So there’s no getting around it, we have to talk about Covid and both the short term and long term impacts on the real estate industry. The main question everyone is asking: will there be a way back from this situation?
The short answer is that for some businesses the answer is definitely YES. For others, it’s a solid no. There will be winners and losers and it’s all about being smart, resilient, adaptable and lean. Some businesses will be crushed in the coming weeks and months and others will be able to turn this challenge into an opportunity.
Winners and losers
ShoreAgents is part of a group called the ShoreFamily which services over 200 businesses and employs more than 700 staff. We’re based in the Philippines but our clients are from all over the world, both small and big businesses, so we really are seeing it from every side. Some of our clients are getting busier, some are shutting the doors. Most are just holding on by their fingernails, wondering what’s going to happen next.
One of our clients at Shore360 is also a good friend of mine. His business is in the travel industry, selling tour packages in Australia. Well guess what? The travel industry has just died a quick and sudden death. The travel industry in Australia was hit badly by the bushfires, then floods, and now Covid. His business, which he has been working on and in for years, has gone bust. He’s simply had to close the doors and let the administrators take over.
On the flipside, we have clients that sell medical equipment that are completely run off their feet. They’re taking on more staff to keep up with the increased volume of calls, emails, chats and messages. They’re working longer hours so they can cover more and more timezones. It’s just bananas.
Coronavirus and real estate
In the real estate space, we will definitely see some short-term pain. Social distancing is affecting the way you do business. How do you conduct an open home? What will happen to routine inspections? How long will this last? When can we start to return to normal operations?
In the short term, these are more like inconveniences than business destroying problems. Depending on where you live, social distancing might only last a few days or weeks. Maybe you’ll need to ask viewers to wear masks and gloves before entering. Maybe you’ll need to hire cleaners to disinfect a home between viewings. Either way, there will be additional time and costs to carry out viewings and you’ll need to factor that in. No doubt, restrictions are about to get even more serious and you may not be able to do viewings at all, even with the best of precautions. No viewings means no sales means no income. I’m sure you’ve already thought about that.
So those are the short term effects. But what about in the longer term? If you can ride out this period, what can you expect next?
Well, obviously we’re heading for a recession, if we’re not already there. With a downturn in the market, more businesses are going to go bust or lay off staff and we’ll have people unable to pay off their mortgages. That means an influx of properties so you can expect to be busy. But with fewer buyers, you’ll also have to work harder for each sale.
How can a real estate business protect against Covid?
Real estate is an old business. As long as people have had homes to buy and sell, there’s been an industry. We’re not quite as old as the oldest profession, but we’re not far behind. By that I mean basically that the real estate business isn’t going anywhere. We’re not disruptors or start-ups or any of those Silicon Valley terms. We are business owners. Sometimes small, sometimes bigger, but always solid. We buy and sell real products, not software or ideas or services. And more importantly, what we buy and sell are homes.
But it can be a tough business. Overheads are high, hours are long, staff are hit and miss, customers are fickle, the market can be volatile, I mean the list goes on.
There’s one thing you can do right now to make sure your business comes out the other side of this situation in a strong position. And that is to lower your cost base.
Right now, you’ve probably had to send most of your staff home. If you’ve never had offsite staff before, you might be feeling the challenge of that. If it’s making you nervous, you’re not alone.
But this is an incredible learning moment. If you haven’t already, you’ll be moving a lot of your systems and documents into the cloud. You’ve probably switched to Dropbox or Google Docs. You might finally be starting to use Zoom for your staff meetings.
Instead of feeling the pressure and rush of pushing through artwork and assets for a sale, you can take your time, find cheaper but better alternatives and just generally slow down.
How you use this downtime and slow down is up to you. You can stress about the lack of income – which, don’t worry, I understand is stressful. But if you can run your business on a skeleton staff all working from their homes, it will make you start to question why you’re paying for some of your overheads at all.
Switching to a low cost model
The smartest business owners are going to see the opportunity this slow down represents. They will invest a bit more now in online solutions and trim down on unnecessary costs like big offices or board rooms.
