Growing a service business

July 30, 2010

No matter your industry you are no doubt constantly focused on serving your existing clients with an eye toward new business. While some say that the day to day of maintaining and growing a business  is a balancing act of duties between the two, I would argue that one is much more important; yet, both are intrinsically linked.

Whether you focus on multi-family and turnaround or Receivership work like Dover Realty Advisors or any service business, I feel strongly that the key to long-term success is, first and foremost, doing an outstanding job for the client and customers that you already have.

It is a simple strategy, really: You worked hard to attract a particular client. You should work even harder to build and maintain a level of trust based on honesty, transparency and superior service. Do that enough times and with enough people and, suddenly, you’ve built not only a strong client and referral base but also a solid reputation.

In turn, that reputation and foundation of satisfied customers, referral sources and business partners builds referrals and new business.  Word always gets around when there is a “good thing” out there.

So, don’t get bogged down or distracted with worrying about where that next big client is going to come from. Fear is always unproductive.  Instead, stay focused on and dedicated to the customers that you have.  Treat them well and others will follow.

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Credit where credit is due

July 23, 2010

As someone who has worked within and closely watched the real estate world for more than 30 years – both in Detroit and throughout the Midwest – I am often asked for my opinion on the current economy and where I think it might be going.  When looking at one key indicator, FICO, or, credit scores, the scene is far from pretty.

10 years ago, when the market was robust, just one or two out of every ten applications and scores we looked at had what we call “hair on them”; that is, some sort of “warning flag” that a particular person might be a risky tenant. Today, by contrast, six out of every 10 applications are suspect and risk from customer defaults is pronounced.

In turn, as managers and receivers for multi-family apartment and condominium properties, we have been forced to adjust accordingly. Where, in the freewheeling days of easy credit, we routinely offered security-deposit-free lease deals, now we must weigh fiscal responsibility with real and tangible risk; for example, a sliding scale menu of security deposit “breaks” (i.e. no deposit with a credit score of 750; reduced at 650 and full below 600).

It is an unfortunate ramification of risk mitigation today in an economy where a tenant is just as likely to walk away from their contract as honor it. If only these same individuals considered the long-term effects of thinking in the short term. Such irresponsible decision-making can come back to haunt in a major way down the road when trying to get a loan on a new home. Not to mention how a plummeting FICO score will adversely impact insurance costs – from health to auto. It is “pay me now or pay me later” via a slippery slope which can be hard if not impossible to recover from.

Can we recover? Yes. Will we recover? Absolutely. It will, though, take sacrifice and a new mindset to, in time, turn things around. How often have we seen it over the years? From crisis can come redemption.