Guest Post by Karen Wenner Cooper, Team Owner, Platinum Group Real Estate at Pearson Smith Realty
2020 has been a year for the record books in more ways than one! Like it or not, economic downturns and market fluctuations are inevitable. With the global impact of COVID-19 it would appear that we are rapidly heading in that direction (if not already there in some areas). So how do you prepare now, and what do you do then to ensure your business survives and even thrives?
As a business owner in the real estate space I’ve survived major (and minor) market adjustments, and learned a few things along the way.
Here are my top tips.
Protect Cash Flow/Prepare Your Personal & Business Savings
Start now by building strong reserves in both your personal and business accounts. Ideally, have 1 year worth of living expenses in savings at all times. Save, invest, and pay off debts.
As much as possible, stay lean in your expenses, in good times and bad. Heavy overhead can spell disaster in a market downturn.
Being a business owner or entrepreneur is a tricky business and rarely comes with consistent bi-weekly paychecks. Handling budgets can be a struggle when your income fluctuates so much.
What has worked well for me is having a separate business account that all of my business income is deposit directly into. Then each month I establish my family’s budget (which is more predictable, and more similar each month) and then “pay” myself from my business account for the month (transferring more throughout the month if needed). This way large sums aren’t deposited directly into my personal account and there is less of a likelihood of overspending in the moment.
Also, in addition to providing peace of mind, having strong reserves and cash flow will allow you to take full advantage of an adjusted market, which could mean business model changes and shifting direction. Both of which you can do more confidently when you have money in the bank.
Marketing, Marketing, Marketing
Speaking of marketing, don’t quit marketing yourself or your business when markets change! In fact, if possible, this is the time to ramp up your marketing if you can.
This tends to be the first thing to go for many businesses when the markets and economy starts to adjust, which means that this is the perfect time for you to invest more!
Remember that not all marketing has to be expensive. Grassroots (relationship) marketing efforts can be some of your least expensive, and most effective tools.
Relationships Are Key
The stronger your relationships with your clients, community and database, the better your business will fare when the market adjusts. When markets adjust, consumers are far more likely to choose service providers based on quality and experience, those they can trust to get the job done.
It’s no longer about who is the cheapest. This is the time when consumers are most likely to acknowledge your value as a professional and will seek out people that they trust. Focusing on growing and building your relationships will allow you to be this trusted advisor.
Focus On Core Competencies
Identify the pillars in your business (where your business comes from, where you want it to come from) and focus on these areas. When you know who your ideal client is you are able to be more clear to ensure that you spend less time and money “trying things” vs being strategic.
I see many businesses who are tempted to offer many, many things, but the problem is that sometimes when you are doing many different things, none of them are being done well. Also, the consumer doesn’t really know who you are and what you do. When you are clear, the consumer is clear, and they will know when to call you and why.
Be A Specialist
Find and develop your niche. Avoid being a “jack of all trades, master of none”. The more specialized you are, the more dominant you can be in your business.
When you specialize with a particular type of clientele or location it is easier to become known as the “go to” person or business. When markets and the economy shift, the strongest will survive, and that often means those that have a dominating presence.
Look for a customer need and serve it well. Many businesses and services will retain demand despite market conditions, someone needs to thrive, it might as well be you!
You must be willing to adapt if you will be able to adjust to market conditions. Flexibility and a willingness to embrace change will see you through tough times. Don’t confuse being disciplined with being inflexible (I often have).
You need to be disciplined in your marketing and consistent with how you manage your business, but that doesn’t mean that you can’t do it in a fluid way. Nothing EVER stays the same. It is important to be able to roll with the punches as they say, and adjust to the changes and market conditions.
Market conditions change, consumer needs changes, ways of doing business and market changes. You need to be flexible, learn all you can, and adjust as needed.
Lastly, stay positive. Refuse to participate in a recession, bad market or market adjustment. Money will continue to change hands. Businesses will continue to operate.
The positive aspect of a recession or downtown is that it will help to weed out the excess competition in some markets or business. The dabblers, the commodities (those whose business model is based on being the cheapest), those considering retirement, the part timers will most likely not survive the market shift (either of their own choosing or not). The professionals will stay. Be a professional.
About the Author
Karen Wenner Cooper is the founder of Empowering Women In Real Estate, and principle behind Empower Coaching by Karen Cooper, providing coaching and marketing systems for women in the real estate industry, and owner of the Platinum Group Real Estate team at Pearson Smith Realty. An 18+ year industry veteran, having served many hundreds of clients, her greatest accomplishments and biggest joy are the three boys who call her “mom”.