But what happens when they don’t? What happens when the consistent and predictable business you have built becomes anything but that thanks to outside factors such as, I don’t know, a global pandemic? Then what?
All of a sudden your numbers are all kinds of messed up. Leads are harder to come by, and calls are more difficult to convert into appointments. Generally speaking, people are less motivated. On top of that, the business you have and will convert is even more difficult to get to the closing table than it was just a month or two ago. Business that was largely done in-person and at the residences of strangers is currently limited by shelter-in-place policies. These are unprecedented times.
At that point, consistent and predictable isn’t enough. Your business needs to be impenetrable. It has to be built to withstand the storm. We find ourselves in a position where our businesses and the people involved need to be as resilient as they have ever been.
Let me backtrack for a second: It’s going to be ok. Things are kind of a mess now, but we really don’t know how the market is going to respond. We could all be pleasantly surprised. The best thing we can do right now is to stay positive, work hard and love our neighbors.
Regardless, we need to build an impenetrable business for today and tomorrow. The following questions will help you to evaluate the resilience of your business.
Do I have enough cash reserves to ride out a dramatic change in the market?
On a recent economic policy briefing held by the Hoover Institution at Stanford University, a key point that they drove home was that the stabilizing effect of having cash on hand is largely undervalued. Small businesses are failing right now if they don’t have enough cash on hand. In an era where we have access to unprecedented amounts of information and technology, we overlook this simple safety net.
This is a problem on the individual level as well. The median savings account balance in the U.S. is $4,960. Stated differently, 50 percent of American households have less than $5,000 saved and readily available to them. That won’t get you far if you lose your job.
A sound goal is to have three-to-six months of personal and business expenses saved. If you’re not there, it’s time to adjust your budget to make cash reserves a higher priority in both your business and personal life.
Having cash reserves gives you freedom and flexibility. It positions you to analyze your decisions and make sound investments into your business rather than being forced to cut back. You may still choose to do so, but you save yourself from having to decide between maintaining your pay-per-click budget and putting dinner on the table.
Can my business, as well as the individuals involved, adapt to the challenges of a new market and industry environment?
Flexibility and adaptability are not traits the average agent holds in high regard even if they say they got into the industry because they think no two days are the same. They want their business to be one size fits all. They want every lead and transaction to fit into a nice, neat box. Many agents conduct their business in a certain fashion simply because that is the way it has always been done.
For your business to be impenetrable, it takes flexibility. On a normal day, this looks like a willingness to make minor course corrections and find quick solutions to problems. Consistently evaluate what is working and what isn’t, then adjust accordingly.
Then there are those days, weeks and months that are anything but normal. What happens when you can’t perform some of the foundational tasks that seemingly make your business and the industry go, like the ability to meet in person or show property? What happens when people are allowing any number of different fears to drive their decisions? What do you do then?
You have two options: you can wait until the market adjusts to fit your business or you can adapt your business to fit the current reality of the industry. You can try to ride it out and hope it returns to “business as usual” so you can do the same old things the same old way, or you can find a new way to do business.
When it became clear that COVID-19 was going to dramatically impact our industry for an extended period (how extended we still don’t know), we got to work. Our team began to tinker with our phone scripts and our approach to phone prospecting as a whole. We produced and re-designed marketing materials to be able to effectively conduct initial consultations over video calls. We developed strategies to generate scarcity and urgency for our listings in this unique market, on top of figuring out the best way to show properties virtually.
None of this happens without the right people in place. It’s ingrained in our team that we are not going to blend in, fall in or phone it in. We pride ourselves on being different and innovative, so when this challenge presented itself, a number of us dove in head-first to figure out how we can adapt. Adaptability and flexibility should be a trait you look for as you’re bringing staff and agents on board. It shouldn’t take a global pandemic for you to innovate.
Perhaps the most exciting part of this forced adaptation is that we may just develop and implement strategies that add value to our company and clients well after the craziness of COVID-19 passes. There is little you can’t overcome and grow from when you and your team are committed to adapting and innovating. Make lemonade.
Do I have diversity in my lead flow?
On our team, we advocate for having a three-pillared business. Each of our lead types falls into one of three categories:
Team-generated business (inbound marketing, radio ads, referrals, etc.).
Agent-generated business using team leads and resources (home search leads, home valuation leads, open houses, expireds, FSBOs, etc.).
Sphere of influence.
You probably consider certain lead sources to be your “sweet spot.” You convert them at a high level, and they consistently produce ideal clients. Other sources may contribute a couple of deals a year and still represent a solid return on investment. Those are great to have too. They all work together to build a consistent and healthy pipeline.
Playing in multiple different pools and getting exposure through a variety of sources provides stability that being all-in on one source doesn’t. What happens if that one source goes away? What happens if your reputation is injured and your sphere doesn’t produce? What happens if radio ads or pay-per-click become too expensive to justify? What happens if Zillow hoards all their leads? You just never know.
Those challenges will sting if they come to pass regardless. If you’re prepared, you can turn the knob up on one source when you’re forced to turn the knob down on another. If our team is having trouble getting quality pay-per-click leads, we can invest more in radio. If home search leads are not yielding the sellers we want, we can put more effort into home valuation leads, expireds, and FSBOs. To be able to make those changes, you need multiple knobs.
Do I have multiple people who can step into different roles if asked to do so?
Agents come and go. Many are not known for their loyalty to their team or brokerage. Much of that is the fault of the industry, but brokers and team leads deserve their share of the blame for not providing value to their agents. Regardless of the reason, agents move and quit a lot. The end.
To guard against the inevitability of agents moving on from your team and leaving vacancies, we need to hire and recruit well. That means we bring on talented individuals who can contribute in a number of different ways.
The easiest way to protect against this is to hire multiple people to hold the same role for every role where it makes sense. On our team, we specialize by having marketing specialists and buyer specialists. We obviously want multiple of each because having one and losing one means our entire business either comes to a screeching halt or requires a dramatic restructuring. Neither are ideal scenarios. Having just two can feel like you’re playing with fire.
Sometimes it just means placing a premium on versatility in hiring. Hire talented people who can adapt. This positions you to transition a person to a new role entirely if necessary. We have had team members slide from one position to another seamlessly when we have lost somebody.
Other times, thanks to the versatility of our team members, we have reallocated responsibilities to the person best equipped to handle the vacated responsibilities. Don’t put yourself in a position where someone is absolutely indispensable because no one else can do what they do.
With that said, there is nothing wrong with having really talented people who love running in their lane and do it at a high level. If you have some of those folks, create an experience within your team to where that person can’t fathom being anywhere else.
The season we find ourselves in will test your resilience, but you can come out of it stronger. Consider these questions while we are still likely on the front-end of a challenging season. For more thoughts on building an impenetrable business, re-visit a previous Members Only Call where we discussed this concept in great detail.
Keep grinding. We are going to make it together.