Learn how to safeguard and lead your commercial real estate business and employees during financial hardships caused by a recession. Discover three key elements.

In This Article:

• Being A Confident Leader Helps Your Team Succeed
• What Commercial Financing Leadership Is About: Helping Others Make Tough Decisions
• Encourage Your Team To Make Financial Shifts
• How the GPARENCY CRE Marketplace Platform Can Help You
• FAQs

Most of the time, people associate leadership with the good times. But as we enter a recession, we must start to ask ourselves, “What about the hard times?” How can we bring people together and lead by example?

As the economy has fluctuated over the last several years, there’s no question that people have experienced stress and moved into a mode of caution. This is where true leadership skills come into play. Thank God, I have had the great privilege of leading in both good and bad economic times. Here are a few guiding principles I’ve learned.

1. Being A Confident Leader Helps Your Team Succeed

As a leader, people will rely on you to have a vision and be able to make tough decisions, keep them calm, and lead by example.

I’ve always believed that leading through a recession is about having a vision and a sense of purpose that can resonate with your employees and customers. It means maintaining the same standards that you would during normal business times, but it also means you’re willing to make the tough decisions and take the tough actions that are needed to move your business forward.

In early 2022, as the economy moved towards recession, I knew we needed to position our team at GPARENCY for success no matter what happened with the economy. Part of success to me meant setting benchmarks that removed any unnecessary or unrealistic pressure from our team. We made the difficult decision at GPARENCY to lower our projected growth goals to 20% month-over-month for April. Our original business plan called for this change in the summer, but we realized how critical it was to start planning for what was to come and made the tough decision we needed to make. This change allowed our team to focus on building the right foundation for months to come and think long-term, as well as showed transparency about the current situation combined with optimism about the future. 

Thanks to this change, our team was able to pull back and focus on ways we could offer even greater value in the months to come. Unfortunately, we watched as many other organizations failed to plan and fell into survival mode—often leading to last-minute decisions that hurt the organization as a whole. 

2. What Commercial Financing Leadership Is About: Helping Others Make Tough Decisions

Showing great commercial financing leadership during times of economic crisis is not just about having a strong vision and making tough decisions but also ensuring that you’re helping others do the same.

How can you do that?

• Keep the vision in front of your team.
• Remind them why they signed up.
• Show them why they signed up by modeling exactly how they should respond.

People tend to worry about their financial future during recessions, so you must take charge and instill confidence in the team. If you allow your team to get flustered and nervous, they will hesitate and underperform. Employees watch how their leaders react, and they will follow that behavior.

If you lead by example, you’ll be able to motivate your team to do the same. I’ve always been a firm believer that you can be both optimistic and wise.

3. Encourage Your Team To Make Financial Shifts

It’s so important to focus on making smart financial decisions… not when the market crashes, not next month, but TODAY.

The hard reality is that you may have to let people go during a recession. Most businesses do. If that’s the case, my advice is to make those calls as early on and fast as possible. Get your top producers around the table and find out what they need (and who they need) to keep closing deals.

Making Cuts

It may be tempting to wait until it’s absolutely necessary, but in a commercial estate company, I’ve always found it’s better for everyone when you make those hard decisions as early as possible. When you make those cuts earlier on, it means those team members can find new work before businesses are overrun with the competition. It also protects your cash flow, and that could save you from having to lay off more people down the road.

Move into a mode of not caring about impressing people, and encourage your team to do the same. Now is not the time to make commercial financing decisions based on an image you want to uphold… leaders and teams can be stronger through market shifts if they work together today to prepare.

More than ever, having strong leadership in your organization is of the utmost importance. Being a confident leader during these unprecedented times can help your team succeed. At the end of the day, leadership is about helping others make tough decisions—even if that means making some financial shifts within your commercial real estate company.

So, encourage your team and be transparent with them about the changes you’re making. It’s okay not to have all the answers, but it’s important to show that you’re doing everything possible to weather this storm.

Confidence, transparency, and wisdom—these traits are critical to coming out on top no matter what’s coming. You got this, and we can help!

