Jay Papasan:
What if I told you that the uncertainty that everybody’s so worried about–the tariffs, the market volatility, the possibility of an impending recession–might actually be one of your biggest opportunities in business and for your career in the next decade?
Well, it’s kind of the truth. If you look at history, you’ll see that recessions, they often create more millionaires than any other time. That’s also when companies get to bound forward, take market share, and overtake their competitors. Uncertain times create lots of opportunity if you know how to look.
Now, here at Keller Williams, where I’ve been working for almost three decades now, we went through the Great Recession. We went into it as the number four company, and a distant fourth. We came out of the Great Recession as the number one company by every measure and almost twice as big as the number two. So, we ran a play that not only helped us regain our profitability, but also gain market share in one of the toughest markets in our industry since the Great Depression.
Gary and I wrote a book called Shift with our previous partner, Dave Jinks, that went on to be a bestseller, which is all about navigating recessions. How do we, as business people, identify the 20% of the 20% of the 20%, really the essential steps so that we can become recession proof? And that’s what this podcast is about. I’m going to share seven strategies on how you can become and your business can become recession-proof.
A lot of people are afraid of change. And I think if Gary were here, he would tell us, don’t fear change, make it essential to your strategy. When you just assume that it’s coming, because I guarantee you, it’s not a matter of if we’ll have a recession, it’s just when. Markets go up, markets go down. If they go up for long enough, it will cause them to go down. If they go down for long enough, it will cause them to go up. That’s how cycles work. So, it’s coming. The question is, are you prepared?
A lot of folks look up right now and they wanna put on their bear suit and go into hibernation and just wish it all away, but not you. You’re one of the One Thingers out there. You’re focused on excelling and getting the best out of this life. So, let’s dive in right now and tackle the seven strategies to make you recession-proof.
I’m Jay Papasan, and this is The ONE Thing, your weekly guide to the simple steps that lead to extraordinary results.
I want to kick it off with a story called the farmer’s luck. So, this is actually a very ancient Zen tale, and I’m just going to read it to you because it’s illustrative of the mentality we have to have about the kinds of changes that we’re going to face in the upcoming market recession whenever that does end up happening.
“So, there was once an old farmer who had worked his crops for many years. One day, his horse ran away. Upon hearing the news his neighbors came to visit. ‘Such bad luck,’ they said sympathetically. ‘Maybe,’ the farmer replied. The next morning, the horse returned, bringing with it two other wild horses. ‘Such good luck,’ the neighbors exclaimed. ‘Maybe,’ replied the old man.
The following day, his son tried to ride one of the wild horses. He fell and broke his leg. ‘Such bad luck,’ his neighbors proclaimed. And what did the farmer say? ‘Maybe.’ The day after, military officials came to his village to draft young men for the army. Seeing that his son’s leg was broken, he was passed over. ‘Such good luck,’ cried the neighbors. ‘Maybe,’ said the farmer.”
The whole point of this is that luck is neither good or bad. It is, things are gonna happen. And as the child in the narrative, the book that I read, he said, “Well, maybe good luck and bad luck are all mixed up.” And that seems like a perfect way to put it. Good times and bad times are not mutually exclusive. As you go into a tough market, a tough season, you often are learning lessons. You may not appreciate it. It never feels fun in the moment, believe me. But you may be learning lessons. You may be garnering skills. You may be building strengths that you didn’t know you had that will serve you for the rest of your life, for the rest of your career.
We don’t know what blessings these times bring to us. We don’t know what benefits they do, but you have to learn over time and trust that there usually is a silver lining to whatever it is you’re going through, especially if you go through it with focus and purpose. So, don’t wish bad times away. Don’t wish that they won’t show up. Prepare for them. So, let’s dive in now to the seven strategies of how you can become recession-proof.
Strategy number one, be resilient. This is all about the idea of your mindset. Resilient, the word, I think if you looked up the Latin roots, it means to bounce back, right? You get knocked down and you don’t just get back up, you bounce back. That is something that’s resilience. When it is forced to bend, it will flex back. We want to be resilient as business people, and we want our businesses to be resilient. We want them to suffer shocks, and in some ways, we want to make them anti-fragile, as Nassim Taleb wrote about in his amazing book.
