This article is a segment of a four-part series titled, “Why I’m Excited For a Correction.”
– Part 1: Why I’m Excited For a Correction
– Part 2: Who Are the Predators and the Prey?
– Part 3: Who Are the Most Vulnerable?
– Part 4: Missteps That Cause Implosions
It’s a Machiavellian analogy, but British nobleman and banking titan Baron Rothschild said, “the time to buy is when there’s blood in the streets.” The Millennials and cat-people would like to deny it, but we live in a competitive capitalist system with winners and losers. I would never want to profit off of someone’s misfortune, but in high-level business, it’s a fact of life. We have fiduciary responsibilities to our clients, but more importantly, to our families. It’s analogous to restaurant dining, and I would bet most of you have eaten meat over the last few weeks.
I would bet a buffalo nickel you didn’t see it get slaughtered, but trust me, that cow lost!
This article will tell a few cautionary tales forged from many conversations, give insight from a CRE entrepreneur’s perspective (at least I am one in my own mind) and spell out some potential pitfalls, along with solutions, for the younger generation, in dealing with the avaricious and those who lack EQ.
How the Younger & Inexperienced are Vulnerable
For the younger or inexperienced in commercial real estate, now is the time to brace for the storm and think about your exposure to the elements. Here are potential pitfalls that can make you vulnerable to career implosion:
Tying Your Saddle to the Wrong Horse
Good, bad or indifferent, all of you have a superior, boss or senior agent even if you are an independent contractor—those higher on the totem pole can typically get you fired, poison your well or use you as cannon fodder. Hopefully, your superior is a mentor, not a boss. I dislike the connotation of the word, “boss,” because control over another person is implicit in its use. If you have a boss or superior that is self-serving, find a way to distance yourself from that situation.
Strategic disassociation can be accomplished through networking and finding mentors. There is a good chance you will be at a different company in the future, conditions inevitably change, and naivety can squander precious productive years. Be prepared because when the watering hole dries, the ass that you thought was a Clydesdale will kick you to the curb.
Non-Reciprocal Shared Accounts
Are you working with a superior, but it feels like you are the closer, performing the majority of the work and they are reaping what you’ve executed? Team dynamics intensify when there is less money to go around. Make sure your teammates are trustworthy and will not poison your well for their self-gain or elicit your talents for non-reciprocal financial advancement.
The easiest way to avoid these pitfalls is to assign responsibilities early, in writing and stick to the arrangement. Partnerships should flow in both directions and if you’re doing 60%+ of the work, but only getting paid 30%-40% of the money, figure a way to get off that team or marginalize your teammate to your boss, because they are capitalizing on your efforts, work ethic and ingenuity.
Ambiguous & Inconsequential Work
If one of my daughters ever go into CRE (I already have a dissuasion strategy in place ), I’m going to tell them this is the most crucial topic of this discussion. It is better to make no money, eat Ramen noodles, get punched in the face at night as a bouncer and show up to work the next day (C to the Jizeee) than it is to have an inconsequential job where you earn insignificant money and gain no experience. Countless people have fizzled out of commercial real estate because of this chain of events:
- Companies/Principals will attend the first meeting, interview, and land sub-par accounts because they have a young producer with “Time and Nothing Better to Do”.
- The more seasoned producer dumps the account to an inexperienced newbie because they have more lucrative thoroughbreds to ride.
- The inexperienced producer cannot correctly explain a cogent solution to their real estate problem due to lack of knowledge and support.
- The property is drastically overpriced or undercapitalized and these are typically the highest maintenance because someone made a mistake. These accounts are the worst return on your time and reap minimal financial gains.
- Frustration ensues, and the broker makes no money.
- The owner doesn’t sell or lease their property and is dissatisfied with the service.
- There is a now a blemish on the reputation of the young broker, and they burnt a bridge early in their career.
Re-Trading Fundamental Terms
When a recession comes, a lot of nasty things surface from bottom, including bad leadership and poor planning. Myopic leaders relish in their success, thinking that their foresight, ingenuity, and relationships lead to this fragile and fleeting solvency. Luck, timing, dedicated employee/partner contribution, and market conditions surely couldn’t have been a factor, right? Here is what I think happens when the purse strings tighten at companies (CRE and general business).
Companies have relished in successes in good times, but when times tighten they will ask you to start sacrificing compensation, and this adjustment will be veiled as a structural compensation overhaul for the greater good of the collective company. Be wary when they ask for disadvantageous modifications to your compensation (fee splits in CRE), require arbitrary additional charges for daily business ops, increased desk fees, cut vacation time, or take away benefits.
In smaller/boutique companies, not only are their company accounts vulnerable to financial strikes but so are the Principal’s personal wallets. John, the (Multi-Millionaire Developer or Earning Broker), doesn’t want to tell little Suzy that the beach condo went into foreclosure, the HOA is suing them and the Barbie Dream House on the balcony has seagull crap all over it.
Avarice makes leaders more susceptible to emotionally driven missteps and clouded judgment. If you are a part of a firm and intuitively sense disharmony, dig more in-depth in a clandestine manner, there is more behind the curtain than you think. If you are a CRE producer in FL that can bring accounts, expertise, revenue and knowledge, call my cell phone (407) 506-9058.
Activities Driven vs. Results Driven
Scenario: You are at a firm that seems affable, everyone is nice, and you spend time together. There are extended lunch breaks, longwinded phone calls, and Smartphone Interpersonal Conversations. Let’s call it SPIC and it replaces the water cooler because many at work talk to each other casually about personal topics, while still looking at our phones and our brains are still hard-wired into our devices.
The person is sometimes having five-to-six conversations at once (text, email, Facebook, LinkedIn, Twitter, Instagram, etc.). This interaction is rudimentary and cold in terms of learning about a person’s non-verbal cues, connecting emotionally and reciprocal learning. There is no replacement for visceral human synergy during an interaction—pixels do not have souls, and the overwhelming majority of the content posted by the masses is inconsequential and aloof.
Nobody cares that your Orange Mocha Frappuccino melted, your bunion hurts in heels, a talking head’s political views you exhort as your own or about the filtered picture, with a selfie with a “yummy” sticker of your avocado toast. That’s the problem, activities-driven people who post worthless crap all the time are helplessly unproductive and typically unfulfilled. We now have digital water coolers, where the incessant, mundane and useless conversations continue, but now on 5.8-inch screens.
Find reliable leaders and mentors to be your sounding board. The unique leader will recognize that people are inherently covetous and tamp their narcissism down with empathy, knowing that rising tides lift all boats. When people are not attuned to their surroundings, routine, lethargy and group influence can leave you as vulnerable as a kitten in the arms of an 800-pound female gorilla.