At a recent mastermind meeting with real estate entrepreneurs, I asked the following question:
What Lessons Have You Learned From The Market Bubble and Looming 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 my be.
I thought I would give you a few of the lessons from my notebook in today's post.
1. Credit lines WILL disappear. This includes business and personal credit lines. My lender froze my home equity loan. I'm sure your lender did too. The BIG lesson here is to build large cash reserves. Don't think that your credit lines will be available when you need them. They won't. Or borrow from your credit lines early and put the money in a savings account and make the interest payments.
2. New credit will be hard to obtain. Your credit score won't matter very much. See number one 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. Clients will become very nervous about buying and selling. Understand this shift in their thinking. Change your client communications accordingly.
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. Improve your customer service FAST. When the real estate market was going gang busters, we let our customer service slip. It didn't matter too much. This was a big mistake. Start going above and beyond for your customers. Don't give them any excuse or reason to go elsewhere.
7. Look for ways to offer lower prices services or products. When money becomes tight, your clients will look more to price than anything else. Be prepared to quickly adjust your pricing to remain competitive.
8. Must have multiple income streams. When times are good, take time to create multiple income streams. Try and diversify these income streams so that the loss of one doesn't impact others. Multiple income streams are like a life raft on a sinking boat. They are required and will 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 blog post 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!