And anti-fragility, all that means is things that in tough times don’t get weaker, they actually get stronger. It’s like your muscles. You go into the gym, you work out, what are you actually doing? You’re actually creating these little micro tears in your muscles. If you do it right, you get just enough of those, your body will then heal and it will be stronger than it was before you took it through the workout. There are lots of businesses and there are business people that are actually anti-fragile. And that’s our goal. How are we resilient in our mindset? How are we resilient physically and in our business models as well?
So, I’m gonna walk you through a quick exercise. When COVID happened, that was the most recent recession that we had to go through. And it might’ve felt like a micro one, but let’s just really face it, folks. For a period of time, our whole world was upside down. It was like we got hit by a meteor. No one really knew what to do, and no one knew if their business was going to make it or not. It was incredibly stressful.
But I had the privilege of working with Dr. Angela Duckworth, who wrote the book Grit, one of my all-time favorite reads, and she let me sit in on the class. And I got to share with her this exercise that we do with our students. And we called it the resiliency exercise. So, get prepared to hit pause on your player here, because I want you to take a minute and reflect. This is a solo exercise. You don’t have to do it with anybody else.
Here we go. I want you to think about a time when you were absolutely sure that you would fail but in the end, you actually prevailed. Got that idea in your head? So hit pause and just think about that for a second and then come back. So, everybody has a story, by the way, of a time that they were sure they were going to fail, but in the end, they prevailed. That’s just life. We all face moments of tremendous uncertainty, and then we look back and go, “Wow, we made it,” right? Whether it was crossing a bridge in a crazy storm or whatever it was, or getting through a season with your family, with your business, whatever.
So, think about that time that you just called up in your memory. How scared were you on the front end? How uncertain were you? And then, on the other side of it, how did you feel? What did you learn about yourself? The point here is we are all far more resilient than we give ourselves credit for. And in the moment, the moment of crisis, if that’s where you are right now, we often cannot see it. It all begins between your ears, folks. If your mindset is not ready for what’s coming, you will not be the first to move. You may be the last to move, right? You want to be ready in your head. “It’s coming, it’s okay. I’ve done it before. I can do it again.”
Everyone is different. These challenges have followed a similar pattern, especially economic recessions, but they all seem to start with something novel, and they seem to end with something novel too. Even if the pattern looks familiar, the starts and finishes don’t get recognized until we’re already in it. So, our goal here with our mindset, be resilient, is just remember you already are. It’s not something you have to become. No matter who you are, you’ve already survived things. You’ve already thrived through things that you didn’t think you could. And remind yourself of that as you step into this next point.
I’m gonna quote Kara Lawson, she’s the Duke Women’s coach. She’s telling everybody, “It’s not gonna get easier, it’s going to get harder, so make yourself a person that handles hard well.” That starts between our ears and our mindset, and then we can take it out into the world. Practice those hard things. It will make us stronger. Everything that we go through should give us more proof that we can get through the next thing.
Okay, strategy number two. Be lean. This is a huge one, folks. If you can learn how to manage your finances in any kind of shift, in any sort of market recession, it gives you a massive, massive advantage. So, the point of a market shift, a recession, is there’s two things that immediately go out the window. Your financials don’t align anymore, right? The green starts to turn to red. The revenue numbers start to decline. While a lot of us, our expense numbers are the same, we often are lagging, we’re waiting. Well, maybe it’ll be another month. Maybe it’ll bounce back next month. People often tend to wait.
And the other problem, which we’ll get to in another lesson, is that maybe our model, the business model we’re running, was appropriate in the market we were in, but it’s not appropriate for the market we’re going in. The first thing to fix is the financials, folks. It is a massive advantage between you and all of your competitors.
So I’m gonna give you a quick exercise. This is as simple as I can make it. If you hate finances, if you hate doing the numbers, this is easy and you can do it. Whether you have a formal statement or not, like a P&L and a balance sheet, if you’re running like a bigger business and you have the bookkeeper or an accountant that helps you out, or if you’re an individual just running it as a sole proprietorship, or you’re just some guy or gal out there that is just trying to manage their personal finances in anticipation of a shift to come, a possible recession, how do we do it?