As people’s life situations change – and they will – they are still going to continue to buy and sell property. Your real estate business isn’t going bust just yet. But you’ll have to be smart. You’ll need to get smarter about who your buyers are and where your sellers are. You’ll have to change your pricing model or offer a more diverse range of services. You’ll have to get creative with targeted advertising. And you’re going to have to do all this with fewer staff.
But the upside is, you can use this time now wisely to prepare for the next step. Once most of your work is cloud-based, you can easily take on offsite staff from anywhere in the world. You can hire a real estate virtual assistant to take care of admin tasks that would otherwise languish, or take on an offshore graphic designer to make your ads stand out from everybody else’s.
Hopefully, you’re already ahead of the curve and you’re settling into this new normal with gusto. Your staff can Zoom with ease, and you were already using Google Forms for rental applications. Maybe you’ve had a few hiccups but you’re bouncing back quickly.
For those of you who are scrambling to play catch up, it’s not too late. My biggest piece of advice is – don’t panic. Educate yourself. There’s so much information out there about why using cloud-based applications is even better than using legacy software. In fact, this is the perfect time to finally upgrade your CRM.
Take some time to understand exactly how your business works – each and every point along the way. What’s absolutely vital? Can those vital tasks be done better and more cost-efficiently? What’s routine? Can those routine tasks be automated or shifted offshore? What’s actually unnecessary? Are there things you’re doing out of habit that don’t actually generate income or benefit to your business? Is it time to let them go?
The future will be different
If there’s one thing we all know right now it’s that the future will not be the same. The traditional way of doing business will never return. In fact, I don’t even like that term – ‘traditional business’. The real estate business has been changing for the last few decades. Either you’ve embraced it, or you’ve been watching it with discomfort. Well, now is the time to get comfortable!
There’s a theory in ecology that’s been adapted to businesses. It’s called resilience theory. Businesses put in more and more processes and procedures and standards and rules to the point that they become inflexible. They only need one catastrophic event to destroy the system, because it is too rigid. In a disaster, flexible systems always do better because they already know how to adapt and change.
If you try to stick to business-as-usual during the Corona crisis, I’m sorry, but you’re going to snap. What’s needed right now is not hard and fast rules, but agility and adaptability. This is your opportunity to make changes and come out the other side better and stronger by becoming more lean and flexible. Are you ready to change your routine?
It’s time to question, learn, adapt and change
There are so many questions and unknowns. I am writing this on the 18th of March 2020 and I am sure by the time it is published things will change. Here in the Philippines, we’ve been in a community quarantine for over a week. Everything except for supermarkets, pharmacies and a few other essential services is closed. We can still get take-out and delivery, but otherwise restaurants and cafes are off-limits.
At ShoreAgents, we were given extra time to organise our staff to be able to work from home. The government recognises that businesses like ours – which are called Business Process Offices or BPOs – are a vital part of the global economy. The government made special provisions so that BPO clients weren’t affected by the lockdown.
We are all in pain from this virus. Each of us may end up suffering its effects physically. But in the meantime, we all suffer shortness of breath watching what it is doing to the economy. The big question is, will the world ever be the same? In a way, business and the economy will recover, just like we did after the GFC of 2008. But it won’t be the same.
Business owners will realise that they have a lot of unnecessary expenses when it comes to running a physical business. Staff will work from home and there won’t be significant changes in productivity. All the things that business owners have been scared about working from home will be suddenly and quickly tested and they’ll discover that it’s mostly fine. You’ll be able to more easily see where you can cut expenses and then, as business picks up again, you’ll find new ways to keep working productively but cost-efficiently. Part of that will be building an offshore team which will push you leaps and bounds ahead of your competition.
There’s lots of don’ts associated with this virus. Don’t shake hands. Don’t touch your face. Don’t go out, don’t socialise. But also, don’t panic. And then there are the dos. Do question how you currently do business. Do learn about new methods and options. Do become adaptable. And finally, do change your outlook. Because the future is coming, and you have to be ready.