9 Lessons For Real Estate Businesses

At a recent mastermind meeting with real estate entrepreneurs, I asked the following question:

What lessons have the real estate bubble and the recession taught us?

I was surprised to hear that many of the real estate agents haven’t learned their lessons. I’ve learned many. In fact, I started a little notebook in which I detail new lessons as they are delivered to me – which is just about every day. I’m hoping to keep this notebook at the ready for the next recession, whenever that may be.

I thought I’d share with you some business lessons I have learned.

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. Obtaining new credit will be tough. Your credit score doesn’t matter much when nobody is lending money. See 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. Keep your overhead low. Overhead will take a business down very quickly. Don’t take on large office space. Don’t take on too many employees right now. And especially, don’t take on large fixed expenses within your business. Try and keep your business expenses variable, reducing these expenses quickly, if you have to.

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 on 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. You must have multiple income streams. When times are good, take time to set up multiple income streams. Try to diversify, so that the loss of one source of income doesn’t impact others. Multiple income streams are like life rafts on a sinking vessel. They’re required and can save you from drowning.

9. Cash is king, and it makes kings when times are tough. If you have cash built up for the bad times, you could take advantage of many opportunities during bad times. Look around. Properties can be bought for pennies on the dollar; stocks are languishing at never-before-seen prices in some cases. Buy when others are selling, and sell when others are buying, and you won’t go wrong.

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!