It’s called the ABC expense exercise. You’re gonna take three months of bank statements or credit card statements to get a handle on what you’re spending in your business or in your life. You can do both, actually advise that. And you’re gonna label every single expense as an A, B, or C. A means it’s absolutely essential, right? So in your home, like, oh, I’ve got to pay the mortgage, I’ve got to pay the rent, I’ve got somewhere to live, I’ve got to make the car payment, I’ve got to have a car to get to work so I can earn money, et cetera, et cetera. I’ve got to pay food bills. There are things on there that you might be able to reduce, but they’re not going away.
Then there’s going to be the B’s, and those are often optional choices. They’re lifestyle choices. Oh, how many subscription services do I need to stream TV at night? You know what? Maybe you don’t need that streaming service. You can just read a book, and you can get that book free from the library. Or you can play a board game with the kids who’ve been begging you to do it, but you’ve been too tired. Now you’ve got the time to make space to do it. Bs.
Bs, by and large, can be cut because they are optional, they are choices. As tend to be non-optional. Like you do have to have shelter, you do have to have food, you do have to have transportation. You probably need a phone, but there is optionality within those As in those A’s where you can probably reduce the cost. If you’ve got a brand new lease on a Cadillac, maybe you can end that lease and get a cheaper car. You still have transportation, but you’ve done it at a lower price.
The final category is the C’s. And those are the things you’re like, what the heck is this? I’m actually paying for that? I guarantee you, if you don’t do this on a regular basis, there is stuff that is slipped into your expense portfolio, your credit card bills, your bank statements that you are still paying for that you have no idea that you’re paying for. And it often happens in tiny dollar amounts, $9 here, $10 there. Maybe it’s some subscription that you’ve got on Amazon that you keep forgetting to unsubscribe for. Guess what? All of those dollars add up.
Now, the good thing about the ABC exercise is it’ll give you clarity. You’ll know what you can reduce and what you can cut immediately and that should give you longer runway. That’s the whole point. The way we put it in the Shift book was the first competitor to find their margin can use it as a weapon. If you can figure out how to get ahead of it so that you are more profitable than your competitors, you now could reduce your pricing to put even more paint on them and get more market share. Margin is a competitive weapon in a down market. Margin is just self-inflicted harm in an up market. We don’t want a gas war when everything is going great, but in a tough time, in a tough season, it becomes your competitive advantage.
Now, when you’re reducing expenses, there’s two kinds, fixed and variable. Fixed expenses are the kind of things that are not adjustable. It is what it is, right? I’ve got a mortgage payment and it is this much a month. I have a rent payment for my business and it is this much a month. I have to pay salaries and they cost this much a month. What you can do is try to renegotiate some of those contracts, you can extend, you can change different things around so that you cut those costs.
I will tell you in our research the two biggest expenses that we see on most small and medium-sized businesses are going to be space cost and people cost. And the first space cost can be very hard to get out of. A lot of leases basically are debt on the business and you have to personally sign for them. But in a really tough market, you might be surprised at what you can renegotiate because I can tell you, that landlord would far rather have you be paying less rent for a longer period of time than have you paying no rent because you can’t afford it anymore. They tend to be negotiable, but they’re very slow to react. And of course, with people, it’s really hard to reduce what you pay your people. They tend to immediately look for other jobs. But it may be that you can reduce your cost through attrition. When people leave naturally, you don’t have to replace them.
So, those are the tougher things to move around, your fixed cost. Variable costs are things like contractor labor, might be software contracts, subscriptions. You can now go through those and say, “Can we reduce those? Can we reduce the number of hours we’re utilizing these contractors?”
Here’s an important caveat. Don’t jettison the things that are going to save you. Like don’t throw the life raft out of the sinking vessel. The things that you need to hold onto, you need to have a certain amount of margin to spend on marketing and prospecting. How are you gonna get your next customer? Those tend to be fairly expensive costs in terms of… I see it as often much as 10% of the budget in a small to medium-sized business, sometimes more. It can be a significant cost, but if you make it go away, where are you gonna get revenue, folks?
So, you have to be very careful about cutting your lead gen expenses. And you also need to be very wary. One of the first places people cut is their training and coaching budget. That is the place that I go to invest. What are the skills that I and my people need to weather the storm? How can we acquire skills that will make us even more competitive? So, don’t jettison the stuff that might actually save your life down the road. Be very cautious around cutting, training, coaching, and lead gen cost.
