Both refinances, and purchases are hot right now, so your business may be booming.
We know this can’t go on forever, but you can make smart business choices now to prepare your business for changing conditions in the future. Here are some ways to prepare for the market to shift.
Keeping your debt low is a great tip for your personal and professional life. If you have business debt, consider using any increased income to pay it down or off, if you can. That lowers your overall expenses, sometimes dramatically, so you can more easily cover costs if your business income drops.
If you also pay off your debt, you will see a benefit because you’ll be able to weather cuts in your income from your business. Long term, you’ll benefit by paying less in interest on your debt and lowering your stress about bringing in enough income from your business.
Increase Your Savings
You already know it’s a good idea to have a fully-stocked emergency fund in your personal life, but you may not have thought about creating these accounts for your business. Just as these funds help you personally, they can offer your business the same advantages.
For your business, the emergency fund should be six months of business expenses. The rainy day fund, which you’ll use to take advantage of opportunities that come up without hitting your everyday cash flow, might be a little harder to plan for. Look at opportunities that have come up in the past that you couldn’t take advantage of, and use the cost of those to help you decide the right amount for your needs.
If you’re earning a lot of income right now, and your emergency fund isn’t fully funded, use that money to provide for your business’s future.
Manage Your Overhead
The lower your expenses, the more agile your business can be when conditions change. As your business grows, your overhead is likely to increase, too.
To decide whether new expenses will be worth it in the long term, look at whether they will help you earn more income or whether they are just something nice to have. For example, an assistant will help free up your time and mental space to serve your borrowers better. But a fancy office with a long-term lease might not help improve your income and can lock you into a large expense that might stretch you too thin.
Find New Ways to Get Business
Even though you might be working at full capacity, you should never stop marketing. If you keep your focus on marketing and business development, you’ll be able to keep your business full when the market slows down. And always be looking at new ways to market yourself and build relationships with both borrowers and mortgage loan originators.
Although the housing market continues to flourish, we know that we are working in a cyclical business. A little preparation now while things are hot will help your business stay strong when it cools.