Charlotte Property Management Weekly: A Realtor’s $100K Case for Rent-To-Own- It’s All About the BATNA

“Straight sale or no deal.” (Charlotte Realtor when presented with a rent-to-own offer)

“There’s nothing like playing with house money.” (Las Vegas Credo)

Oh, it has been difficult finding Realtors who want to deal with rent-to-own prospects for their listings for sale. Some won’t call you back. Others will take offers and then not respond to them. Some will tell you that their clients are not interested. Then others will ask for the world: 10% down, first and last month’s rent, and a rent premium of 20%, and the closing within 6 months (if they had this, would immediate financing be an issue?).

But, as Tupac said, “I ain’t mad at cha. Got nuttin but love for ya.” I view the reluctance of Realtors to enter into rent-to-own deals as more of an issue that needs to be corrected from my side of altar. If I was presenting rent-to-own better, Realtors on the other side of the transaction would be eagerly calling me back. I honestly believe that almost all Realtors want to do the best thing for their clients. However, my presentations are not addressing the lingering uneasiness they have. More specifically, I am not showing them the:

1. Value of rent-to-own for their clients (they only see the risk)
2. Incentives- more on this in next week’s article (they don’t see how they can get paid)

First of all, let’s address the value objection. In the book, “Negotiation Genius” by Deepak Malhotra and Max Bazerman, they have a 5-step framework for a successful negotiation. The first step is “Assess Your BATNA.” OK- done. Next step is…

Wait! What the heck is a BATNA? BATNA is the acronym for Best Alternative To Negotiated Agreement. Or in layman’s terms, if this deal doesn’t work out, what am I going to do instead? Everyone does this mentally to a certain degree in their head without thinking about it.

Example: OK, Mark just asked you out. Do you say “yes” and go out with him this week? He’s average looking and needs to trim his nose hair, but he seems sort of funny. If you say “yes”, you’ve got a date (and a free meal) on Friday night. If you say “no”, you might be sitting at home alone (again) this weekend watching TV and listening to your friend, Molly, complain about her awful life for an hour over the phone. Oh geez, it could get worse; Molly might feel inclined to stop by if she knows you’ll be home…

So either you can go out with Mark and complete the negotiation with an agreement (a date), or turn him down. Your BATNA would be to stay home, watch TV, and try to dodge Molly.

But this is life! It could get even more complicated- who knows? Mark’s friend, Hot Dan, might call (improbable as it may be…) and ask you out. If you go out with Mark, that would destroy your chances with Hot Dan. But is he really going to call? You heard he likes Suggestive Suzy. Decisions, decisions, decisions…

This is the same exact scenario for a rent-to-own offer. Right now, your client has a vacant house on the market; they are losing money as they have to pay two mortgages (vacant home and where they live now). For this example, let’s say the payment on their vacant home is $2K/month. The hope is, of course, that the wait is worth it and they sell their vacant home in the near future. Let’s analyze the negotiation:

Offer: Rent-to-own tenant offers $4K option fee down, $2K/month, and wants to buy the home at the market price within two years.

Seller BATNA: Continue to pay $2K month and wait for a coveted buyer who will be bringing a below market offer.

Rent-To-Own Buyer BATNA: Look for another suitable home out of the 10,000+ homes on the market that are vacant.

However, what about if there is an agreement reached?

Agreement: Seller stops having to make a $2K payment every month and realizes a potential NET GAIN of $96K!! Instead of paying $2K a month, they are receiving $2K a month. ($2K + $2K = $4K X 24 month lease = $96K!). Don’t forget the $4K option fee payable to the owner which ups the net amount to a cool $100K! Rent-to-own buyers get an opportunity to build their credit, accrue a down payment, and begin building a life in a home that will be theirs. Everyone wins.

Before you say it (“But rent-to-own tenants never buy!”), let’s say that they don’t and move out at the conclusion of their lease. It’s now spring of 2012 and the market looks a whole lot better, doesn’t it? Maybe you can list the house for a lot more in a much better sales market?

Know your client’s BATNA and act accordingly! Maybe on second thought, you may want to take that date with Mark (to avoid Molly) and forget the roving-eyed Hot Dan who never seems like he’ll settle down. Mark’s lonely, you’re lonely, why not get together?

Next week’s article will cover how to build incentives into a rent-to-own transaction for your favorite person- you!

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.

Charlotte Property Management Weekly: The Tipping Point is Coming- Are You Prepared for Lease Purchase?

