Black Swans, Gray Swans And Real Estate

Mike McMullen is the CEO of Famous Houses and the author of Build. Rent Sale. Go back!

Last spring, the world closed the lockdown. As a result, the economy is flowing into economic moles. Many companies still feel the effects now, and others not around to feel anything.

No doubt, you’ve already felt the sorrows. We “live in unparalleled times.” This is the “new normal.” The world is “a different place” in 2021.

As a business owner, cliches tend to take on a much quicker definition of meaning. People need food, shelter, companions, sleep, etc., but businesses rely on cash flow. Without it, they wither and die.

Over the past few months, many businesses have been exposed to the cold. We face the same conditions, but I am happy to say that we have succeeded. And we are not only sustainable but growing, increasing our market share in the process.

These are the lessons we know.

Black And Gray Swans

If we were honest with ourselves, we would have seen it come. Global pandemics are always a different possibility. It has happened before and it will happen too. However, they are relatively infrequent, and because of this, they tend to shock the market.

Economists point to predictable, rare, disturbing “earthquakes” such as Covid-19 as “swan events” or simple “gray swans. ”In contrast, completely unexpected“ earthquakes ”are known as“black swans. ”

I would argue that Covid-19 is a gray swan. Perhaps we knew / should have known that a global pandemic is a different possibility. In contrast, the economic closure is a good example of a black swan. Who predicted that America, the land of freedom and home of the brave, would rule the closure? I really don’t.

So, we can’t stop the economy from closing. But by distinguishing between what can and can’t be controlled, we get the molasses and move on.

Relying on Chaos

While we made brief adjustments to our office hours (even if we didn’t close the office completely), we all ended up doing more work during the heat of the pandemic disease than ever before. And we reap consequences as a result.

That’s something that’s often overlooked about swans: If there’s a big event (a bomb falls, the market collapses, a storm, a sector experiences rapid growth, etc.), both which affected everyone. Good or bad, big events make waves. If you have something to hang on the raft, you will probably find that there are plenty of places once the storm has passed.

Taking Calculated Risks

Finally, you need to know when to take calculated risks. If the lockdown was hit, we decided the whole company would double down. It’s true that we built more homes than we did in the spring, summer and fall of 2019, and the decision paid off a lot of dividends.

The key to taking risks is to calculate. Every gray swan can be restrained with enough forethought.

For example, increase in wood prices recently It presented a large gray swan for the founders. Some struggle. But the increase in material costs and lack of supply of measurable elements – something that always happens, something that can be calculated.

We have lumber guarantees in the summer of 2020 because we have developed good relationships with local and national lumber suppliers. We knew we had supply, so we proceeded with confidence.

My point is that some events will take you in complete surprise (black swans), but others can and should be prepared for (gray swans). As a business owner, you need to learn to prepare for the things you can change and accept the things you can’t.

It is said that the unthinkable is inevitable, but the impossible is not troublesome. Entrepreneurs, investors and CEOs need to know to know the difference between the two.

Forbes Real Estate Council a community of invitation only for real estate industry executives. Am I eligible?

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *