Floyd Wickman, Founder of The Floyd Wickman Team Ernst & Young, Inc. sponsors a national Entrepreneur of the Year Award, and they are the experts at spotting business people who create jobs. According to them, only 5% of the work force has the temperament suited for living on an entrepreneur’s (commission) income, and only 5% of the 5% thrive on it. Most people need and want the security of a weekly or monthly paycheck.

Forty years of eating, sleeping and drinking this real estate business has taught me that those 5% ratios are pretty darn accurate.

The financial ups and downs of commission sales are not always comfortable for everyone, and for sure not for everyone’s spouse or family. If you’re married to a “paycheck” person, you know exactly what I mean.

People don’t leave this business because showing and selling houses has become boring or unsatisfying. They leave because they are not making enough money. Not just some of the time. Almost all of the time.

Show of hands. How many know someone who currently is not making enough money? See what I mean?

Step one, take my program and we’ll fix that for you. We will show you how to generate the income you need to make it through the down cycles. It takes a goal, a proven plan, good habits and selling skill.

But even when income is greater than expenses, too many real estate salespeople get into financial trouble because they can’t handle temporary prosperity.

When their income is up, they act like it’s always gong to be that way. When income is down, they think they can just sell their way out of anything.

It’s no way to live. And it’s no way to ask your family to live, especially if you want to maintain “home court advantage.”

Here’s a Rule of Thumb. When your income is good, sock some rainy day money away, because nothing lasts. Not the good times and not the bad times.

As you do, set aside a healthy percentage of every commission for a “cash reserve” until you can pay yourself and your family a regular paycheck.

This cash reserve plan will do two things. First, it will level out some of the peaks and valleys for you. In the lean times, you won’t feel like you have to get them all to make ends meet. Pressing too hard and closing too hard out of need pushes business away.

You’ve heard me say, “Don’t go on the appointment to see if you can get it. Go on the appointment to see if you want it.” That’s much tougher to do when you know you need it.

In the flush times, having a cash reserve can help you keep a tighter rein on extravagant spending, that is buying stuff you really don’t need, but you buy anyway just because it’s been so long since you could.

Remember, most commission salespeople are not temperamentally suited to live comfortably on commission income. Admit for a minute that it’s true, and consider living on a salary from a cash reserve account. I can almost guarantee you’ll be happier.

The second benefit is what a cash reserve will do for your family, especially that “paycheck person” you live with – the person who has been saying to you at least every other month, “We don’t have enough money.”

Here’s what you do for them. Ask, “OK, Honey, I have to admit you're right. So this never happens again, please tell me how much is enough? Enough to make you feel comfortable that you can trust me to do my part for our financial future?” Get a number. Make sure it’s their number. Don’t give them your number or this won’t work.

Once you get their number, write a check for that amount out of your cash reserve account and hand it to them every month, and say, “Here you are, Honey. Just enough. I love you.” With, of course, the right voice inflection.

Take the pressure off yourself and simultaneously build the home court advantage with this cash reserve method of handling the ups and downs of commission income.

We have all seen people make the mistake in the past of spending everything they earn. I even had a partner who would spend everything he was going to earn. Take my advice and Don’t Do That! Eventually you will have to pay too high a price.

-Floyd Wickman

I hope you enjoy these articles and blogs as much as I enjoy writing them for you, and I hope you pass them along to your friends and colleagues. See you soon!