Steve Murray:
Hi, this is Steve Murray, president of REAL Trends. This is special report and a special message for our friends and clients throughout the US and Canada.
Steve Murray:
By now, most markets are in a slowdown, if not an outright shutdown. Here are some thoughts for broker owners as to how you face the next one, two, three months. It appears in all regards that the brokerage industry is either 100% shut down, or 80% or more shutdown, and unable to conduct normal business activities, and that this may continue for more than just a week or two. It could well be at least 30 days, more likely 60, and in some markets in some areas it could be 90 days.
Steve Murray:
For brokerage companies and for many businesses the only solution to this right now is to face the fact that we may see 70, 80, 90% declines in your company revenue over the next 60 days at least, and it could be 90. The most important thing to do is to try to preserve your business the very best you can. This is a 60 to 90 day problem that we all need to address by keeping distance, staying safe, and staying healthy.
Steve Murray:
So what is my input for friends and broker owners around the country? Number one, first focus on your people. In our white paper Against All Odds, which we publish some years ago about those who were able to grow and survive and prosper from 2006 to 2009 downturn, we found the number one thing they did, that separated them from so many others, was if you think you’re close to your people, get closer still. Now in this particular circumstance, that can’t be in person a whole lot.
So every leader in the brokerage industry needs to focus on how you’re going to stay in touch with your people and keep communications open, where you can see them personally fine, but more importantly, find ways through social media, email, phone calling, or text to stay in close touch with your people and get your team involved in the same activity, and the same focus. That has got to be your primary concern right now.
Steve Murray:
The second and only other concern is to preserve cash. This means in many cases you need to push your payables out 30, 60, and 90 days. This means curtailing payments that you would normally make as good business people every month, on time, regularly. But in this case, this drastic challenge, all of businesses, small businesses particularly, need to manage their cash, critically manage your cash, so that you can live to see 60, 90 or 120 days from now, when agents are permitted to go back to helping buyers and sellers achieve their dreams in their house and their homes.
There are all kinds of ways to do this. Delaying your payments for 30 or 60 days, talking to your landlords is a good idea. All of your suppliers, you need to speak with them as well, and talk about what needs to happen now so you can preserve your company.
Steve Murray:
And by the way, you don’t need to wait a week. This is an activity that needs to happen right now. Right now. Preserve your balance sheet, preserve your cash, manage your payables, and on the other side, manage any receivables you have. It could be you need to talk with employees about furloughs or momentary reductions.
I recall back in a prior recession many years ago in a major market where one broker reduced, for example, all employees to four day work weeks and 80% of their normal pay, and promised to restore it when sales got back to normal, in fact specified what normality looked like.
Steve Murray:
That broker became Long and Foster, one of the giants of the industry. There were other large leading firms in that market who did not cut their costs, did not manage their costs, did not manage their payables, and not one survived that more modest recession.
Steve Murray:
It’s my view this is going to be short and sharp, 60 to 90 days in duration. I am no economics expert, and I’m not a health expert, but I spend most of my time reading, observing, and watching and absorbing all the information from experts from all corners of this country and the world, and that’s what this appears to be, short and sharp. We look forward to talking with you through this.
Please feel free to call us if we can of any assistance, at (303) 741-1000 or email me personally at smurraya@realtrends.com. We will pray that all of you make it through, first that you and your families and your friends stay safe and healthy, and secondly, that you find a way to manage through this next few months. This has been Steve Murray for REAL Trends.