RECESSION PROOF YOUR BUSINESS!

PART 1

Many of you know that the opening of this show where I say happy, healthy, prosperous, and profitable comes from a saying that we started around my office 8 to 10 years ago that we started affectionately referring to as h2p2. Happy, healthy, prosperous, and profitable, h2, p2. We had t-shirts made, it became a whole thing around our offices, and whenever we ask each other how they’re doing, instead of saying, ‘good’, or ‘alright’, they often just say, ‘h2p2 boss!’ Sometimes, if somebody isn’t happy about something they’ll answer that question with an, ‘H1, I’m H1 today man!’, which means they’re healthy but not happy. So, this will typically garner an, ‘uh oh, what’s going on?’ conversation. It’s all pretty cool, in my opinion, that this little language and mindset has taken on a life of its own. The reason I bring it up is because I have had some listeners ask me why we say ‘prosperous and profitable’, along with the happy and healthy part, so I thought I’d share the thinking behind it.

Let me first say that I really appreciate those who’ve asked about it because each one of those words from the very beginning were loaded with more meaning than most would know without asking. As most of you know and understand, words matter. There may be dictionary definitions for every word we use in our daily conversations, but there are often deeper meanings within words that get overlooked in common language. For example, If I ask you if you’re healthy, you may use a set of metrics like weight to height ratio, or your last doctor visit to answer my question. “Yeah man, I’m healthy, doc said so!”. However, health means physical health, mental health, financial health, relationship health, emotional health, and so on. Happy means different things to different people depending on their particular life situation at that moment. When we say happy and healthy, we’re saying it more as a reminder that those states entail more than just the surface level happy and healthy. It’s more of a challenge than it is a question. It’s a challenge to look deep at where your health and happiness comes from and how much of it you may have despite life’s challenges.

Like happy and healthy, prosperous, and profitable are also deeper concepts. The Latin root of prosper speaks to looking forward with hope and positivity. It refers to advancement of one’s life in all areas. To prosper is to live well regardless of one’s financial situation. In essence, it’s a way of thinking more than the state of one’s bank account or assets. You can prosper from a bad business deal when you look at all the things you learned from the experience. I’ve said many times that I came out of a divorce 12 years ago very prosperous despite having lost almost everything I had worked for financially up to that point because I realized in that experience that my prosperity wasn’t rooted in the things, it was rooted in my mental, physical, and emotional health and the fact that I could earn it all back. My prosperity came from within me, not from external sources. The word profitable is usually the one that stumps people the most because almost everyone thinks of profitability in terms of a business or a transaction, and why wouldn’t they. The only time profitability is typically talked about is in that context. However, the word profit also has old world roots and it’s early meaning was more akin to advancement, increase, success, progress, accomplishment, usefulness, and making something happen. The ultimate profit, in my opinion, comes from our ability to choose, not from how much we have in the bank. You’re said to be profitable when you can choose one life over another.

Of course, as a business coach, when we talk about your finances and we’re looking to see if you’re profitable, we’re definitely using the accounting definition in that context. I want to know if you’re covering all of your expenses with your sales to see if you’re profitable in that sense. However, if I see you at an event at some point in the future and ask you if you’re happy, healthy, prosperous, and profitable, just know that I’m asking you more about your state of mind and outlook than I am about your blood pressure, your 401K, and your tax returns.

Alright, onward and upward my friends! With that out of the way, let’s get into the meat of this week’s show, how to become recession proof. Why are we talking about recessions in this episode? Why wouldn’t we? The word is in almost every headline around the world and it’s freaking people out. To clarify, a recession, by definition, is simply when something recedes. When the ocean tide comes in, that’s called an expansion or advancement, when it goes back out, it’s receding. When an economy is growing it’s said to be expanding, when it stops growing for 2 consecutive quarters, it’s said to be receding. Typically, an economic recession lasts around 10 months or so and then takes a turn. Without going deeper on that concept and how we got here in the US, just know that recessions are natural and expected. All of life moves in cycles and, since economies are made up and driven by humans, so too do economies move in cycles. Money ebbs and flows. Preferences ebb and flow. The stock markets ebb and flow. One day Beanie Babies are popular, the next day they’re not and your evil sister in law’s stupid collection is worthless.

Recessions are natural and necessary, but they also require the proper mindset and activities to get through them happy, healthy, prosperous, and profitable. In the next two episodes, we’re going to talk about some things you can do to help make a recessionary period in the economy as prosperous and profitable as possible. I will also say that this is not an exhaustive list, nor are these the only things one can and should be doing. Many of you are likely doing some things that have set you apart in your markets and I would love to hear those stories. After all, when things recede, that typically means there is less to go around. That means, unfortunately, that some won’t be able to make ends meet and will likely be changing careers, getting out of the business they’re currently in, maybe closing down their small business and applying their skills somewhere else, and, for some, potentially learning a whole new skillset to survive and thrive.

