At a recent mastermind meeting with real estate entrepreneurs, I asked the following question:
What lessons have you learned from the real estate market bubble-burst and this recession?
I was surprised to see that most of the attendees hadn’t learned any lessons this year. I’ve learned many. In fact, I started a little notebook where I detail new lessons as they are delivered to me – which is daily. I’m hoping to keep this notebook handy for the next recession, whenever that may be.
I thought I’d share with you some business lessons I have learned.
1. Credit lines CAN disappear. This includes both business and personal lines of credit. My lender, for example, froze my home equity loan. I’m sure your lender might have, too. The BIG lesson here is that it is necessary to build large cash reserves. Even in good times, don’t be lured into thinking that your credit lines will be available when you need them. They won’t in the worst of times. Maybe borrow from your credit lines when they are available and put the money in a savings account, making the interest payments.
2. New credit will be difficult to access. Your credit score won’t matter much. See No. 1 above.
3. Business opportunities change quickly. You must be proactive and spotting and adapting to these changes. What are larger businesses doing to adapt? Copy their strategies within your business.Where is the money in your marketplace. Pay attention. Follow the money. Be decisive. Change quickly.
4. Your clients will be very nervous about buying and selling. Try to understand their point of view, this shift in their mindset. Alter your client communications in accordance with this shift.
5. Always keep your overhead low. Overhead will take you down very quickly. Don’t take on large office space. Don’t take on too many employees. Don’t take on large fixed expenses within your business. Try and keep your business expenses variable. You can reduce these expenses quickly, if need be.
6. Do what it takes to improve customer service immediately. When the market was moving like gang-busters, agents let their customer service slip. This was a mistake, and one that needs to be corrected now. Go above and beyond for your customers. Do not give them reason to take their business elsewhere.
7. Seek ways to offer lower-priced goods or services. When money is tight, price becomes a bigger consideration to your clients. Be prepared to adjust your pricing so that they have no reason to go elsewhere.
8. You have to have multiple income streams in place. When times are good, prepare for leaner times by creating multiple income streams. Diversify, so that losing one source of income doesn’t mean disaster. Multiple sources of income are like life rafts on a big ship; they can save you from drowning.
9. Cash gives you the ability to lock in massive wealth. You’ve heard the saying – “Cash is King”, haven’t you? It’s true. If you have cash in a down market and the courage to invest it, you’ll build wealth very, very quickly. Homes can be purchased for pennies on the dollar. Stocks can be acquired at rock bottom prices. Buy when others are selling and sell when others are buying.
I hope this article helps you eliminate mistakes in your business. Lessons will continue to be delivered to you, until you finally learn them. Lets learn them the first time around!