“I understand that qualified buyers are becoming scarcer by the day. More and more houses I list are sitting vacant on the market while the owner eats the mortgage every month. Do I just tell them to wait for the market to come back or is there something I can do?” (Charlotte Realtor)

“In sociology, a tipping point or angle of repose is the event of a previously rare phenomenon becoming rapidly and dramatically more common. The phrase was coined in its sociological use by Morton Grodzins, by analogy with the fact in physics that adding a small amount of weight to a balanced object can cause it to suddenly and completely topple.” (Wikipedia definition of “tipping point”)

"The Times They Are A-Changin’” (Bob Dylan)

The tipping point is an interesting phenomenon. Malcolm Gladwell wrote a New York Times bestseller on the subject, bringing up a myriad of examples to illustrate it. In a business application, it basically says that a product’s life cycle (from conception to death) does not grow in a steady, predictable pattern; rather, it starts like a flat line of a few buyers that grows slowly to a certain point, then spikes suddenly upward (explosive growth!). This “certain point” is referred to as the tipping point. If you charted any successful product’s sales growth on a piece of paper, you wouldn’t draw a straight line going up, but rather a line that looks like a hockey stick. All companies want to enjoy the rapid sales (cha-ching!) that result on the blade of that stick.

I remember when I worked in telecommunications in the early 2000’s, almost every sales meeting touched on motivating us to sell a certain service. “It’s great”, “Clients just need to see the value in it”, “It’s all the rage in Europe”, and “Did I forget to mention how worthless you are?” were the usual exhortations we were subjected to. We just couldn’t sell it. “It’s garbage!”, “Why would clients waste their money on something they’re never going to use?”, “They can just pick up their phone if they want to communicate with someone!”, and “Let’s see you sell it!” were our explanations for our low sales numbers for this service. And what was the service we couldn’t sell? In hindsight, I can LOL. It’s probably something you use every day- text messaging.

It’s not like text messaging didn’t have business applications that we could reasonably sell our customers on using. Hospitals could send texts to their ambulance driver’s cellular phones with addresses to go to without the fear of no or poor cellular coverage affecting the response time. If you needed to get an important message to your boss while he was in a meeting, the text would get it done simply and discreetly. During 9/11, the cell towers were overwhelmed and cellular calls were futile, but texts still got through (for the few customers who actually bought this service from us!).

However, as the text messaging user base continued to slowly trickle in and grow (as we begged and pleaded each of our clients to use the service), something happened. Everyone started to ask for text messaging to be added to their orders (Asking us? Is this a joke? Did our sales manager put you up to this?) This $10 a month add-on service started to become real money as hundreds of thousands of users added it to their plans each month. This text messaging revenue lasted for years and still provides huge returns for my old company (and the wireless industry in general!). The tipping point was achieved and the profitability in that growth was beautiful for those who were able to take part in it.

So what does this have to do with lease purchases? The lease purchase tipping point is coming. People want to buy and the banks are not willing to play along. Banks are concerned with risk issues of their own (commercial real estate loan default, credit card default, upcoming bank regulation by Congress, keeping a huge cash buffer so they don’t ever have to take money from the government again, etc.). Consumers want to buy homes, but banks will continue to raise credit score requirements, down payment requirements, and reject any loan that doesn’t fit a tight cookie-cutter model so they can further eliminate their risk.

At that same time, more consumers than ever want to buy homes for the usual reasons (marriage, divorce, having kids, job changes, etc.). More vacant houses than ever will sit on the market unsold while eating away at the owner’s dwindling finances. More Realtors than ever will leave the real estate business as sales transactions dry up further. Babylon the Great (the banks) has fallen and we will all wait for the scraps of a few loans they occasionally leave us. Or will we?

Across the country, some enterprising Realtors are putting lease purchase deals together and transacting real estate. Their buyers and sellers don’t really understand how the whole “lease purchase” thing works, but they do. Every deal is a struggle of educating the other parties involved, showing the mutual benefits, ignoring naysayers who only believe in “clean” buy/sell sales, and negotiating commissions to reflect the value of what they bringing to the table. They are supplementing their income (and value!) now, but see the need for their services increasing every day during the next few years.

And at what point will these pioneers really be rewarded? At the tipping point, of course!

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.

Charlotte Property Management Weekly: Sales- You Gonna Do It the Hard Way or Like Rick Pitino?