Personally, I love these periods in history because they force people to get very creative and very efficient. One of the good things to come from recessions and depressions is the mindset shift that has to occur for people to get by. People are forced to wake up a bit and take a hard look at how they live, how they operate, and the things that are important to them. Things have been really good up to now, but now things are changing and you’re likely going to have change too if you want to prosper. And you can, by the way! There are some really good things that come out of these kinds of shifts in markets and economies. For one, lots of things that were previously too expensive to consider are suddenly on sale. I don’t want to make light of trying times, but there is a reality to all of this and it’s that it’s simply a contraction in the market. Yes, your business will be affected. Yes, your life will be affected, and you’ll likely have to make some changes to your lifestyle. However, if you’ve been digging your well like we suggest all the time, you will have a fully funded survival account, you’ll have your business relationships dialed in and ready to make some more, and you’ll be ready to pull the proverbial trigger on expanding your net worth. To quote the great Warren Buffet, wise investors are “fearful when others are greedy, and greedy when others are fearful.” Fear is setting into the market, which means stocks are dropping, house prices are starting to level off, inventory is starting to increase across the country, and things are starting to go on sale. Nevertheless, this episode is not how to build your wealth during a recession, it’s how to recession proof your business, so let’s chat about what you can do.

No realistic recession proofing episode would be complete without addressing one of the most important aspects of all of this: your health. Trying times create stress. Stress taxes the body and mind. One of the best ways to deal with stress, anxiety, and trying times is by getting strong and healthy. People often offload the responsibility of maintaining or improving their health on external factors like being too busy, the economy, travel, or some other thing outside of themselves. That is until something major happens and forces them into crisis mode. We can all probably conjure up an anecdote supporting what I just said. We all know somebody who was sidelined by some kind of diagnosis, injury, or health scare. What happens when that occurs? All the things they thought was more important leading up to that moment suddenly becomes not that important. Family, mobility, having more time, all those things become far more important than cranking out another not-so-important appraisal file or making another dollar.

When faced with a crisis, especially a health crisis, nobody says I need to ramp up my production at the office. Take care of yourself now so you can take care of your people and get through tough times and enjoy life long into the future. Lifespan is not what’s important, health-span is. It doesn’t matter if you make it to 85 or 90 if you’re suffering for the last 10 or 15 years of that span. The goal is first to have as much life in your years while you’re here, and secondarily to have the best possible health and mobility for as long as humanly possible, that’s what health-span is all about. If you want to recession-proof your business, you must first recession and depression proof your body and mind and that only happens with some kind of focus on your diet, your lean muscle mass, your cardiovascular health, your joint health, and your mental health. Take it very seriously friends because nobody else can do it for you! Your people need you (this includes your family), your business needs you, and the world needs you to be as healthy and strong as you can possibly be.

The next recession proofing suggestion is to pay off debt as soon as possible. I know, most people hate hearing this one. We’ve been sold a lie that to live a good life we need to have stuff, we need to keep up with the neighbors, we need to live in the gated community, and we need to show the world we’ve got some shit. I get it! And I’m all for living life to the fullest, whatever that means for you. I’m not against the boats, the cars, the jet skis, the houses, the travel, or whatever else brings joy and meaning to your life. This is simply a strong recommendation for making it through tough times. If any of those things are being obtained through debt, get rid of the debt as fast as you can. Not only are we already in a recession, but we are also already in some rough waters economically. Inflation is out of control, which means our dollars are not able to purchase as much as they could last month or last year. Gas for your car is ranging between $5 and $8 per gallon depending on what area on the country you live in, groceries are more expensive, not to mention we’re experiencing some supply shortages in some food staples, we’ve seen out of control increases in home prices and living expenses as rents rise globally, and so on. All of this to say that making the most of each of your dollars goes a long way to aiding your survival through tough times. Pay off as much debt as you can as soon as you can.

The next recession proofing suggestion I have is around your brand. For clarification, your brand is not your logo. It’s not your letterhead or business cards. Your brand is not the sponsored banner at the local little league ballpark, and it’s not your company colors. Those things can all be elements of your branding (emphasis on the ‘ing), but it’s not your brand. All of those things have to do with your marketing and advertising, not necessarily your brand. Marketing and advertising should be a very easily calculated activity, meaning; one dollar of advertising produces $5 of return, or whatever the metrics are for you and in your industry. When we talk about your brand, we’re essentially talking about what you stand for and what you’re known for. Your brand has more to do with how people feel about your business than what they see out in the marketplace. Again, not that your banners, business cards, and ads aren’t important or valuable in getting you more business, but during in both good times and rough times, your brand can have more impact than your marketing. If your marketing is what people see and hear about your company, and branding is about how they feel, how do people feel about you and your company?

