For a moment, I want you to imagine it’s 2019 – back when none of us had heard the term ‘coronavirus’.
It was a golden time, right? Well, no, it wasn’t, it was a tough year for many. My group, One Agency, has more than 150 licensees across Australasia, and when I visited our principals and agents, I saw just how many of them were operating in tough real estate markets.
Some, though, were thriving. Why? Because they’d built businesses designed not for summer but winter.
Fast forward 12 months and those principals and agents are still doing well, despite COVID.
That leads on to the biggest lesson I’ve learned from this crisis: you can never predict what will happen to your local market or the wider economy. So you need to build a business that can do well in any environment. How? By doing these three things:
- Protect your revenue
- Minimise your costs
- Master your mindset
How to protect your revenue
Sales revenue is unpredictable, because you have no control over whether your local market goes up, down or sideways.
Property management revenue, though, is largely predictable, because rents are much less volatile than sales prices and volumes. That’s why every agency with a rent roll is safer.
Big or small, even one-person agencies can build rent rolls – you just outsource the different property management functions to freelance staff. One Agency has businesses of every size, including several solo operators, who do sales while managing more than 50 properties.
How to reduce your costs
You have limited control over your revenue, but you have complete control over your costs.
Remember: it’s not what you make, it’s what you keep that counts. That’s why you need to minimise your fixed costs and take a close look at your variable costs. Some ideas include:
- Move from expensive main street premises to a cheaper, less visible office, or virtual office – these days, a strong digital presence is much more important than a strong physical presence
- Send some tasks offshore – outsourcing will not only save you money, it will also make it easier for you to scale up and down when your revenue rises and falls
- Refinance your debts – interest rates are at record lows, so you could potentially save thousands of dollars per year by investigating current lower-rate loans
- Hold your group accountable – if you work with a branded group, research the market to see if you can find a group that will give you the same service for lower fees, as there is no such thing as a best brand, only a best operator
How to master your mindset
During my decades in real estate, I’ve learned that the market always turns – for better and worse.
You need to build a mindset that can handle these ups and downs. You can’t allow your mood to go up and down in tandem with the market, because that’s not sustainable.
When the market is booming, you need to remain level-headed; when the market is tanking, you need to remain optimistic.
Have a plan, work the plan and reset as necessary. A strategy with a goal keeps you focused.
So work hard on yourself. Hang out with positive people. Read personal development books. Take care of your physical and mental health. If you’re feeling down, don’t be afraid to ask for help.