Finally, I want you to look at your personal lifestyle. You cannot treat your business like an ATM. So many small businesses absolutely force their business to produce the income that they need to support their lifestyle. So, if you are a small business, a sole proprietorship, you need to take a hard look, not just at your business expenses, but at your personal expenses. A lot of times, in good times, we allow our lifestyle to rise at lockstep with business, and that is a massive, massive opportunity for you to change right now.
If that’s what you’ve done, how can you reduce your personal expenses so that you as the owner, as the founder, as a principal are not a burden on the business? If that business needs to invest that dollars in its survival, it should not be paying for your second car or your second home. You definitely need to look hard at those. If you can reduce your lifestyle costs, that puts less pressure on the business. People who have no debt, people who have a nice cash reserve, sleep a lot better in times of transition when we’re looking at a recession because they know they have a cushion to get them through. If you came in on the edge, you have to do harder work on your expense cutting.
During the last big recession, I remember Gary went in to our board and every single month, he asked them to cut 10% of the budget. And it’s kind of like stretching. You’re like, “What? Didn’t we just do this last month? How can we keep doing that?” But if you’re stretching, you know how it works. Like the first time you reach down like, “Oh, I can barely touch my toes,” then you relax. And then, you do it again. Like you can go a little further. Then you relax, and you do it again, you can go a little further. You do that for three or four consecutive months, and you absolutely will know every loose dollar that you’re spending in your company.
So, find your margin is competitive advantage. The opportunity in a recession is not for you to rake in the profits. For a lot of us, it’s to go from surviving to thriving. Like you want to feel secure, you want your people to be secure, you want your business to be secure. The opportunity in a recession is to grab market share. Companies that lose market share in a recession are rarely able to gain it back. The companies who grab market share in a recession often will not give it back until they go into the next one. You may not be more profitable in the moment, but the moment the market turns and it heads back up again, that’s when you get to reap the rewards.
Lesson three, be focused. When you’re looking up and things are changing around you, deciding what not to do can be just as important as deciding what to do. That’s kind of a famous quote from a woman named Jessica Jackley. Think I’m getting that somewhat right, but it’s an absolute truth in life. You need to identify the 20% that matters. We teach this in The ONE Thing, right? It’s called Extreme Pareto. List all of the things that you’re currently doing and then ask, what are the things that I simply must do versus I could or should do? And we’re trying to identify the 20% of the 20%.
And one of the exercises we did during the Great Recession with a lot of our clients was we would look up and we’d say, “Can you list out every source of revenue that you have?” And on average, you’d be amazed, a lot of small and medium companies will end up when you really add it up, they might have 9 to 12 sources of revenue, some of them being quite small. But when you look at the stats, on average, about 50% of their revenue would often come from their number one source of revenue. And if you looked at their top four, often as much as 90% of their total revenue was coming from four out of their nine to 12.
So, the opportunity and the shift is you look up and think, “These are all the things that we do to earn money,” what would happen if we just drew a line around number five and said, “If we focused all of our efforts on the top five and just ignored everything else, could we get more out of those by doing less?” That’s the goal. That’s one of the huge ideas behind The ONE Thing is that by doing our 20%, we get 80% of our results. How do we do even less of the little stuff, so that we can give more time and more resources to our 20% and hopefully reap the rewards?
So, stop doing everything that doesn’t matter, identify the things that do and double down. This is your chance to put all of your eggs, maybe not in one basket, but just in a handful that truly matter. The beautiful part of this is it will actually simplify your business. In good times, we get a little bit arrogant, we get a little cocky, and we start experimenting. That’s just the truth. You start saying, “Oh, maybe we should do a bound journal,” “Oh, maybe we should do this.” And you’re doing great. And so, you’re buying into your success and you start adding to the mix.
That’s how all of those other things showed up in the beginning. This is a little bit of a spring cleaning for your revenue. You’re gonna go through it, you’re gonna identify the things that matter most, and you’re gonna double down on those, and you’re just gonna allow the other ones to be what they are. It doesn’t mean you have to stop taking people’s checks if it’s on autopilot, but you don’t need to give that any more focus than the minimum required. And in some cases, you may just want to get rid of it altogether.
So, that’s our first three lessons. Why don’t we take a quick break? And on the other side, we will come back and dive into strategy number four.
