There’s nothing like a worldwide crisis to test a business’s resolve and ability to adapt. John Knight examines what great real estate businesses did when the going got tough and what lessons you can adopt at your agency.
I have always advocated that through any crisis, the strong get stronger, and 2020 was no different.
We saw real estate businesses of all shapes and sizes step up to the challenge of a ‘crisis’ and transform something potentially catastrophic into something positive.
When the going got tough last year, this is what we saw the great real estate businesses do.
1. The leaders talked (and then did something about it)
Leadership is one of those terms often misinterpreted or misunderstood.
A big part of leadership for me is when someone can have a conversation, share what they know and facilitate finding a solution to the problem – all without knowing what the answer may be.
We saw many business managers shy away from hard conversations because they didn’t have all the answers.
The great business leaders had discussions regardless, not only sharing their instincts but also listening to what their team had to say.
Importantly, they then did something about it.
2. Human centricity and safety
Great leadership instils a feeling of ‘we have got this’ for the people behind the business.
At the end of the day, all businesses are just a group of humans, processes and systems working together to achieve an outcome for their customers.
I struggle to see how real estate businesses could exist without humans, even with the incredible technology and automation available today.
Great businesses, and the leaders within them, showed empathy in 2020 like they have never shown before.
When necessary, this required breaking the rules to support the specific human they were dealing with.
They took the time to understand what was going on in that team member’s world, rather than treating everyone the same.
As a result, team members felt safe knowing that their leader ‘had their back’.
3. Tough decisions fast
The urgency of the crisis and a whole stack of uncertainty meant there was no time to waste.
Great businesses made tough decisions fast.
Many of our clients were pre-emptively reducing costs to prepare for the unknown.
While this was somewhat driven by fear, it was also a lesson they had learnt from previous crises, when they did not act fast enough.
Often these decisions involved laying off staff, cancelling subscriptions or dramatically changing processes.
Typically though, they knew in their gut that these decisions should have been made a long time ago.
The fear of a crisis just created the urgency to do it now.
4. Recurring revenue rules
Past economic crises have proven the value of having recurring revenue and this crisis has been no different.
After an initial lull, inquiries for rent roll acquisitions have massively spiked since COVID.
Businesses who set about acquiring were clearly strong already with the equity, had an appetite to invest and a good relationship with their bank (if they needed to access their cash).
These businesses are perfect examples of the strong getting stronger during tough times.
As a result of the acquisitions, they were able to enjoy significant reductions in their breakeven point.
5. Got to know their numbers
There is no better time to know your numbers than during an economic crisis and times of unprecedented uncertainty – and, that’s exactly what the great real estate businesses did in 2020.
Everyone talks about knowing their numbers, but few actually do.
The great businesses not only know their numbers, but they now have a greater understanding of their business, and they are clear what the drivers of success look like.
Not only are the business owners more informed, they are undoubtedly making better decisions on the fly.
That’s what you need to do in times of fast-paced change.
Are you and your business stronger now than this time last year?
If so, well done!
If not, lean on the lessons other business owners have learnt and start implementing some of their thinking now.
John Knight is the Managing Director of businessDEPOT, a team of energetic accountants and advisors.