Principals often zig when they need to zag during a downturn. So why do leaders get the macro and micro focus wrong?
Topic – 5 big mistakes made in a recession
Mentor – Jacob Aldridge
- Great business leaders are on top of the detail
- When the mood and motivation of a team drops
- Don’t ignore the detail
Kevin: Real Reach is the programme we’re talking about this week as we pick out some of the highlights in the Real Reach programme. One of those in particular that stands out and seems to be getting a lot of traction is any discussion around recession, preparing your business, making it more bulletproof. And our guest to do that is the man behind Real Reach, Jacob Aldridge. Jacob, thanks again for your time.
Kevin: You’ve been talking all this week about principles often zigging and zagging. Doing it the wrong way round, zig when they need to zag in a downturn. Why do leaders get the macro and the micro focus wrong?
Jacob: Always a pleasure to chat with you Kevin. Great business leaders need to be astrophysicists and microbiologists. They have the big picture and they’ve gotta have the detail. When a downturn happens in their local market or there’s a national or a state recession, revenue drops, the mood of the market and their team drops, and the emotional response, the reaction from business owners is often to jump into the details. But this is the time when holding that big picture is most important.
Kevin: Why is that mate? Why is it so important now?
Jacob: I like to see a downturn as a good thing. Never waste a good recession because it cleans all of the cowboys out of the market, creates a lot of movement in sales people and in market share. It’s almost impossible to grow market share during a boom because that’s when all the cowboys come flooding in. So you build market share, you build a sustainable, long term super profitable business in a bust because you stand your ground, and you attract great agents, build your profile. So if you’re sitting in your office counting how many biscuits the staff are eating out of the tin, you might save ten bucks, but at the expense of all that opportunity that’s going on in the market.
Kevin: There’s one real estate group in Australasia, one of the biggest in fact, they say they always sail strongest in light winds.
Jacob: Which is a great way of pointing out how much opportunity is floating around for the good operators. And I assure that based on all my experience Kevin that every single one, every single person who is listening to this show is a great operator.
Kevin: Jacob as we talked on Tuesday about risk, is the opposite true during a boom?
Jacob: It is absolutely is. During a boom the business owner, feeling great, is naturally looking big picture and they can take their eye off the detail, and that’s when they can build in some of the fat, some of the inefficiencies in the business that will come back to smack them around the head when the market turns and it’s a cycle. Eventually it will turn.
Kevin: Jacob what are some of the macro investments you can make during a downturn?
Jacob: One of the biggest I see is recruitment. If there are some great sales people that you’d love to have on your team, during a downturn is often the best time to acquire them because they’re going to have fewer listings, fewer commitments to other businesses, and they’re going to possibly be looking for a change if that other business is operating a little bit too tightly. And brand is another big one. If you imagine if there’s a drawn out recession, a drag, all of your competitors are looking really downtrodden and you get a new brand or some new signage, new profile out in the marketplace. Those people who are still selling, so people will still sell houses in every point of the economic cycle, they’re going to be so much more attracted to you if you’re the one who looks like you’re still investing and growing.
Kevin: It’s a point you made earlier in the week too about how hard it is to grow market share in a boom time. There’s a classic demonstration of how you can rapidly grow market share in a downturn, just by tweaking your image a bit.
Jacob: Working with Australian real estate businesses through the global financial crisis and I also was based in London for a few years of that working with some there and in North America. And I saw businesses double their market share in a quarter during the global financial crisis because they just kept doing the right things while their competitors got scared and ran away.
Kevin: Yeah wow what a great lesson. We’re going to put the icing on the cake this week when Jacob comes back tomorrow. Jacob Aldridge our guest. We’re going to talk about the different cycles tomorrow. Jacob of course the man behind Real Reach, a great programme if you’re looking at honing your skills as a leader, even if you’re looking at starting a role as a leader, everything you need to know is behind that wall. Real Reach is the programme, you can get all the details right at RE Uncut. Jacob, talk to you again in the morning mate, thanks for your time.
Jacob: You’re welcome.