Strategy number four, be agile. So when you look out at your opportunities to kind of play offense, you’ve got to adjust your model. What you were doing before probably isn’t going to work. One of the great truths I’ve learned from working side by side with Gary through all of this these times, is he’s constantly said, “You need to focus on winning in the market you’re moving into, not the market you are in.” He’s always preparing for change. It’s an essential part of his strategy, and he’s definitely taught it to all of us.
This idea of the market we’re headed into is where we need to be making our adjustments so that we’re not caught behind the eight ball when it’s already arrived. Go ahead and prepare for it. Go ahead and make those adjustments, so that when it shows up, you are ready to go. So, you look up and there’s going to be a market of the moment. That’s what we called it in the book, Shift.
Almost every recession in your industry, if you look around, there is gonna be a sweet spot that emerges. There’s always a segment that someone is killing it in. They’re having their best year when everybody else is looking around going what happened? Your job is to identify it. You’re in this industry. You already serve it. You may not be serving that segment. Can you identify the sweet spot, the part of the market that is still thriving, and then go and try to dive into that market?
It’s usually a shorter learning curve because I’m not talking about getting into a whole new industry. I’m talking about diving into a segment of yours that you may or may not have been in, or maybe it was a small part of your business, but it’s time for it to become a big part.
One of the examples that I could show of this is in the Great Recession, there were a handful of agents in every market that knew how to handle a short sale. And a short sale is kind of a weird middle ground between foreclosure and a home sale. But it’s very complicated. And very few people know how to do them. Guess what? In some markets, like 60% of homes in 2011 and 2012 were short sales. If you didn’t know how to do that, you weren’t gonna eat. So, everybody learned the market of the moment. They figured out how to do it. And even if they didn’t enjoy it and didn’t plan to do it outside of that market, they did it because that’s what it took to thrive in that period of time.
At the same time, there’s also evergreen markets. There are parts of most markets that just don’t go away, right? If you’re in the toy business, guess what? Come around December, there’s a big holiday that a lot of people celebrate and they tend to buy toys. Even if they don’t buy as many, how do you become the one that they choose? I don’t know what that looks like in your industry, but I promise you, just like the market of the moment, there is some core foundation of a customer base that just doesn’t go away. You need to identify the new market that’s showing up and what is the core market that just won’t go away and how do you have a presence in both of those. If you have to pick one I would frankly go with the evergreen. It may not be as sexy in the downturn but if it’s always there then you will always be serving it, you’ll just have a larger market share in it.
The other thing that people do is smart marketing. I kind of think about the old baseball terminology of “Hit them where they ain’t.” In a downturn, people in the same industry tend to look up and they seem to start running a very similar place. I remember in going into the Great Recession, people used to do a lot more print marketing. When the Great Recession happened, remember, that was when social media was starting to rise. We had a lot more electronic marketing. People moved a lot of their marketing to e-newsletters and online marketing. And frankly, that is the future. It wasn’t a bad move.
But I did know a handful of people who said, “You know what? I have a lawn business and all of my competitors and me would send a postcard to all these neighborhoods to get that business, none of them can afford it anymore. But I still can, because I found my margin. I’m lean,” right? Be lean. “So, I found my margin. So I’m actually gonna do double-sized postcards.”
So, I know people who ran a counterplay. If everyone in their industry had a congested channel where they got business and suddenly everybody clears out to go to a cheaper one, maybe you should stay there and actually get the lion’s share of whatever’s left. You know, just be a little contrarian. That’s the point. Don’t just chase the crowd.
Finally, when you’re looking for innovation, you’re rarely going to find it within your industry. A lot of times, the innovation your industry needs is in a neighboring one. So, there is another parallel world out there where people, they don’t call it lead generating, they call it marketing or whatever, they are running a play that you could totally take and move into your industry and it would feel revolutionary. It’s ordinary in theirs, but no one else is doing it in yours. So, when you’re looking for ways to innovate, to be agile, to try different things and focus on new things, that’s how you’re getting your new revenue. You’re getting market share. Look outside of your industry. I promise, there are lessons that have not been applied to your industry yet, that will make you look really, really smart.
Let’s go to strategy five, be connected. This is kind of the hardest one to kind of title because it’s a mix of things that you’re gonna be doing internally if you have a team and externally if you have vendors and customers and a database.
