We all know that markets move in cycles, ups and downs. So why do we make these mistakes when the market turns?
Topic – 5 big mistakes made in a recession
Mentor – Jacob Aldridge
- Most make ‘gut decisions’
- Why that is out of date
- Be greedy when others are fearful and vice versa
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Kevin: Recessionary times normally surprise most business people. It’s almost like the recession sneaks up on them and then creates the surprise. Very few businesses in the world have set themselves financially and strategically for the downturn before it arrives.
Kevin: There are five common mistakes business people make. In our industry, as in certain parts of the world, we are actually headed toward some sort of a downturn. It might not happen in all markets but, as I said, there are five common mistakes that business people make when they adjust the business to cope with the economic environment. In outlining them, we’re gonna hope that we can help you avoid some of the common pitfalls.
Kevin: He’s normally a regular guest of ours, at least once in the week, but this is such an important topic we’ve invited Jacob Aldridge from Real Reach to join us all week. Jacob, thank you very much for your time.
Jacob: My absolute pleasure, Kevin. I think this is such a timely conversation because, as you were saying, so few business leaders actually get ahead of these market cycles even though they know that these are cycles.
Kevin: Yeah. So we know that the markets do move in cycles, ups and downs. So why do we make these mistakes when the market does turn?
Jacob: Most real estate principals, licensees, business owners, like most business owners in general, we make decisions based on gut feeling. Most of the time, our gut feeling is pretty accurate and that works out for us. It’s just when the market changes, particularly when it changes from boom to bust, although there are other points in the cycle as well. When it changes, our gut feel is out of date. So leaders are acting one step behind. A lot of the mistakes that we’ll talk about over the course of this week are linked to this. Business owners are making decisions based on what is no longer the market situation that they’re operating in.
Kevin: I liken it, in a way, to hot spotting. We talk about finding a hot spot. And by the time you find it or you identify it, it’s almost over. It’s a similar situation, isn’t it?
Jacob: It is, and the reality is if you’re an expert in your market, you’re not an expert on what’s happening with the wider economy necessarily. You’re not an expert on what’s happening even in an adjacent market or another city. And so you can be blindsided by some of these things if you’re not keeping an eye out. And then you’re late to the party.
Kevin: So it’s even more relevant, when things are going well? Even though they’re going well in markets they should be preparing for this contingency?
Jacob: You need to absolutely have a contingency. We’re not talking about a massive shift to your business strategy, it might just be a bit of a plan you’ve got on one page. And it’s certainly something that I’ve put in place in my business this year, is a plan for when that next recession downturn comes. And it might be two years away, but when it shows up I’m going to be able to pull that plan out of the drawer and act on it immediately, instead of being three or six months behind. And if I’m fast, I’m ahead of the competition, and that’s a massive boost for my business.
Kevin: Tomorrow we’re going to have a look at risk, risk appetite, how is your risk appetite, as we look at the five mistakes of a recession. Joining us this week, Jacob Aldridge from Real Reach. Thanks for your time, mate, talk to you in the morning.
Jacob: Thanks Kevin, talk then.