Few real estate groups managed to achieve incremental business over the past year, and even fewer are willing to claim they beat the GFC (Global Financial Crisis). This article shares the strategy that delivered the Barry Plant Group twelve record months in a row. Story by Mike McCarthy.
In January 2009 the real estate industry was facing great uncertainty. America had sneezed mightily and here in Australia we were all bracing ourselves for the inevitable infection. We believed we were facing a deep recession and while I am a great believer that an economic down cycle provides an excellent opportunity for a good business to grow market share, we had to make sure that each and every one of our Barry Plant Group franchisees was a good business and could take advantage of the predicted economic chaos. We had achieved many years of great growth becoming Melbourne’s largest metropolitan real estate group and successfully expanding our Victorian brand into Queensland. I was determined that we wouldn’t go backwards during the impending Global Financial Crisis, that at the very least we would maintain status quo.
We identified several key areas where we could help our franchisees weather the predicted rough ride. In mid 2008, when it became obvious that there would be considerable fall-out from the US sub-prime crisis, we changed the focus of our training to give our sales team the skills and confidence to thrive in a changing market. The market was now service-based and they were trained to treat a reduced pool of buyers as gold, to build a buyer pipeline and to be selective about the listings they took on. Hard as it was, we advised them to hand back exclusive authorities to vendors who were too difficult and time consuming with unrealistic expectations that were never going to be met. Better to use the time working hard for vendors who were motivated to sell. We ensured that the dialogue with vendors was frequent and forthright and urged the sales consultants to get in front of the vendor at every opportunity to build the relationship. If they could prove they had done everything right, everything possible, then the vendor would realise this and be more willing to accept advice on what is an achievable price.
Another challenge was the confidence of our principals. Many of our franchisees had endured tough times during the recession in the early 90’s. They’d re-built their wealth but were fearful that at more advanced ages they would have to do it again. It was vitally important that all our principals were confident and projected that confidence to keep their teams motivated in the face of a determinedly gloomy media. Therefore we ran sessions with our franchisees to analyse the situation – to understand the threats to our business.
We made a list of all the external factors that were going to impact on their business in the coming credit crunch – interest rates, consumer confidence, unemployment, credit squeeze, stock market falls, first home buyers grant, migration, housing supply, the USA election and even the reputation of our group and the attitudes of our sales teams. We then went through the list, deciding which would have a positive or negative influence on business. Interest rates, group profile, stock market fall (as people were taking their money from the stock market and investing in property) and the first home buyers grant were deemed positives. Internal attitudes and training were either a positive or negative depending on whether an office was approaching these correctly and the rest were considered negative. Credit squeeze was taken out of the mix as Barry Plant Head Office was already addressing the possible drying up of finance by looking to form a liaison with a strong financial group to make funds available.
It was a powerful exercise for our franchisees to engage in as it proved that there was considerable opportunity in the offering and that whilst many factors were outside their influence, if we focused on those that we could control, success would still be ours. You could feel the pessimism drain away. We resolved not to talk to our employees or clients about a “tough market” but rather a “changing market”. We kept pumping the media with good news stories (even though they just wanted bad news), we increased the frequency of our training and every principal pledged to attend the training too – so they were across what was being taught to their teams, and could make sure all the strategies were implemented.
Then the results started coming in. Excitingly, January, February, March and April were record months for us. Independent research from RP Data showed that we had grown by 16% while the overall Victorian real estate market had contracted by 26%. This put us 42% ahead of our competitors. May and June were also records and by this time there were signs that Australia, to all intents and purposes, was going to ride out the GFC with surprisingly minimal impact.
China started ramping up their purchase of our primary resources, consumer confidence bounced and with it the real estate market. We have just finalised our December 2009 figures and yes, it was another record. We achieved twelve record months in a row both for value of sales and number of properties sold. The value of sales – nearly $4.4 billion – was up 35.1% on 2008 and 21.8% on 2007 while the number of properties sold – 10,441 in total – was up 21.8% on 2008 and 15.1% on 2007. We’ve grown market share and our franchisees have positioned their businesses to take full advantage of today’s healthy market.
While 2010 will no doubt throw up some new challenges, we’ll continue to revisit our strategies and strive to improve every aspect of our franchise offering. By doing this I’m optimistic that the Barry Plant Group will continue to grow and continue to re-write the record books.
Mike McCarthy, CEO and Director, The Barry Plant Group, has an extensive career in marketing and franchise management. In 2001 he joined the Barry Plant network as their GM, then CEO and became a partner in the group in 2006. During this time, he has seen the network expand by 100%, whilst franchisee revenues have nearly tripled in the same period.