So, internally first, if you have a team you need to stay connected to them and you need them to be connected to the business. I had a friend share with me that during the last downturn, the boss showed up and he said, “Guess what. Everybody now is in sales.” And that’s a truth no matter what but we tend to forget it in good times when the salespeople and the marketing department do all the work. If you are really in a major recession and nobody knows exactly how it’s gonna turn out, how do you get everybody involved in sales? How can everyone start asking for referrals? How can everyone maybe share things on social media?
I don’t know what the answer is for you. And in some industries, it’ll be more regulated than others how you can even acquire customers, but ask the question, how can everyone, no matter what position they are in, be in the business of helping us get and keep customers? I guarantee you one or the other is always possible. What they’re doing is about client retention or what they’re doing is about client acquisition or both. But you have to ask the question to find your answer.
You also need to look up and say, “Hey, everybody on my team has only known good times. They’ve never seen a recession.” The last one, by the way, the Great Recession was a long time ago, we had a mini recession after COVID depending on which industry you’re in. And some of them had longer, granted, but you may have an entire team that has never once faced tough times. So, you may have to help them. You may have to train them. You may have to look for the coaches and the trainers that can give them the skills to focus on what matters in this market.
Don’t assume that they know what you know. Like I looked up and I was like, “Wow, I’m kind of surprised.” I was aware of a couple of their sessions, but I’ve actually navigated for professionally for big enough ones to kind of make the history books. And you look up and go, “Okay, so I’ve learned some lessons from that.” The people on your team may not be so fortunate or they haven’t actually realized the lessons they learned or they need to be reminded. That is your job as a leader.
Next, you need to go out to your network. There are people in your database of clients, past clients, that can be a source of referrals. That’s a huge source of business in the real estate industry. I’m continually surprised that more industries don’t do it. How can you teach your customers to refer you to new ones? Do they need to be rewarded or they just love you so much they’re happy to do it? Even if they’re happy to do it, you may have to train them.
“Hey, if you’ve ever thought about recommending someone like me to help other people with their estate plan, here’s the easiest way to do it. I don’t need you to sell my business, just make the introduction. Just get permission and then give me their number and I will handle everything for you.” Take the work off of them if you’re trying to get referrals from your existing or past customers.
You’re gonna look up and you’ll look at your affiliates. You have partners, you have vendors. There are people that are riding on your bus. When you look at the transaction or service that you’re a part of, the product that you’re manufacturing, you are a customer of people as well. They are your vendors, they are supporting you. And if you go out of business, it hurts their revenue. It is okay for you to ask for them to pay a fare to ride on your bus.
Sometimes in some industries, real estate’s notorious for this, there are a whole bunch of people who are riding on the bus who don’t get paid unless you close the deal. Is that true in your industry? And can you work with your vendors and say, “Look, we’re all in this together. My success is your success. Your success is my success.” You need to ask the question, “How do we help each other succeed?” It might be by sending referrals back and forth, but if you don’t ask, don’t assume they’ll do it.
So, finally, mastermind. You have peers, people that a lot of times you think of as competitors. One of the great strategies, that’s why masterminding works and people pay to be a part of them, they wanna be in a network of people they consider their peers, but aren’t direct competitors. You can either join one or you can create one. But the point is you can look up and ask, there are other people in my industry or similar ones facing the same challenges I do, so how do we band together and learn from each other? You’d be surprised at how many companies are willing to do it.
That’s it for “be connected.” You wanna be connected to your people, what training do they need, and are they engaged in helping you save the business? You need to look at your vendors and your affiliates. You need to look at your past customers and your clients. And you even need to look to your peers and competitors. All of them, if you are connected to them, can help you weather the storm.
Strategy six, be irreplaceable. It’s not just about finding markets of the moment and the evergreen markets. Those are things that will work in every single instance. There’s also something that we’ve seen magically happen in recessions. It’s where people make a radical change to their approach to business. They develop a new thing that radically gives them a leap forward.
So, you just have to ask some questions. What is the thing that you do better than anyone else? What is your One Thing? Have you taken the time to truly identify it? What is the problem that you are solving? When I look up at what we do at The ONE Thing, fundamentally, what great coaches do is they solve for chaos. People are unclear about what they need and what they want and what they should be doing. And they don’t feel like they have a lot of control of their time or their actions.
And when you have the right training and coaching and a framework like The ONE Thing, you can end chaos and bring back some sense of control, clarity and order. And that’s fundamentally kind of the battle you’re fighting. So what do you do differently in that battle that other people don’t? How do you pursue it differently? But your job is to become irreplaceable.