“I’m okay at sales. I send out 1,000 postcards and call all my internet leads every month. I’m just trying to figure out how to convert more of them this year.” (Pensive Charlotte Realtor)

“That’s right! You’re not your dad. He could sell a ketchup popsicle to a woman in white gloves.” (David Spade to Chris Farley in "Tommy Boy")

“Put. That coffee. Down. Coffee’s for closers only.” (Alec Baldwin in "Glengarry Glen Ross")

Man, sales can be tough. I remember coming out of college and working in sales for a telecommunications company in New York City. That was rough. My manager was from the “no excuses” school of sales. Every question I asked was interrupted with “I have an idea- sell something” or “will you please sell something, PLEASE?” The problem was that even though I was trying hard, the customers I was cold calling didn’t seem to care. Most of them, when I was able to get them on the phone, responded negatively to my request for an appointment; responses ranged from asking me to do things that were anatomically impossible to my personal favorite, “kill yourself.”

The weekly sales meetings were the worst. I was on the #2 team nationally in sales so most of the salespeople sold a lot of phones. All of the meetings were run the same way. There would be announcements and then we would go around the conference table giving our sales numbers verbally. “Schenk?” “120 units.” “Great job!” “Nichols?” “85 units.” “Way to go! I’m impressed you closed the IBM deal.” “Furniss (me)? “(cough) (mumble)” “Furniss- didn’t hear you. How many units?” “Zero.” “Zero? Wow- way to be an asset to the company! At least you’re a consistent loser!”

For those of you keeping score at home, the top 3 insults from my sales manager were:

1. How is Furniss like a rowboat? No sales.
2. I have a great idea on how to solve the nation’s drug problem. We just have to have Furniss become a drug dealer. Nobody will buy.
3. Do you know Furniss is actually Bob Hope’s long lost brother? No Hope.

I thought this experience was the norm for people who were new in a sales job. Then I read a story about the University of Louisville hiring Rick Pitino as its head basketball coach in 2001. Pitino was joining a program that was in turmoil (aka they weren’t winning a lot). Pitino knew that his success would hinge on his ability to recruit and sell great players on joining his program. In 2002, he signed a highly coveted recruit, Francisco Garcia (now with the NBA’s Sacramento Kings). However, Pitino didn’t even sell him on Louisville. He came on his own accord even as he was heavily recruited and offered multiple scholarships by major college basketball programs across the country. How did this happen?

It happened largely by accident. Pitino used to be an assistant coach with the New York Knicks in the early eighties. There was a young ball boy that Pitino would talk to from time to time. It turned out that this ball boy wound up as friends with this high school star from the Bronx (approximately 12 years later after both had left the Knicks for several years) and told Garcia that he would be very comfortable with Pitino as his collegiate coach. That was all it took. Garcia was convinced; he willing to sign with Louisville without even meeting Pitino!

As I was cold calling and taking abuse, Rick Pitino was cracking jokes with a ball boy. Who had better results? Coach Pitino. Caring about others trumps sales pitches. Referrals trump cold calls. Relationships trump all. People like to do business with people they like. And a “friend of a friend” is much better than a stranger on the phone.

Sales can be easy. Treat people well and reap the rewards!

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.

Charlotte Property Management Weekly: Thankful for an Awful Year: Next Top 2 Business Takeaways from 2009 (Part 2)

“I thwink… 2010 will be a treeemendous year… I mean, it’s gotta, just Gotta (with a capital “G”) be better than this one… you know what I’m sayin’? Hey, honey, pass me another glass…” (Drunken Charlotte business owner bypassing the shot of hemlock for some more red wine)

“The MacArthur Foundation gave out its annual genius awards. This year’s awards went to a journalist, a mental health scientist, and a couple who sold their house three years ago.” (Conan O’Brien from The Tonight Show with Conan O’Brien)

“Have yourself a merry little Christmas. Let your heart be light.” (Ralph Blane)

In last “Charlotte Property Management Weekly’s” episode, I discussed the first two takeaways from businesses looking to survive this tough economic environment. This article will focus on the other top two business adjustments I’ve seen businesses take in 2009. Without further ado, they are:

1. Revenue hedging became important. By this, I mean that business models adapted. Let’s look at real estate. People need to live somewhere, right? If they are not buying and selling homes, they’ll be renting. Businesses made sure they were in position to benefit no matter what their potential customers chose to do.

