Today Matt discusses the importance of being prepared for a change in market conditions and how to turn it into an opportunity to grow.
While its not always a fun topic, having a downturn or change of market conditions plan can be crucial to survival if your market takes a turn.
Why it’s important to have one:
If there is a sudden change in market conditions, you don’t want to get caught flat footed. Even having a 1-2 page downturn plan is vital. Unfortunately, most broker/owners don’t take a detailed look at their budget every year, this is where the downturn plan starts. Take a look at your budget and think about the following scenarios: what happens if there are 10% less transactions? What if prices decrease a few percentage points? How does this affect revenue and bottom line?
Thinking about these changes with your team will clearly show you what changes you need to make and who in your organization will be affected most by market changes. Focusing on variable costs, rather than fixed costs is an excellent want to begin to go lean within your company. Maybe you don’t hire casual staff for as long, office costs and marketing costs, may need to be reduced or you may need to find an alternative way to fund these aspects of your business.
How to respond to a change in market conditions?
Here there are two options, and the one thats best can only be determined by you. Option one is above, and that can best be described as ‘trimming the fat’, but the other option is taking a bigger share of that shrinking pie. When conditions change and everyone is looking at reducing their marketing costs, it may prove to be the perfect opportunity to invest in your marketing to grow your business. When everyone is thinking of battening down the hatches and reducing costs you and your brokerage can really take advantage of that opportunity to grow.
We sincerely hope you never have to use a downturn plan, but planning for a change in market conditions means you will always be prepared for anything that comes you way and you can make those quick, important decisions while others are overwhelmed with what may happen next.