Lessons Learned From Tax Season

Lessons Learned From Tax Season

May 11, 2010
If you're like most real estate agents, then you find it difficult to track the finite details of your business - your money, the results of your advertising, client retention, days on market numbers, list-to-sale price ratios. The list is truly endless. But, just like filing your income taxes, tracking is an essential task. Have you learned your lesson from last tax season?

April 15 is a distant memory now, but many of us can still feel the nail-biting tension of getting receipts and forms in order. If there's any time of the year that forces us to face our own shortcomings with a head-on vengeance, it's tax day.

So why am I writing about it now in the middle of May? Because now that it's over, I think we can look back and derive from it some valuable lessons. Not just lessons to prepare us for next April 15, but lessons that will help us every day of the year:

  1. Deadlines

    There's nothing like a deadline to light a fire under your chair. A deadline causes one of two things to happen - massive action or a panic attack. Which do you get?

    Real estate agents are notorious for their procrastination abilities. There's just so much we need to juggle every day that putting things off is a tempting thing to do.

    When you give yourself a deadline, you bypass procrastination by setting in motion a stream of actions. A deadline motivates you because you know the task must be done within a certain period of time. Deadlines can be harsh, but they have an amazing way of helping you to get things done.

    The best way to implement a deadline is to involve another person. It's easy to put something off if there's nobody to remind you that you didn't do something. It's not so easy when a trusted friend calls to say, "So how's Project X going?"

    First, make a list of everything you need to get done in the next six months. Prioritize each by importance. Then, call your friend or mentor and say, "I need you to hold my feet to the fire. I'm going to get Project X done by June 1, Project Y by July 1, and Project Z by August 1. I need someone to report to, just to make sure I do what I say I'm going to do. Will you help me?"

    This is the way to commit yourself to a deadline. Deadlines can be your trustworthy friends or your mortal enemies. By getting them working for you instead of against you, you will accomplish more.

  2. Tracking

    If you're like most real estate agents, then you find it difficult to track the finite details of your business - your money, the results of your advertising, client retention, days on market numbers, list-to-sale price ratios.

    The list is endless.

    But, just like filing your income taxes, tracking is an essential task. You need to know where every penny of your investment is taking you. You need to know the location of each and every money leak in your business so you can minimize outflow and maximize inflow.

  3. Reality Check

    Nothing gives us a greater reality check than that line at the bottom of the tax return that tells us if we owe or if we're getting money back. We've been playing this game our entire lives, hoping that this is the year we will see a refund instead of having to write a check.

    When you think about it, that bottom line is the harsh truth on the scorecard of our businesses. How many years have you stared at that line, wondering how in the world you got there?

    The reality check is that you shouldn't have been surprised at all. If you had kept up with your financials every month instead of waiting until the first part of April to look at them, then you would have known all along how much you owe or how much you're getting back.

    Our finances are what hold us together. We need to pay more attention to what we're doing all year long, not just on tax day.

    Here it is, mid-May. Why not start now by doing a complete self-audit? You have eleven months between now and the next tax day. If you begin to track and register every financial transaction now, there will be no surprises next April 15.

    This will make life so much easier, I guarantee you. Your stress level will be lower. You will have a greater sense of where you stand - no matter what day of the year it is.

    Do a reality check. Look at all your financials every month - and not just business financials, but personal ones too. They are both deeply intertwined.

  4. Organization

    I can't tell you how many times I've visited an agent's office only to find papers strewn everywhere, open records lying about, and a complete sense of disorder. It's no wonder that I'm here, I say to myself.

    Don't let this be you! If you're not organized, then get organized now. When tax time rolls around again, you don't want to be racing around looking for receipts, contracts, and forms.

    For many agents, getting organized can be a grueling experience. Again, it's something that just has to be done. Trust me, once you're organized you will experience a great sense of peace and relief.

    Make sure your system of organization is simple enough for you to follow all year long. Don't get too complicated. Take it in little chunks as opposed to big bites. It will make life just so much easier for you and your business.

Let's start now. Let's promise to each other that next April 15 will be a walk in the park because of the lessons we've learned from this April 15.