2. Cash was promoted from “King” to “High and Mighty Emperor.” Before banks completely shut off the loan faucet, forward-looking businesses took the maximum out of their lines of credit and put the cash into interest-bearing accounts; their cost of accessing capital was the interest spread between the borrowed money and the short-term certificate of deposits. Smart move! Banks cut everyone else’s lines of credit to tighten their balance sheets. So what did businesses do so they would have sufficient working capital to pay people?

Small business became like big business. They played with their accounts payable (paid their vendors later) and accounts receivable (provided incentives to customers to get paid earlier). What does this mean? Here are examples:

· Accounts payable: You pay your vendors an average of $1K/day and wait 15 days to pay invoices. However, if you started paying invoices in 20 days, you would now have $5K more in your bank account (5 days X $1K/day = $5K).
· Accounts receivable: You take in $2K/day in revenue and your customers pay you in 30 days on average. If you can get them to pay you in 27 days, then you would add $6K to your bank account balance (3 days X $2K = $6K).

It has been said that 90% of all businesses fail for lack of cash flow. Take these steps to stay in the game. And be thankful that the tough economy, though presently painful, ultimately makes your business stronger (think of how tired the Karate Kid was washing all of Mr. Miyagi’s cars)! When economic times get better, you will be very thankful (think a beaten-down Daniel-Son taking down Johnny Lawrence with the “Crane Kick” to win the All Valley Karate Tournament!)!

Thank you for your readership and I look forward to dishing on more of our business issues in 2010. Have a wonderful holiday!

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.

Charlotte Property Management Weekly: Thankful for an Awful Year: Top 2 Business Takeaways from 2009 (Part 1)

“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.

Charlotte Property Management Weekly: Can You Beat UNC Coach Roy Williams in a Pie-Eating Contest?

“I’m not making any money. The economy is killing my firm. I’d be lying if I said I wasn’t in anything but survival mode at this point. My New Year’s resolution this year is to be able to make a 2011 resolution with a roof still over my head.” (Charlotte business owner)

“Creativity without implementation is irresponsibility.” (Ted Leavitt at the Harvard Business School)

“In a typical game we want to have between 90 and 105 possessions, and we try to get that number up as high as we can, because if I’m better than you are, the more possessions we play, the more likely it is that I’m going to beat you. If I play golf against Tiger Woods for one hole I might beat him, but over 18 holes, I have no chance.” (University of North Carolina Basketball Coach, Roy Williams, from "Hard Work: A Life On and Off the Court")

Roy Williams is one of the greatest college basketball coaches ever. Besides winning 2 national championships in the last five years (2005 & 2009), his accolades are mind-blowing: 594-138 record in 21 seasons, Hall of Famer, 7-time Coach of the Year, 1st in winning percentage among active coaches (81.2%), 3rd best winning percentage all-time, only coach to win a NCAA Tournament game in 20 consecutive seasons, and the list goes on and on…

What makes him so good? There are many reasons obviously. But the one that I want to focus on is that he is incrementally better. What the heck does that mean? And what’s with the italics again? Well, it goes along the lines of his quote on top of this article. If you play UNC long enough, they should be able to beat you. They have great coach, talent, and system. UNC doesn’t blow out every opponent, but they do win most of their games. For example, in the 2005 NCAA Tournament in which they won it all, they beat their opponents by 28, 27, 1, 6, 16, and 5 points respectively. They were good, but didn’t win every game by 50.

The reason is the essence of the game of basketball. It has fixed rules. There are only so many points you can realistically score in a 40-minute game, and your defense cannot fully stop a talented team from scoring. Basketball is a “fixed pie” meaning that there are usually a certain amount of points scored in a game. If you have just one more than your opponent, you win!

So let’s say your business is really good and always takes 80% of your city’s market share. Last year, there was $10M in sales (fixed pie) and your firm predictably took in $8M of that. Awesome stuff! But this year, sales have shrunk to $8M (smaller fixed pie), and your firm made $6.4M. That is still good, but not as good as last year. So maybe good old Roy has got it better than you? He wins 80% of is games over his career and is a Hall-of-Famer. You take 80% of market share this year and your shareholders are wondering whether it’s time to find another CEO to run things.

But maybe, just maybe, you have it better than Roy. Roy is locked into a “fixed pie” scenario and you’re not. In business, if you don’t like the pie you’re eating out of, you can shift to another pie. Or you can be eating several different pies at once (sort of like what we’re all doing this holiday season, even those who have sworn off sweets).