That’s a very big word. But think about it. I took you through the expense. You’re going through it. You’re saying A’s, B’s, C’s. Your clients are doing the same thing. If they’ve got a good coach, if they’ve got good training, they’re looking at their expenses and you need to know what are the chances when they look at you on their expense line item that you make the cut? Are you doing something so well that they can’t imagine working without you? That’s your goal. How do you do that? How do you create experiences that they do not want to lose out on? How do you make it so special, so VIP, so high-touch, so effective, so practical, you fill in the blank, that you effectively become irreplaceable?
What we’ve seen again and again in a recession, in a major market shift, there are some competitors who look up and say, “There is a new way to do things.” Some of those last, some of them don’t. I had a good friend that looked up and they figured out how to run outdoor bootcamps. Couldn’t do it indoors anymore, but they flipped the model on its head. I told you earlier that most small businesses, what are their top two costs? Space and people. They eliminated space. Getting a permit to do a workout in a park is far cheaper than paying a lease. And they figured it out and they claimed a lot of the best ones and they grew dominant market share throughout the region.
So, there is an innovation waiting to happen. Maybe you’re borrowing it from another place. But if you can identify a solution that your customers absolutely need and package it into a program, you can make yourself irreplaceable in this market and in the market to come. That’s the goal. Remember, they’re reviewing their expenses too. What would you have to do besides just cutting your cost, right? How do you deliver so much value, you can maintain your margin and your clients? And you may need to work with someone who knows you, your coach, your mentor, and say, “Help me look at my business through my client’s eyes.” How do I get some distance from this, so I can truly identify the opportunity in front of me? The earlier you can identify this opportunity, the faster you can move towards blowing your business up in the most positive way possible.
All right, the last one, strategy number seven, be a beacon. So, this is kind of like the idea of being a lighthouse in the storm. So, when we went into the Great Recession, we already had a book called Shift, right? We’d already written it. We had seen the recession. Actually, we identified it in the fall of 2005, even though the federal government didn’t recognize it, I don’t believe, until 2011. We already knew we were in it. We knew it was happening. We were tracking the numbers. So, we actually got our book out in 2008, before it was officially there.
So, we look up, we’re way ahead of the market in terms of understanding the market we’re in. We actually write a best-selling book to try to help our industry deal with it. And we’re looking up and COVID is about to come around the corner. And I remember looking up and going, “Wow, we’ve got to run the play again.” I was in charge of education at that time. So, we looked up and we said, “We are gonna run a Shift bookclub. We’re gonna do it on Facebook.” It was the largest group where we could be a part of.
One of our coaches and faculty members, a guy named James Shaw, great, great human being, had already announced he was gonna do a Shift bookclub on Facebook. And in a very short period of time, he had added thousands of members to it. We reached out to him, right? Remember this whole thing about “be connected”? We partnered and our whole education community joined his effort to first do the bookclub with the author’s involvement, and then we curated three pieces of education until that weird, scary period of time was over.
And over the course of that year, that little face group started with a handful, maybe 4,000 or 5,000 people in it, it grew to 2,000, 92,000 members by the end of that year. That was how we partnered. No one said, “Hey, y’all should do it.” We just elected ourselves. We felt like we had the knowledge and we jumped into the opportunity because in a moment where your industry is going through a recession, is going through a tough time, however you choose to do it, find the opportunity to be a beacon.
There are moments in these recessions, especially when they’re prolonged, when people are fleeing companies. How do you become the company they flee to? How do you become the person that is attracting the best talent in the market when talent is looking up and trying to find a boat that’s not taking on water? You have to be the beacon to be seen that way. So, go ahead and shine the light. You don’t have to wait until you’re absolutely there. Just be transparent. This is what I’m doing. This is what I believe for work.
And the funny thing is, even when you’re messing up, but you’re doing it in public, if you’re listening, the answers will show up. People will point out how you could do it better or do it differently. And if you’re a little bit discerning, you can meander your way right to the top. So, be the beacon might be one of the biggest opportunities. How could you, in whatever your position is, you’re an accountant, you’re a lawyer, you’re in sales, you’re in a service, you’re a nurse, you’re a doctor, you’re a teacher, how can you kind of be the beacon for your industry, for your avatar, for the people like you? How can you lead the way through this tough time?
