[Ed Note: Today’s Guest Post comes for Garth Chapman, a Diamond REIN member and the co-founder of REMA, a Real Estate Management and Analysis software. (Not so shameless plug: I use it!)]
This has been our approach to making sure our estate business prospers going forward. We’re always trying to answer the question: What are you doing to adjust your business to our brave new world? Our first major actions began in the summer of 2007:
- Stay focused and view things from the 10,000 foot level (get out of the forest and above the trees). Don’t be pulled back and forth by the daily news that bombards us. Pay attention to the longer term trends and stats – they will keep you balanced and help you to make better decisions. Pay attention to both the positive and the negative things that are happening around you. Look past the headlines. Be realistic as you evaluate of what is going on. Be positive but don’t be mistaken for Pollyanna. A positive mindset is a powerful ally in getting things done, but must be accompanied by a realistic view on things to allow you to focus on that which is achievable.
- Analyze your business. What are you doing well, and what not so well. What can you improve on? What must you improve on? Review your financial performance versus budget (your financial expectations). Measure what is significant so you will know what areas to put your time, effort and money into. Know your true numbers (for each property and your whole portfolio) – if you don’t you are not really managing your business, and that means you have put it at risk. Always know your cash position at present and your cashflows going forward – if you don’t you risk running out of cash. Maintain sizeable cash reserves, and/or credit facilities. Cash is King. Long live the King.
- Review your business plan (the short term and the long term) and adjust it as prudent investors should when the world you operate in changes big time. Be proactive. Don’t be buffeted by the changing seas. Don’t allow yourself to drift. Chart your course.
- Involve your team and other experts in this process. They are on your team for a reason. Get their input. Ask for their advice. Involve people you respect for their knowledge and experience. Most of your best ideas will come out of those discussions – both your ideas and theirs. And you will awake with eureka moments, both small and big, in the wee hours of the night. That’s a good thing. It means you have engaged your subconscious mind, a very powerful tool.
- Take a break. Get away and relax. Read some books, go sailing, walking, running, diving, flying, driving – whatever works for you. If you take the right amount of time, all that you have done so far in this process will distill in your mind and you will find clarity.
- Now act – recession-protect your business. A few examples – refinance your mortgages with longer amortizations, look for ways to increase revenues and decrease vacancies (provide cable TV, internet, other services), add rental units to your properties (suites, garages, parking spaces, coin-op laundry facilities, etc).
- Do the same for your family/personal life. Your family’s business also needs your attention. Treat your personal finances much like your business finances.
- Review and repeat. Review what you did to determine how to do it better next time. Do it all again at least once a year. In these times maybe twice is more prudent.
- Share what you have learned. This will help to make others’ businesses better as was yours. Much more will come back to you than you put out there.
What are you doing to ensure the health of your business?
Originally posted on myREINspace.