Cutting overheads to save your business might seem a bit scary but in this article, we meet a company who went through the exercise and came out stronger the other side.
I had a meeting with an estate agent client of ours a few days ago. Based just outside London, with a few nice branches and a couple of smart Audi’s occupying the off road parking spots, it was difficult to see how this agent had ever been anything other than successful.
We went through the usual business stuff we had to cover and of course I asked him how business was going and was pleased that for him, despite all of the Brexit doom and gloom, things were very good.
I suppose I took it for granted. They were a forward thinking firm, dynamic and one of the first to take our app but the owner quickly dismissed this and told of a time when things for his firm were very different.
“It was just post credit crunch” He told me. “Mortgages were no longer getting approved, people were rightly worried about the property market and suddenly, we found our monthly sales got slashed by some number.
“We were genuinely worried about the business, so we called a meeting and quickly established a plan of cutting overheads immediately, before we got into an unsustainable position.”
At this point in time, this particular estate agent had 2 branches, one of which was relatively new and up against some of the “Big Boys” locally. Although their reputation was excellent locally, they knew that firms who were nationally backed, were going to be tough to compete against.
“The first thing we realised is that we were not going to be able to scale back on marketing. If there are less properties to sell and less people buying, we had to make sure we were still out there being seen.
“Instead, we started doing much more of it ourselves. Delivering our own leaflets, designing our own adverts, even advertising in unusual, cheaper places.
“Once we had decided on an aggressive but streamline marketing plan, we looked at the overheads of running the actual business and we decided to go drastic from day one.”
Firstly it was agreed that all senior staff agree to a drop in pay but a slight increase in commission. In fact the directors decided that they themselves, would take “bare minimum” wages for at least 3 months. They then got rid of cleaners, window cleaners, even the people they used to put up there signs.
“We were quite lucky, we owned our own signs, so it was pretty easy for us to put them up ourselves. We’d usually use a different member of staff from the one who had visited the client but even the directors did there bit.
“We sold off all but one of the company cars and used it as a pool car. It wasn’t always easy because sometimes appointments would clash and you could have one agent dropping another one off, while he or she went to a different appointment.
“We cleaned the office, swept the floor, begged local shops to let us put adverts in their windows, everybody was involved in every little aspect of the business.
“We even turned the heating off in all of the back offices, so only the front of the shop had heat. I remember coming to work with fingerless gloves some mornings, I felt like Bob Cratchit working with Scrooge.
“This was cutting overheads at it’s most brutal!”
Looking around the office now with the Surface Pro’s on the desks, smart furniture and ambient temperature, it’s difficult to imagine quite how tough it was for this firm back then. They are convinced that their aggressive attitudes to cost cutting and marketing, saw them through a very torrid period.
“I wouldn’t wish it on anybody” Said the agent, shaking his head. “But in some ways, it taught us a lot.
“It’s easy to ride a boom or be in business when the market is buoyant, it’s a real test of character when you are faced with a survival situation.
“I wouldn’t ever want to visit those times but they did ground us as a business. We don’t take any new sale or rental for granted, we work hard to achieve on every single property we represent.”
With so much uncertainty over Brexit and recent tax law changes to buy to let owners, many think that there is another rocky patch to come in the property market. The 8 years since the credit crunch hasn’t seen much in the way of growth nationally, with property being one of the only markets seeming to recover.
It’s not just the property market that is vulnerable, not many industries are “thriving” at the moment. But if you find your business struggling, pause and think about these guys and what they did to keep theirs going.
How far would you go to save your business?