In real estate, most were eating out of the brokerage (buy/sell) pie. You were just like Roy, incrementally winning by keeping a steady market share in a growing amount of business. Your 80% market share was nice when your city’s brokerage pie grew from $10M to $12M ($9.6M in sales, up from $8M the year before. Yeah, baby!) There was more than enough pie for all and everyone was happy! Then the housing market fell apart and there was less pie for everyone. Some went hungry and left the business. Others started rationing their smaller portion while complaining about how hungry they were.

But you’re not Roy and stuck in his world! You can use innovation and change the game! As I’ve written before, people still want to transact real estate; the American dream of homeownership is still alive and well (arguably even stronger!). Macroeconomic conditions have made it necessary to transact real estate through other methods like rent-to-own, rent-to-sell, owner financing, short sales, or any other way you can think of! These pies are growing and taste pretty good! And there are less forks banging together trying to take their piece of it out!

If Roy could legally add more methods to score, he would. I’m sure he would create his own version of “Calvinball” (yes, a Calvin & Hobbes reference) and start blowing teams out by singing “Thriller” while throwing a horseshoe over the backboard (10 points!).

But, alas, Roy is stuck between the baselines with fixed rules and one fixed pie, so you can easily beat him! Are you ready to eat heartily from some different pies in 2010?

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.

Charlotte Property Management Weekly: Jack Welch is Envious of Your Real Estate Firm?

“I’m not sure what we are going to do… Revenue is down and costs are the same. We are scraping by on a few first-time home buyer sales that come through. Worst of all, my employees are having a hard time making a living in this traditional brokerage business model.” (Frustrated Charlotte Real Estate Firm Owner)

“Most small companies are uncomplicated, simple, informal. They grow on good ideas regardless of their source. They need everyone, involve everyone, and reward or remove people based on their contribution to winning.

We love the way small companies communicate with simple, straight-forward, passionate argument rather than jargon-filled means.

Everyone in a small company knows the customers- their likes, dislikes, and needs. Small companies have to face into the reality of the market everyday, and when they move, they have to move with speed. Their survival is on the line.” (Jack Welch, former CEO of General Electric from 1981 - 2001)

Jack Welch was one of the most successful businessmen in the 20th Century. Under his leadership at GE, he took the company from $14B in market value (1980) to $410B (2004). He helped create the largest and most valuable company in the world.

Welch felt that while being big was good and had its advantages, GE would only be successful if it maintained the traits of a small business. These traits included personally knowing their customer base, shifting to meet changing customer needs, and the ability to nimbly reposition their services efficiently to serve niches of customers before their larger competitors. And they had to do it quickly!

The problem was that any major initiative GE undertook would go on for years; it was the nature of their sheer size. When you have hundreds of thousands of employees, it takes a long time to disseminate information, train employees, and get things working correctly; just fighting through layers of bureaucracy is a time-consuming ordeal! Welch hated this and wished he could move at the speed of the market.

Big real estate firms have this same issue. They made billions of dollars in a buy and sell market and positioned themselves in the public’s minds as the place to go for brokerage. Their agents were trained killers that were negotiating offers, putting up listings, and putting ads all over the country. Unfortunately, as the pure brokerage market began to fade and real estate revenue sources moved elsewhere, they ran into the same issues as GE.

Besides being costly and time-consuming, repositioning a large company’s value proposition to customers is risky! The risk is in confusing the public about what they do well. For decades, big real estate companies told the public (with many, many ads!) that they were good at helping people buy homes; this year they are telling different stories. Some are saying that they are expert property managers now? Some are now good at finding foreclosure and REO properties for investors? Short sale specialists?

Here’s the rub. Name one company that says they do multiple things well- it’s tough! You just don’t see this in today’s marketplace because this type of marketing message doesn’t work! Customers do not like generalists; they go to specialists. Think about it. When you shop for shoes, do you go to Wal-Mart or a shoe store? Most people actually go farther than this. They’ll visit a very specialized shoe store (women’s dress shoes only stores, running store for running shoes, etc.), rather than a regular show store. Customers feel that if you say you are good at many things, you are actually mediocre and not an expert at anything!

In a changing market, small businesses are in the best position to capitalize. They can reposition their business to specialize in growing customer segments, get employees up-to-speed quickly and inexpensively, and communicate to their existing customer bases what they are doing. There is no red tape. Today you can be “Charlotte Brokerage, Inc.”, and tomorrow you can morph into “Short Sales 4 U, Inc.”, “Distressed Properties R US, LLC”, or “Rent-To-Own Rock Stars, Inc.”

You can innovate and implement today with little hassle. This is why Jack Welch is envious of your small business!

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.