How to Grow Your Business Even if We Go into a Recession
Is the economy crashing? That’s the question on everyone’s minds right now.
Last week, Berkshire Hathaway sold off half of their shares in Apple, causing a full-blown panic in the stock market. This came after a jobs report showing job growth far below economist predictions. And as we know, the real estate market has remained slow amid high mortgage rates and serious inflation.
It’s worth asking, what’s actually going on in the economy and what does it mean for real estate agents trying to keep their businesses afloat?
In this blog, I’ll give my best answer to that question, but what I really want to do is help you prepare your business for the type of market we’re facing. I’ll give you four strategies to recession-proof your business and seize this period of economic downturn for your advantage. Because, as you’ll see, this is the best time to expand your market share if you do it correctly.
This is not a doom and gloom article. This is a message of hope.
Are we in a recession?
No, we’re not in a recession and at this moment in time, some economists don’t think a recession is necessarily inevitable – though others would disagree.
The U.S. economy has already triggered the Sahm Rule, a time-tested indicator used to determine whether the U.S. is headed into a recession. The Sahm rule states that the first phase of a recession begins when the three-month moving average of the U.S. unemployment rate is at least .5 higher than the 12-month low.
This “rule” is unofficial and other factors need to be taken into account, such as what actions we take right now, but it’s proved to be a historically accurate indicator. Still, a recession does not technically start until we see two consecutive quarters of inflation-adjusted decline in GDP.
So, yes, things are looking worrisome, but here’s what’s important for you to know...
History Shows Us the Way
A 2010 Harvard Business Review study puts things into perspective. They analyzed the performances of 4,700 public companies during three different U.S. recessions from the 1980s through 2022. Here’s what those businesses fared:
- 17% didn’t survive the recession
- 80% had not regained their pre-recession growth rates even three years later
- Only 9% flourished after the slowdown
So what did that 9% do differently which made them so successful?
The researchers broke the companies up into categories based on the plays they ran during this time:
- Prevention-focused: cut costs and played defensively
- Promotion-focused: went fully offensive during the slowdown
- Progressive: strategically combined offensive and defensive strategies
The Prevention group performed the lowest, with only 21% odds of outperforming their rivals. Promotion came up better at 26%, but it was the Progressive group that majorly won at 37%.
Interpreting the Data
So if the Progressive group is what you want to be in, what makes them different from the others? Let’s start by looking at what the Prevention and Promotion groups have in common.
When the economy gets hard, CEOs get scared. The majority start cutting jobs and scaling down marketing. Then there are those who continue to hire like crazy and shoot out marketing like never before – but here’s the thing… While it looks like they’re playing on the offensive, they’re doing it in a reactionary way. It’s coming out of fear or ignorance.
What makes progressive companies different is that they grow strategically while reducing costs carefully. They’re not firing a bunch of people and completely backtracking on their previous plans; they’re simply adjusting them. This requires keeping calm and seeking other perspectives.
Recession Play No. 1: Focus on Operational Efficiency
The Harvard Business Review researchers dove into different combinations of offensive and defensive plays that companies ran and rated them based on their effectiveness. Those who cut employees while focusing on market development and investing in assets performed the worst. On the other hand, those who used the same offensive moves while focusing on operational efficiency instead of employee reduction performed the best overall.
Streamlining your operations comes down to organization, continuous training, and tracking and measuring results, and non-stop development. When you study your business and cut all the things that don’t serve you, it creates space for more impactful actions.
To give an example, those who attend this year’s Success Summit will gain access to the full playbook of Florida rockstar, Lourdes Maestres, who developed standard operating procedures which increased her business efficiency by over 50%. These SOPs directly led her to generate over $2 million in GCI last year.
Focusing on operational efficiency is the No. 1 predictor of success in a recession market.
Operational Efficiency & AI for Real Estate
Right now, we can’t talk about efficiency without talking about AI. According to Forbes, business owners who have adopted AI into their workflows report experiencing a 50%+ improvement in overall productivity.
As a real estate agent who wears so many different hats, this is especially true. AI can help you edit videos, create social posts, improve your website, automatically set up appointments, interpret data, optimize your schedule, and so much more!
Not to brag, but TomAI is seeing heavy everyday use from our coaching members who rave about the impacts it's made in their businesses. This is the ONLY comprehensive AI tool built specifically for real estate agents.
Those who are serious about using AI in their real estate businesses can not afford to miss the powerful AI discussions they’ll hear at the Summit real estate conference.
Recession Play No. 2: Strategic Marketing & Lead Gen
It’s not enough to just put out more marketing. To survive and thrive after an economic downturn, you need to get strategic about what channels you’re running in order to minimize costs and maximize results. If you’re just putting out more of the same and throwing money at the problem, that’s how you end up in that 26% Promotion group.
Start with your messaging. When people find themselves in a new economic situation, the messaging is more important than ever. Decide the story you want to tell and choose channels that will allow you to convey it to your target audience while remaining within budget.
Luckily, there are a few marketing channels that cost next to nothing and have proven effective under any circumstances.
And remember, most of your competition is as scared as you might be. They’re likely going to pull back on their marketing and regret it later. This is a massive opportunity for you to scoop up market share.
Recession Play No. 3: Mindset is Everything
Just thinking about what we discussed in the first few paragraphs of this blog is enough to drive anyone insane. Over the next few months, things might get worse. The election has people on edge and no one knows the future.
YOU CAN NOT LET THIS GET TO YOU.
That is so very important. Do not go reading the news in your free time. Take in just as much news as you need to stay informed and do your job effectively, and then get your head to a more productive place.
Buy one of the mindset books on this list – or all of them – and read a chapter every morning. Listen to them in the car or on the treadmill. Mediate, exercise, and eat well. Write out your mission statement, create a vision board, and keep a gratitude journal.
Do whatever it takes to get out of the noise and keep charging the storm. That’s one of our biggest focuses at Summit real estate conference, and it needs to be your priority now.
Recession Play No. 4: Invest in Training, Knowledge, and Guidance
If you want to achieve the first three plays in this list, this one is how you do it. Training and guidance and the most recession-proof strategy you can possibly adopt – for both yourself and your team.
We’re not in a Speed Market anymore. This is a Skills & Strategy housing market, so only those with the best skills and strategies will win. That’s where training sets you apart. It’s the reason that agents who join real estate coaching begin to multiply their GCI within the first year and continue to grow consistently after that.
When it comes to your team, providing training is your best tool for keeping them engaged and loyal. Researcher Bob Nelson states that other than direct recognition, career development opportunities are the best way to drive employee engagement. Data from Deloitte shows that 26% of all employees are actively disengaged but developing a learning culture and providing training can rapidly drive engagement and boost retention by 30-50%.
As I said before, this is a scary time, but there is nothing to be scared of if you have the skills, knowledge, and expert guidance to handle whatever the world can throw at you.
Training = Confidence. Remember that.