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Strategies for survival.

The last three years have been difficult ones for the real estate business, especially in the northeast. Rather than dwell on what went wrong and how we got where we are, it would be more helpful to focus on five steps which your firm could take in order to insure its survival over the coming year. In fact, these strategies will assist you in being in a very competitive posture when the recession ends and business recovers to a more normal pattern of growth.

* Be debt free - Easy to say, hard to do. But it's not too late to talk to your lender and restructure your pay schedule predicated on a viable, well conceived plan which you absolutely adhere to. Talk to your lender before you get into trouble; afterwards it may be to late.

* Generate fee income - Take on consulting/management assignments to help cover overhead. You've been in business a long time, you have breadth of experience, knowledge and contacts. Use these strengths to acquire assignments that will generate a stream of income and increase your cash flow.

* Work smaller brokerage leads - That 5,000-square-foot lead which you formerly tossed aside should now be worked. Better to make a series of 5,000 square foot deals than no deals at all.

* Cut costs - Take a hard look at your overhead: telephone bills, supplies, printing, payroll, etc. Health insurance costs are now the second largest line item on the P & E statement and must be controlled. Consider passing any increases on the employees (isn't everyone?) or increase the deductible to $500 or $750 or $1000. Remember, insurance is not there to cover every doctor's visit and every prescription; it's there for catastrophic events.

* Build Infrastructure for the future - Get your shop ready for the end of the recession and to be more competitive. Examine the telephone switch, computer system, copying machines and other equipment and office procedures for upgrades and improvements. for example, it may be possible to replace your old computer system with a much more powerful, sophisticated one which could be leased at lower costs based on today's interest rates than what you are paying for your old one.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Review and Forecast, Section III; real estate industry
Author:Bernstein, Asher
Publication:Real Estate Weekly
Date:Jun 24, 1992
Words:362
Previous Article:Creative solutions for elevator ups and downs.
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