How to Successfully Navigate an Economic Downturn
In a recent CommissionTrac blog post, Rethink CEO Vijay Mehra and CRE Holdings Chairman Daniel Levison noted that while “none of us have a crystal ball, we do know that real estate is a cyclical business.”
And though the current market is bullish, there are reasons to believe that commercial real estate (CRE) professionals should start preparing for a downturn now. For instance:
- A recession is multifamily investors’ top 2020 concern.
- Two-thirds of Americans anticipate a 2020 recession.
- One CRE economist put recession odds at 60% by 2021.
So, if you don’t want a downturn to catch you by surprise, it’s best to get your plan in order now.
Not sure where to start?
According to Vijay and Daniel: “An agent that accurately understands whether their future revenue is coming from tenant representation, landlord representation assignments, sales or leasing assignments can more effectively tailor their prospecting for future business.”
And thanks to the integration between Rethink and CommissionTrac, uncovering that information is easier than ever.
Rethink — the client relationship management (CRM) and PropTech solution purpose-built for CRE — provides insight into your dealmaking processes and performance.
And CommissionTrac’s back-office solution provides intelligence on your financial and accounting operations.
Together, they give you a full-picture view of your revenue — from prospecting to cash flow.
Below, we’ll cover two key ways you can use that insight to position your firm to successfully navigate an economic downturn.
1. Emphasize your strengths
Susan Ward, a small business expert, recommends organizations “protect cash flow” and “focus on core competencies” — among other strategies — to thrive during downturns.
Using Rethink and CommissionTrac, you can quickly and easily determine which cashflow sources to protect and which core competencies to focus on.
For instance, you might find your firm closes deals that involve retail properties at a higher rate than deals that involve industrial properties. You might also find your firm closes deals with prospects who work for larger organizations at a higher rate than deals with prospects who work for small or mid-size businesses.
Armed with this information, you can invest more resources into the activities and deals that are most likely to generate revenue.
2. Expand to new markets
While focusing on your strengths can help you retain the bulk of your existing revenue streams, you may need to branch out to new markets if you want to continue growing.
This will also position you to withstand instances where your target market scales back spending with your firm.
According to Forbes, “Recession has a way of spreading through the supply chain. It could hit any of your buyers before you, and their problems quickly become your problems. That’s why your revenue shouldn’t be heavily dependent on a few customers.”
Using Rethink and CommissionTrac, you can evaluate how much revenue you generate by geography, industry, and deal type.
Then, you can pinpoint opportunities for growth and strategically ramp up marketing and business development efforts in those areas.