gina

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