How the GPARENCY CRE Marketplace Platform Can Help You

During a recession, the commercial real estate industry can experience significant disruptions, making it difficult to secure financing and identify profitable opportunities. However, with GPARENCY, investors can stay ahead of the curve and make strategic decisions based on accurate data and insights.

GPARENCY provides access to a range of tools and resources that can help investors make informed decisions and find financing options that work for their unique needs. This includes access to a range of features, including a database of lenders so you can shop for financing, market data and insights so you always walk into every deal prepared, and expert advice from experienced professionals. GPARENCY’s database of lenders can help investors find the right financing options for their specific needs, even during a recession, as well as provide guidance on market trends and conditions, helping investors identify profitable opportunities that may otherwise go unnoticed.

FAQs

1. How do companies protect themselves from a recession?

There are several ways that companies can protect themselves from a recession:

• Build up cash reserves: Companies should prioritize building up cash reserves during good economic times so that they have a cushion to weather the storm of a recession.
• Diversify revenue streams: Companies can reduce their reliance on a single product or market by diversifying their revenue streams. This can help mitigate the impact of a recession in any one particular area.
• Manage debt: Companies should be cautious about taking on too much debt during good economic times and work to pay down debt when possible. This can reduce the risk of defaulting on loans during a recession.
• Cut costs: During a recession, companies may need to reduce expenses in order to survive. This can include cutting back on non-essential expenses and finding ways to increase efficiency.
• Maintain customer relationships: Companies should prioritize maintaining strong relationships with their customers during a recession. This can help ensure that they continue to generate revenue even in a difficult economic climate.

Overall, the key to protecting against a recession is to maintain a strong financial position and be prepared to make tough decisions to weather the storm.

2. What is the best way to protect yourself in a recession?

There are several steps individuals can take to protect themselves in a recession. While these steps are similar to how a company can protest itself, there are a few differences.

• Build up an emergency fund: It’s important to have an emergency fund that can cover at least three to six months of expenses in case of a job loss or other financial hardship.
• Pay down debt: Reducing debt can provide a cushion during a recession, as it can reduce the number of monthly expenses.
• Increase savings: Saving more can help individuals weather a recession by providing a financial cushion.
• Evaluate investments: Review your investment portfolio and make any necessary adjustments based on your risk tolerance and investment goals.
• Cut expenses: Look for ways to reduce expenses and save money, such as by downsizing your home or car, cooking at home more, and avoiding unnecessary purchases.
• Focus on job security: If possible, try to build skills or take steps to enhance job security, such as networking, taking on additional responsibilities, or pursuing additional education.

Overall, the key to protecting yourself in a recession is to maintain a strong financial position, reduce debt, and increase savings. It’s important to be proactive and take steps to protect your finances before a recession hits.

3. How do I prepare my business for a recession?

Preparing your business for a recession requires taking proactive steps to strengthen your financial position and operations. Here are some strategies that can help:

• Diversify revenue streams: Look for ways to diversify your revenue streams, such as by expanding into new markets or product lines. This can help mitigate the impact of a recession in any one particular area.
• Manage cash flow: Work to improve cash flow by reducing expenses, collecting receivables quickly, and negotiating better terms with suppliers.
• Reduce debt: Pay down debt and avoid taking on new debt to reduce the risk of defaulting on loans during a recession.
• Build up cash reserves: Prioritize building up cash reserves during good economic times to provide a cushion during a recession.
• Evaluate and adjust your business model: Assess your business model and look for areas where you can improve efficiency or reduce costs.
• Maintain strong customer relationships: Focus on maintaining strong relationships with your customers by providing excellent service and products.
• Monitor and plan for potential risks: Monitor economic indicators and industry trends and plan for potential risks that may arise during a recession.

Overall, the key to preparing your business for a recession is to maintain a strong financial position, focus on efficiency and cost reduction, and be prepared to make tough decisions if necessary. By taking proactive steps, you can increase the likelihood of weathering a recession and emerging stronger on the other side.

About the Author