The Three Bucket Method

It’s year-in-review time! Time to look back at your 2023 financials and find out what went well and what went wrong. Step one is getting familiar with your income and expenses.

So you open QuickBooks, run your profit and loss statement, and then what? Or your accountant sends you the P&L and you don’t know what to do with it so it gets filed away, never to be seen again. 

If you’ve never known what to look for on your profit and loss statement, that's ok. I agree there are probably too many lines, the categories are too specific or too vague, and they’re not laid out in an order that makes sense. 

Cut down the confusion by organizing all the categories into three main buckets.

Administrative

These are the things that work behind the scenes to keep the doors open.

For real estate agents, this bucket includes things like licensing, education, insurance, admin staff or contractors, dues, etc.

Marketing

These are the things that bring clients in the door.

Lead generation, business development, marketing, sales, advertising, networking, print materials, direct mail, events, sponsorships.

Fulfillment

These are costs to get your clients to the closing table.

Photography, staging, mileage, transaction coordination, inspection, closing gifts.

Grab your P&L and three different colored highlighters, or use the highlight tool on a pdf, to group your expenses into these three buckets.

Add up the totals for each bucket.

What’s the biggest bucket? Smallest? Are the amounts surprising? Higher or lower than expected?

This simple exercise is one way to start getting familiar with your numbers.

If you're shocked at what you find, let's dig in together! Grab a time on my calendar for a quick chat.