It may feel weird to take that onto yourself, but I can tell you as having been a part of a team that did it, that it is an amazing opportunity to claim thought leadership in your industry.
Okay, here are the seven lessons, a quick recap. First one is gonna be “be resilient.” We gotta be resilient because going into this, we need to believe that we can make it. We need to remember that we’ve made it before, that we have the grit, we have the determination, we have the resolve to make it through tough times. We’ve done it before, we can do it again. But if you don’t believe it, you will end up hanging out with all the people complaining about how hard it is, instead of hanging out with all the people who are seeing the opportunity and trying to find it.
Two, be lean. This is all about finding your margin, both on your professional side and your personal side. How can you cut unnecessary expenses? It’s a wonderful opportunity to kind of do a financial reset on your fixed and variable cost so that you can find your margin and charge into battle.
Number three, be focused. How much stuff did you start doing when times were good that is truly unnecessary? It feels good. Maybe it was cool. Maybe it felt special or it was fun. How can you cut, ruthlessly cut all of the stuff you’re doing down to the 20% of the 20%, the truly essential? That is super important now more than ever to figure out what not to do as much as what to do.
Number four, be agile. That’s about not being fixed on your current way to acquire customers. There’s gonna be a market at the moment. There’s that segment that is going to pop precisely because of the conditions in the market. And then there’s the evergreen parts. The parts of the market, they tend to never go away. How can you claim market share in one or both? That’s your best opportunity to thrive instead of simply survive. And then obviously, you’re gonna be looking out for opportunities to hit them where they ain’t. What are the things that your industry is abandoning that maybe you shouldn’t? I don’t know the answer, but there’s usually one or two opportunities where everyone is kind of lemmings. They’re all racing off the cliff and you can say, nope, not me. I’m gonna hold on to that. And because I’m gonna be the last person standing, it’s an opportunity for me.
Five, be connected. This is about you connecting with your team, being super clear about the stakes and the expectations and being really clear about what they need from you as a leader. Then going out to your vendors and affiliates, your current and past clients, and possibly even your competitors and looking for opportunities to bring new business and keep old business, and ways to operate that you may not already know.
Six, be irreplaceable. Maybe the biggest opportunity is can you innovate? Can you evolve your business model? Maybe not for the reasons you wanted to, but because you had to, that takes you to a brand new place and a brand new level of opportunity and finally be a beacon.
If you’ve figured it out, if you did steps one through six, you’ve certainly earned the right to turn on the light in your lighthouse. There are other people out there that are wondering, you can be the business person, you can be the guru, you can be the thought leader that people are turning to instead of fleeing from. And there’s a lot of movement of talent in recessions. It is a wonderful opportunity to grab market share. It’s also an amazing opportunity to attract talent.
Those are the seven lessons. So let me give you your challenge before we preview next week. This is a bigger challenge than usual because this is a heavier episode than usual. One of the fundamental things that people don’t wanna do when they put off is manage their expenses. I want you to go back to the ABCs, get three months of your expenses, either through credit cards or bank statements, label everything as an A, B, or C. You can use colors, right? You can do green, yellow, and red, whatever you wanna do.
But all of the A’s are things that you just cannot cut. You truly need them. You might be able to reduce them, but they’re not going away. The B’s are the optional things and you’re gonna have to make some hard calls. What can you afford to do without and still have a functioning life and business? C’s are the stuff that, man, I can’t believe I’m even spending this and you’re gonna cut it. Whether you’re in a recession or believe we’re headed into one or not, this is the kind of benefit that will make you lean and mean and help you move through to the next territory.
So, please set aside an hour. I know that’s a lot longer than usual, but if you have the statements, you can identify all of those costs that you can cut. Now, it’s just a matter of tackling them one day at a time, calling up the vendor and canceling. I promise you your balance sheet and your P&L will look better and so will your personal bank account.
So, next week, I had the privilege of interviewing my friend, Brandon Turner. You may know him as the longtime host of the BiggerPockets Podcast. He made a transition a few years ago and he started his own business, the Better Life Company and a massive investment company. He used The ONE Thing as kind of his true north and navigating that, he cast a huge vision, and he absolutely knocked it out of the park. So, definitely tune in next week for my friend, Brandon Turner, to talk about his amazing journey, starting his new business, his new life, Better Life.
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