The military has a term they refer to as a SITREP. It stands for Situation Report.
The Situation Report (SITREP) is a form of status reporting that provides decision-makers and readers a quick understanding of the current situation.
Your business (and personal) financial plan should take a similar approach. It's one thing to set a financial plan or goal at the beginning of the year/quarter or month.
But if we never check our progress against that plan or goal, we have no idea if we are on or off track, often until it's far to late to do anything about it.
- If you don't know your profitability until after your CPA does your taxes, you're doing it wrong.
- If you only look at your total revenue (GCI, etc), and never review your profitability (how much you actually keep), you're doing it wrong.
- If you don't even have someone doing your monthly books for you, you're doing it wrong!
We suggest using our 5 Simple-Numbers below when doing your very own financial SITREP's every month, quarter, and year.
#1 Total Revenue (Check Goal Vs Actual)
#2 Cost of Goods Sold (Check Goal Vs Actual)
#3 Gross Profit (Check Goal Vs Actual)
#4 Expenses (Check Goal Vs Actual)
#5 Net Profit (Check Goal Vs Actual)
I see real estate agents, team leaders, and brokers do a great job of setting a financial plan (especially those that use our free 5 min budget tool), but where I often see them fail is the reviewing of their financials throughout the year to confirm they are on track.
The Two Financial Reports you need to be looking at regularly:
The Income Statement (aka Profit and Loss...P&L) and a Balance Sheet.
Your Income Statement (P&L) will simply show you how much you've generated in revenue, vs how much you've spent. It will break down where all your money came from and where you spent it, entered into specific identifiable categories so you can better make decisions for your business.
Your Monthly Balance Statement will show you all your assets (cash, equipment, etc) minus any liabilities (debt, payroll commitments, etc). It's a snapshot in time of your net worth.
These become your two report cards in your business financials.
Consider sitting down with the decision makers in your business, and personal life ONCE A MONTH to review these two reports. If you're a client of ours, we'll review them with you regularly, and help you identify issues and what to do to fix them. Unlike a general CPA or bookkeeper, we've built and ran a successful real estate team ourselves, so we know how to help you.
You work too hard in your real estate business not to be making the money you deserve. The time is now to get a grip on your financials. Start doing your SITREP's!
Need help? Set up a time to talk with us by booking a Free Financial Consultation HERE.