Don’t panic. The housing markets’ shift into a period of greater calm and balance between the supply and demand of for-sale houses shouldn’t be cause for alarm among real estate practitioners; yet neither longtime pros nor newbies should ignore the realities of today’s market conditions. Here are 10 suggestions for strategic reassessment and mindful business planning that can help any business turn with the market:
1. Identify objectives and set goals. The maxim “fail to plan or plan to fail” might seem like a trite or trivial sound-bite from an inane business-advice book, but like many such sayings, it contains a nugget of truth and shouldn’t be dismissed out of hand. The failure to identify broad objectives and set specific measurable goals can put even a seemingly successful business on a path to nowhere. Don’t wait for Jan. 1, 2006, to get ready for new market realities.
2. Analyze the market. Listings may be a winning strategy in a seller’s market, but balanced markets can open the door to other approaches. For instance, some niche markets may be more attractive now than they have been in recent years. An intuitive sense of the market is valuable, but don’t ignore raw data that also can point to good opportunities that otherwise might be overlooked. Research the numbers, track the trends and set a course accordingly.
3. Target ad spend. The decision to curtail advertising in a weak market is a classic error that abandons the field to one’s competitors. Yet scattershot advertising can waste scarce resources. To resolve this dilemma, position advertising toward specific opportunities in the current market. Target the message and choose the media–be it classified advertising, direct mail, a bus bench, a newsletter, a Web site or whatever–to match the strategy. Track the results and tweak the plan to focus resources on advertising that’s effective.
4. Cut the fat. Most people naturally increase their business and personal expenses when they have more disposable income. But fewer people have the foresight to cut back what they can when their future income looks less certain. Trim back now to gain peace of mind and get ready for the possibility of leaner times ahead. Question every expense and activity, be it one time or recurring, to determine whether it is truly necessary.
5. Avoid taxes. Income and employment taxes are among the largest expenses that independent contractors and other small businesses face in the normal course of business. While tax fraud obviously is illegal, tax planning is a permissible way to reduce the burden of these government-imposed costs. Consult a tax expert to learn how the right ownership structure, detailed record-keeping and other strategies cut the cost of taxation.
6. Build savings. Money set aside today could be invested tomorrow in targeted advertising, new technology, professional education and other business-building opportunities. In the worst case, today’s nest egg could be used to pay for basic business and living expenses if a severe downturn develops in the market. Don’t overlook opportunities to capture higher interest rates on bank account balances and certificates of deposit as well.
7. Get help.Many real estate pros have found success through partnerships and teams with other agents. While this arrangement doesn’t work well for everyone, it’s often worth considering as a sharing-the-load and sharing-the-risk approach when the direction of the marketplace is uncertain. Make sure to put any such deals in writing and include a dissolution procedure to be used if the partnership proves dysfunctional.
8. Streamline procedures. Busy professionals rarely have time to step back and analyze their business practices and operating procedures, yet even small efficiencies can produce spectacular payoffs over time. Find ways to eliminate unnecessary tasks. Say no to time-consuming commitments that don’t contribute to the bottom line. Question whether existing and new systems and technologies enhance efficiency or in fact consume more time and effort than they save.
9. Invest to grow. Technology budgets, like advertising spends, often are among the first expenses to be cut back when the market turns from boom to balance. Yet smart investments in technology can create new opportunities and strengthen a business’ position in the marketplace. Look for technologies that create efficiencies and competitive advantages.
10. Learn to earn. Successful people often fail to set aside enough time to acquire new skills because they’re already doing well in the marketplace. Yet professional development can lead to personal growth and even greater success, especially if the new skills and knowledge are applicable to the new realities. A balanced market is a good time to take advantage of training that can open new doors to success.
Marcie Geffner is a real estate reporter in Los Angeles.
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