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Steps You Can Take Today to
Prepare for the Market Turnaround
By David Goldsmith
President, MetaMatrix Consulting Group LLC
Although capital markets are virtually shut down and business slow, now is the time for you and your real estate colleagues to prepare for the day when money starts to flow again. Yes, today’s conditions may seem unlike previous cycles, making it difficult to form a reasonable course. Yet remaining inert will put you in an unfavorable position when business starts to pick up.
So what do you do when the future is so uncertain? I suggest that you begin to view real estate as a long-term road race where you don’t know where the next turn will lead—or the location of the finish line. But you still need to remain at the front of the pack if you want to finish strong. With this in mind, you can take measures now to ensure that you’re better positioned than your competitors.
Let’s say that you’re a developer with a mixed portfolio of commercial, manufacturing and retail assets. Your business and its balance sheet are strong. You know there will be development in the future and you know what investors want. But instead of sitting on the sidelines waiting for the market to turn, you can move to strengthen the company’s ledger and create the best possible cash position for your firm. In doing so, you put yourself ahead of competitors, no matter what the economic “road race” looks like.
Although funding markets may be closed, now is the time to sit down with a banker or other investor and provide them with options to work with you. As long as you’ve got the fundamentals under control—good-paying leases, property in expanding populations, low tenant-turnover rate, strong debt-to-equity ratio, stable staff, sales derived from current market changes, etc.—these financiers are likely to invest in your ventures first when the markets turn.
Here are five tactics that will strengthen your position:
- Perform better competitive intelligence. You don’t need to spend large blocks of time or much money to track down competitors’ activities, but you should be aware of where competitors are expanding and what opportunities they’re capturing. Many people say they know their competitors, but I’ve found that many of them are guessing. Plot out where competitors are making tracks by actually observing them, like sports coaches and teams do when they view and analyze game films.
- Use technology to do more with less. Are you using old manual or manually automated systems instead of actual automation, which generate leases and contracts with a push of a button? I know of several asset managers who have used technology to leverage their staff and as a result have been able to work on thousands of leases each year with only a handful of people.
- Outsource services to lower expenses and improve your bottom line. The IT industry uses a 24/7/365 model for software development. Code is written in the U.S. during U.S. work hours, then sent to India during their work hours, then to Eastern Europe, and then back to the U.S. to complete the workday cycle. Mimicking the IT industry’s methodology, you could lease space on an international level by partnering with a vendor in another country who understands the laws of their country and can generate leases and proposals for you while you sleep. Then you get back to work the following day and continue on the same work.
- Do research that leads to better decision making. How familiar are you with psychographic overlays? These systems allow you to classify customers by segments and groups, track population shifts, and enable you to forecast and position your real estate decisions more intelligently. A retailer can use psychographic overlays to calculate population growth, and forecast purchasing and shopping patterns. A landlord can anticipate business development and community changes.
- Develop and foster relationships with the ‘right’ people who can help you grow and strengthen your business. Keep in touch with people you already know; build new relationships with people who can open doors, help you think smarter and give you an edge in the marketplace. To put substance behind the relationship, be sure that you provide value to the other person, too.
These tactics can keep you ahead of the pack, but you’re not finished yet. Researcher Terry Hill introduced the concept of Order Qualifiers and Order Winners to the business world, and in this exercise, you’re going to define your own Qualifiers and Winners so that you know more accurately where you stand against competitors in your marketplace.
- Qualifiers: List everything you need in order to qualify to do the type of business that you do. Qualifiers might include your real-estate license, certification, access to databases, professional affiliations, etc.
- Winners: Be specific as you list every element that causes buyers or investors to work with you rather than to work with your competitors: track record, awards, assets, growth, etc. This list of Order Winners will be your baseline, but it is not your end all list.
- Forecasted Winners: I’ve added on to Terry Hill’s original model to include the future, because in essence, your job and your greatest advantage is to be prepared for tomorrow. What do you anticipate you will need to edge out competitors and win in the future? In actuality, you need to look at trends, cycles, and patterns to forecast tomorrow’s Order Winners. Remember when people had to put down 20 percent to purchase a home? Adopt the mindset of the lender who considers risk as compared to value and equity.
- Take measures today to build tomorrow. Remember the uncertain road race as you build upon and work toward your list of Forecasted Order Winners, because your goal is to stand out and differentiate yourself from the pack.
Eventually the market freeze will thaw and when it does, you want to be in the best position possible to take advantage of the opportunities that will be available to you. Even though times seem uncertain today, follow these suggestions now and you’ll come out stronger tomorrow.
Leadership and management expert David Goldsmith is an award-winning professor at New York University and the president of MetaMatrix Consulting Group, based in New York State. Business owner and entrepreneur turned international consultant and speaker, Mr. Goldsmith was named by Successful Meetings Magazine as one of the "Top 26 Hottest Speakers in America," and has been featured in media outlets worldwide. He is a regular columnist for several publications, and has published over 500 articles globally. His book entitled Paid to Think will be available in bookstores in May 2010. To learn more, visit www.davidgoldsmith.com, email
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, or call (315) 682-3157.
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