Was the increase in your business from the first-time homebuyer tax credit good for your bottom line? Was it expected or was it unexpected? Usually everyone says that they expect a good thing to happen to them, so I'll bet your answer is "Oh yea, I expected that."
But did you expect the drop off in business when the tax credit expired? Usually the answer is "I thought in the back of my mind that business could drop off but I never expected it to drop off this much." Is that you?
Your business, your family, your life, is an organization. Organizations require management. There are a number of aspects of management that you need to address. One of them is "The Unexpected."
Unexpected events come in all sizes. Some are events that make you more money. Some are events that make you less money. But, all of them are surprises and need to be examined and understood. In the example of the boon to your business created by this particular outside market driven condition, how did you respond?
Many companies that I do business with did actually realize that the tax credit, an outside influence, was creating the extra demand that they were receiving. But, just like me, they began to think that the new flow of business as normal. It is easy to think that you did something that caused increase in business.
So, not only did the drop in business, from change in the outside influence, catch them unaware, the lull in their marketing during the boon, because, "yea, I'm doing well now," caused business to be even worse when the tax credit expired than it could have been. During the good times, they stopped marketing, stopped growing their referral sources, and did not expand their effort to attract new customers. Why? It is hard to do what needs to be done all the time. But it seems especially difficult to work on your organization when an outside influence is driving the business.
Proper management of your organization requires that you soberly recognize when an outside influence is driving your business and not be drunk on the wine of this success.
Another example of this is a real estate agent that came to work for me in 1986. The first three months she was in business, she sold five properties. That was unheard of in our market in 1986. She was a rock star. She won an award. She thought she was really great. So, what's the problem? All of her clients were created by an outside influence and not by her organization. What? All five of the transactions were from a pent up demand from her family. A brother sold his house. A son purchased a home. A cousin listed his building with her, etc.
Since these transactions were not created by her organization, its marketing effort, it networking effort, its late nights of blood, sweat and tears but from an outside influence, she was lulled into thinking how easy it is to be in this business. Therefore, she established her perception of what it took to succeed in the business without understanding that the source of business had been from an outside influence.
She was, of course, disappointed when the evaporation of the outside influence suddenly ended her stardom and her business. She wasn't prepared to adjust her thinking and thus her actions and therefore failed within one year.
While this is a true story, it is perhaps an over-exaggeration of what you are facing. So, don't overlook the important and fundamental principle.
The question always remains for you and for me to consider: Now that this particular outside influence has caused an unexpected drop in business, will we be more prepared next time to actually see the influence for what it is? The answer: Only if we increase our individual ability to manage our organization.
Joel Pate is an entrepreneur and founder of multiple successful companies in the mortgage, real estate, and marketing space.
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