If you don’t know the answer to that question, you probably don’t have much of a recognizable brand in the marketplace, or you’ve just done a really bad job of connecting with your market. Either way, in recessionary times, it is very important to be heavily focused on your brand, and I’ll tell you why. When times are good and everybody is happy, they’re much less concerned about how much they have to pay for certain things. Conversely, when the people who have the ability to pay you for your services are watching their own spending during down times, they’re much more conscious of who they choose and how much they have to spend for that thing. They’ll research longer and harder, they’ll likely have more options to choose from, and they’ll likely have cheaper options to choose from. They may have always had cheaper versions or options to choose from, even in good times, but when times get tough, they get tough for everyone, and businesses tend to get more competitive to stay alive.

If you’re an appraiser, or an appraisal company, and this would go for agents, lenders, and many other industries as well, you likely tend to place heavy focus and emphasis on what you perceive your product to be, and in many cases it’s the wrong thing. For appraisers, they tend to focus on the appraisal as their product, and therefore, their brand. Their brand becomes about the piece of paper, and less about their service, the personality of their company, their core values, their overall mission, and how customers and clients feel about doing business with them. In fact, I’ll go as far as to say that, for most appraisers and appraisal companies, not only could they not care any less about how their clients and customers feel about them, many secretly, and not so secretly, hate their clients and customers with a passion. I’ve worked in 8 or 9 different industries in my life and have yet to work in an industry that has so many participants that have a disdain for the people who pay them more than in the appraisal industry. Just spend 5 minutes in an industry forum and read how they talk about their clients and customers, and you’ll get a good sense of how disconnected many appraisers are from how to be really good in business. And, as I always say, this is the good news!

The good news, especially during a recession when things might slow down in business, those who are really good at what they do, those who like their clients and their clients like them, and those who understand that their service is their main product will tend to stand out from the rest. If you are in a service business, and appraisers, realtors, and lenders are in a service business, your brand is way more about how you treat your clients and customers and how they feel about you after doing business with you. It’s not the document, it’s not the interest rate, it’s not your office, it’s not the house they’re buying, it’s you, and it’s the experience they have before, during, and after the proverbial sale. So, how is yours? How is your service? What will the experience be when your customers call you, email you, text you, or refer you to a friend or family member. This becomes infinitely more important during recessionary times because customers tend to become far more judicious about what they pay for services, and they tend to have more choices available to them than they did when the markets are sizzling along and everyone is slammed busy.

What are you known for? What do you want to be known for? And does what you want to be known for mesh with what clients and customers in the market care about? For my appraiser colleagues who continue to say, “I want to be known in my market as the provider of the most honest and accurate appraisals”, I would say that’s great, but does the market of clients and customers even know what that means, and is that what they’re really looking for? In most cases, the easy answer is ‘no’, they don’t have any context for what that means, and they have nothing to compare it against. If you’re referring to lender clients or AMC clients, my guess is that they’re not looking for the most honest and accurate appraiser. Not that they won’t take that when they find it, but that’s not the top of their list when they’re looking for appraisers to add to their panels. Lenders and AMCs are looking primarily at turn times, revision rates, on-time report status, update frequency, communication standards, and fee. If you’re referring to the private market for appraisal services like attorneys, estate planners, Realtors, and your average homeowner, honesty and accuracy may go a little further, but it’s still not going to hit the mark when it comes to a brand, a feeling, and the residue that’s left over after somebody has an experience with your business. When it comes to your brand, think experience, friends! Your service is your product. Those who can give the market a great experience, and an experience that exceeds their expectations, win, especially during a recession when competition expands.

In the next episode we’ll talk about your website, social media, Google reviews, direct lender versus AMC work for appraisers, and a little bit on leadership. Remember, my friends, when times get tough leaders emerge. Tough times create tough people, and tough people create tough businesses. Recessions are a normal part of the economic cycles. I don’t want to minimize the effect they might have on your business and your livelihood, but there are some definite benefits to be taken advantage of during these times if you’re of the mind to see them and take action. I want to leave you with a thought that the opportunity is always equal to, and often greater than, the crisis. What you cannot do is get stuck in the ‘when things get back to normal’ mindset. There is seed planting time and harvesting time. We’ve been in harvest mode for a long time. What seeds are you planting now and what will your harvest be when the next cycle comes around?

Until next week, I’m out…