Think Three Steps Ahead: How To Keep A Real Estate Business Afloat In Crisis
Real estate agents are independent contractors, and all independent contractors work with no safety net. No unemployment benefits, no employer-subsidized health care, no matched contributions to a 401k. In return, they don’t pay taxes out of every paycheck, and they have the freedom of 1099 employees. But when the economy falters, 1099 employees are the first to suffer. In a crisis like the one that COVID-19 has brought upon us, as with the 2008 recession or the months after 9/11, the independent contractor can think only about one issue: how long until my next deal? Can I pay my rent? How long will my savings hold out?
There are no one-size-fits-all answers to these questions. All over New York City, and the US, and the world, real estate agents, mortgage brokers, waiters, singers, instrumentalists are asking themselves the same things. And so are small business owners like me. We share the concerns of these independent contractors since we, too, are flying without a parachute. For us, the questions look more like this: how do I make payroll? How do I repay the loyalty my employees have shown to me without throwing myself and my business under the bus? What functions can the company survive without fulfilling? What I have learned, in my life as an agent, and now my life as a small business owner is this: be brave! Act fast and intently enough to solve not the problem of today, but the problem of a week from today, or a month from today, or three months. Now is the time to act. Although some of the decisions feel different, they skew similarly for both agents and the owners of the small businesses which support them. Here are a couple of ideas for agents:
- Do you need all those cable channels or can you use basic cable (which probably also supports your internet service) and read more, or rent the shows you really want to see by going online.
- Do you need a landline and a cell phone? I am not sure that I need both even as a business; I am looking into whether I can simply forward all Warburg Realty calls to the appropriate person’s cell phone.
- If you are spending days at home, can you sacrifice your personal marketing plans and do actual personal marketing – contacting people directly on the phone, or by e-mail or FaceTime. Or set up a few virtual groups on Zoom, to discuss books, or the opera, or sports, or what everyone is making for dinner, or just to help you and other members of your sphere feel less isolated.
- Let’s all actually cook for a change, even though we can still get food delivered in the city. Cooking is fun and a great de-stressor. Plus it’s a lot cheaper than those delivered meals.
Speaking of de-stressors, let’s not forget yard work for those of you who have left the city. Rake up those remaining leaves. Start the seedlings for your vegetable garden. Make a schedule for cutting back the plants which need spring pruning. Connections to the basics of life, like working in the soil or making a great dinner, help us remember that this situation, too, shall pass. The more anxious we are, the more cortisol we are pumping out, and the less well our immune systems function.
I am trying to keep all this in mind as I plan for the future of my real estate brokerage. What steps do I need to take NOW to make certain we are still strong three months from now? Do we seek rent mitigation? Do we reduce staff or their salaries? How will our insurance, or government, help with managing these expenses? We have already taken steps to cut all non-essential items from our overall budget, including events (we would be unable to do them in any case), conference attendance (mostly canceled for the foreseeable future), and non-core IT functions.
For the rest, we will wait and see. What I have learned from the crises Warburg Realty has faced until now is this: the sooner you act, and the bolder you are, the greater the likelihood that you will live to sell another day. New York will still be New York when all this is over. The city always bounces back. I have seen time after time, in 1988, in 2001, in 2009, that New Yorkers are buoyed up with excitement as these traumatic events draw to a close. Markets bounce back. Optimism returns. Sales begin to boom.
Join me in making a plan to hang in there. We will toast to each other on the other side.