“Oh… Deck the halls with boughs of holly (picked for free from the yard), fa la la la la, la la, la, la… ‘Tis the season to (fake) be(ing) jolly, fa la la la la, la la, la, la… (“Unthankful” Charlotte Business Owner)“…give thanks in all circumstances…” (1 Thessalonians 5:18)
“Left a good job in the city
Working for the man every night and day
And I never lost one minute of sleep
Worryin' 'bout the way things might have been”
(Proud Mary by Credence Clearwater Revival)
Wow! It’s been a tough year for traditional real estate brokerage. In Charlotte, the year-over-year statistics for closings and home prices have gone down every month (except this past month when closings were up 1%- woohoo!). Many of the people who left their jobs to become Realtors and contributed to the real estate boom are now wondering what they were thinking. The same can be said of business owners who took the leap and are struggling to make payroll every week.
When I’ve talked to other business owners prior to this year, I would always hear about how “great” things are. Things are “great”, sales are “great”, “employees are great” (this is the first clue that they are lying), my wife thinks I’m doing “great” (second clue), and have you been to “the club” recently? Unfortunately, I have no idea what “the club” is. I try to pull the Groucho Marx “I wouldn’t join a club that would have me as a member” line and then try to change the subject. That’s always followed with “Who the heck is Groucho Marx? Is he a member of the club too?”
Now, things are very different. “Brett, I’m not making any money.” “This economy %&**#!!” (meaning “not great”) “Are you going to finish those?” Entrepreneurs are eternal optimists but I suppose that can only go on for so long. Scraping by every month is tough and the business lines of credit that provided some comfort have been cut, bagged, and appear on the back of milk cartons.
But like all negative things, there are silver linings. Tough times make businesses adapt and strengthen. For this we should be thankful! If “pain is weakness leaving the body” then the same can be said of financial struggles for a business. When money is tight, you’ve got to be creative to improve (and survive!). The top two business improvements I’ve seen as a result of this economy are (drum roll please):
1. The elimination of unnecessary fixed costs. These were much more than anyone thought. Old assumptions on this were challenged: With technology improvements, do employees need to work out of an office all the time? Any of the time? Do I need to pay salespeople before they sell anything? What can be outsourced to make it a variable expense? What costs can be shifted away from an employee to (much cheaper) technology?
2. The return of “return on investment”. Our old friend, ROI, made a comeback and it was brutal. If an expense wasn’t generating any revenue, it was eliminated. The “pay for play” model became much more dominant. You had to prove it, too! No longer was money hurled at marketing with no tracking capabilities. Employees had to prove they were part of revenue generation to keep their jobs. The pay-per-click Google model was emblematic of this; you didn’t need to pay marketers so people saw your ad, you would only pay when someone clicked on your ad. (On a side note, I see this being taken further. You really should only pay when someone actually clicks on your ad and purchases something from you. I mean, why do I pay you if they click on my ad and don’t give me any money? The only barrier to this is how to track it, but I see this obstacle being eliminated over the next year or two.)
These two business practices are now commonplace among the firms that are still open. So you’re still in business and never made any changes along these lines? Count your lucky stars! But remember as they say on Wall Street, “the market can stay irrational longer than you can remain solvent.” And the three-word advice of the late NC State basketball coach, Jim Valvano, on the key to staying alive in the NCAA Tournament. “Survive and advance.”
Part two of this article will discuss the other top takeaways from this year. Have a wonderful holiday season!
Brett Furniss is the President & Owner of BDF Realty, “Charlotte’s Most Innovative Property Management & Investment Company”specializing in rent-to-own (lease options) and rent-to-sell homes. You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://Twitter.com/BDFRealty. He is the author of the FREE E-Manual entitled “How to Rent-To-Sell Your Own Home” (http://www.RentToSell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.
When I’ve talked to other business owners prior to this year, I would always hear about how “great” things are. Things are “great”, sales are “great”, “employees are great” (this is the first clue that they are lying), my wife thinks I’m doing “great” (second clue), and have you been to “the club” recently? Unfortunately, I have no idea what “the club” is. I try to pull the Groucho Marx “I wouldn’t join a club that would have me as a member” line and then try to change the subject. That’s always followed with “Who the heck is Groucho Marx? Is he a member of the club too?”
Now, things are very different. “Brett, I’m not making any money.” “This economy %&**#!!” (meaning “not great”) “Are you going to finish those?” Entrepreneurs are eternal optimists but I suppose that can only go on for so long. Scraping by every month is tough and the business lines of credit that provided some comfort have been cut, bagged, and appear on the back of milk cartons.
But like all negative things, there are silver linings. Tough times make businesses adapt and strengthen. For this we should be thankful! If “pain is weakness leaving the body” then the same can be said of financial struggles for a business. When money is tight, you’ve got to be creative to improve (and survive!). The top two business improvements I’ve seen as a result of this economy are (drum roll please):
1. The elimination of unnecessary fixed costs. These were much more than anyone thought. Old assumptions on this were challenged: With technology improvements, do employees need to work out of an office all the time? Any of the time? Do I need to pay salespeople before they sell anything? What can be outsourced to make it a variable expense? What costs can be shifted away from an employee to (much cheaper) technology?
2. The return of “return on investment”. Our old friend, ROI, made a comeback and it was brutal. If an expense wasn’t generating any revenue, it was eliminated. The “pay for play” model became much more dominant. You had to prove it, too! No longer was money hurled at marketing with no tracking capabilities. Employees had to prove they were part of revenue generation to keep their jobs. The pay-per-click Google model was emblematic of this; you didn’t need to pay marketers so people saw your ad, you would only pay when someone clicked on your ad. (On a side note, I see this being taken further. You really should only pay when someone actually clicks on your ad and purchases something from you. I mean, why do I pay you if they click on my ad and don’t give me any money? The only barrier to this is how to track it, but I see this obstacle being eliminated over the next year or two.)
These two business practices are now commonplace among the firms that are still open. So you’re still in business and never made any changes along these lines? Count your lucky stars! But remember as they say on Wall Street, “the market can stay irrational longer than you can remain solvent.” And the three-word advice of the late NC State basketball coach, Jim Valvano, on the key to staying alive in the NCAA Tournament. “Survive and advance.”
Part two of this article will discuss the other top takeaways from this year. Have a wonderful holiday season!
Brett Furniss is the President & Owner of BDF Realty, “Charlotte’s Most Innovative Property Management & Investment Company”specializing in rent-to-own (lease options) and rent-to-sell homes. You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://Twitter.com/BDFRealty. He is the author of the FREE E-Manual entitled “How to Rent-To-Sell Your Own Home” (http://www.RentToSell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.
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