Downturn? Wait—what downturn?
If that’s what you were thinking just now, you’re right: we aren’t in one. Which makes this an excellent time to plan for the next one.
And of course, there will be a next one—there always is. After all, the good times can’t last forever, and deep inside we all know that. Just ask the brokers who were doing business back in the glory days of 2007, right before the Great Recession.
In fact, if you know brokers who survived the last recession and have the battle scars to prove it, do this: ask them how they did it, and how they’re preparing for the next rough patch. A few CRE pros are already getting a head start on that question over at Wall Street Oasis—here’s what they’re talking about, plus our take on what else you can do to stay on top in a downturn.
1. Double down on prospecting—and stay in the game.
“Moving forward, what could I have done then to take advantage of such terrible economic and cyclical trends?” asks one poster on the CRE forum. “Lots of things!”
“As a broker, you need a pipeline of high net worth buyers that have tons of cash and equity,” he continues. “That work early in a downturn will pay off in about 12 months.”
The difficult part? “You just need to be able to make it through an 18-month to 24-month slowdown not of prices, but of deal volume. Understand that once a correction comes, it’s not low values that are the problem. It’s low volume. You need to find deal volume. Don’t get sidetracked with some other venture or business.”
With that advice in mind, take a look at your pipeline right now: how’s it doing? What do you have in the works now that won’t come to fruition until at least a year or two down the road? If the answer is, “Not a whole lot,” it’s time to ramp up your prospecting.
Yes, it’s tempting to take a breather when you’ve got plenty of good deals in play, but don’t let that lull you into a false sense of security. This business is a little bit like farming: if you want a healthy crop in a few months, you’ve got to plant the seeds today. And if you miss that window of opportunity, you can’t just shove them into the ground and hope something grows in a week. It just doesn’t work that way.
So are you prospecting enough today to carry you through a future downturn? Here’s how to tell.
2. Save some of that commission check for a rainy year.
When times are good, it’s so easy to blow those big commission checks. After all, things are going well and they’re only getting better—right? Or at least that’s what it feels like.
But humans are notoriously bad at predicting their future circumstances. If they find themselves in a fortunate situation today, they’re “extremely reluctant to predict its end” tomorrow, according to research. In other words, when you’re earning awesome commissions, it’s really hard to imagine not earning them in the future, and that can negatively impact how you spend them today.
“If you save your money and don’t buy multiple houses, cars, boats, etc. you can survive and then thrive when the eventual upswing happens,” one person writes on the WSO forum, relaying advice passed on by an industry veteran.
The lesson? Set aside a portion of your commission check to cover you during future downturns, when you very well could be earning $0 per year (it’s happened before).
3. Invest in your relationships.
When the going gets rough, your relationships will keep you afloat. But building good relationships takes time, so it’s not really something you want to start thinking about as your boat is already sinking.
This is easy to forget as we’re running from one thing to the next, in that perpetual state of busyness that comes with doing business when times are good. So we let relationships slide, because they don’t really come with deadlines: after all, you have to close this deal today, but you can call your mother or spend time with your family later. Right?
This is the final lesson that can make you downturn-proof (or at least more able to deal with setbacks). If you prioritize relationships when times are good, you can help each other out when times are bad. We’re talking about all relationships, by the way: those with potential clients as well as with other CRE professionals, your family, and the wider community around you. This is the best time to create lasting connections within your community, work on how well you connect with others, build strong professional networks, and find (or be) a mentor.
If you survived the last economic downturn, we want to know: what are the specific things you did that helped you come out on top? Please share your story with us in the comments!