Reflecting on the situation we have all found ourselves in over the past months with Covid-19, I thought it could be valuable to share with others my own experiences, both as an individual and as a business owner, about how crisis has impacted me, and also the phases to recovery that I have personally followed.
Without a doubt the current pandemic has been one of the biggest crises I’ve experienced to date. However, the GFC comes to mind as a crisis that also had a big impact and perhaps an even greater impact in some ways.
At the time of the GFC, Ironfish was only a couple of years old; so we were still a new business and less experienced compared to today. We were also in a big growth phase, building our branches and our own experience amongst our leadership team.
A couple of the publicly listed developers we were working with collapsed during the GFC, owing us a significant amount of money. Other developers were delayed in making payments, so there was a substantial cashflow impact we had to deal with as well.
This crisis also impacted me personally, as it would for any business owner. To get through the period, I decided to take a total pay cut to zero, my co-founders Susanne and Grant also took a significant temporary pay cut. I received a lot of advice at that time to let employees go or reduce all salaries and I am proud to say that no other salary cuts had to be made at the time.
I also decided to quickly sell 8 properties from my portfolio to be able to invest back into the business, and also to sustain my family, so they were not impacted by my lack of salary.
Having more properties than my home, has always put me in a good position to deal with crisis. You can always buy another property, but when you’ve been building a business, it’s hard to rebuild it from scratch. As a business owner I have 100% faith in my business, and together with the Ironfish leadership team, we are always committed to back the business with our own personal assets.
The pandemic has been much larger in scale than the GFC, but Ironfish is now 14 years old, we are more experienced, more prepared, we have stronger leaders and stronger people. We have been able to adapt to the crisis relatively quickly and there is little that I have personally had to do to manage the crisis – our leadership team has done a lot more.
So what are the steps we’ve taken as a business, or personally to manage crises? Like many aspects of life, I am a firm believer that there is a formula you can follow. This the formula that has worked for me.
- Pre-empt challenges that may come
Challenges, obstacles, crises – these are inevitable. In life, business, careers, investing – it’s never going to be perfectly smooth sailing. The more you can pre-empt challenges that may arise, the better you can prepare to handle them in the future.
- Remain calm
When you find yourself facing a crisis, it’s important to step back and remain calm. When I found myself in a position with no salary, the need to sell 8 properties from portfolio, I wasn’t emotional about it. I didn’t even let my wife know about it – she was at home with two babies, I didn’t want to add any additional stress in her life. I told her many years later, and we had a good chuckle about it.
At work, I remained calm, as if nothing were different, not sharing any tension with staff or team members. I talked through my concerns with friends, of course. It’s important to share with someone and have a sounding board so you can remain mentally tough. But I feel strongly about not adding any stress to my family at home, or to my colleagues at work.
- Have a positive mindset
Remaining positive about finding a way forward is key. Giving up was never an option for me. I received a lot of advice from friends at the time of the GFC to let go of staff, to stop expanding the business – advice I listened to but did not take!
- Build a reliable team with the experience, mindset and knowledge to deal with the crisis
During the GFC I went to some of my friends to borrow some money; successful people who I thought would help me, as I would help them if they were in need. None of them helped me at the time, and I realised that perhaps these weren’t the right people to be friends with! I have made some new friends since – real friends who I know I can genuinely rely on.
As a businessperson, it’s hard to do it all on your own. Together with the Ironfish leadership team, we’ve been able to work together to look for solutions through crises. We often see things differently from our peers. We’ve used these times to put in suggestions to developers or other stakeholders. We are all equally committed to put in where required from our own properties.
The more trustworthy, experienced, reliable and knowledgeable people you have around you, the better you can navigate through a crisis.
- Build some financial muscle
Since 1998, I have been a serious investor; careful with how I spend during the good times and always re-investing in property or business. Like many people who have been investing for a long time, because of my portfolio and savings, I was able to weather the GFC, Covid-19 or other crises. My assets are a security blanket both for the business, and for myself, to be able to continue without a salary during crisis periods.
In addition to the assets, it’s also important to always have emergency money aside. A strong financial buffer is a bullet proof way of dealing with many crises – certainly it can’t solve everything – but it can help significantly.
- Put mechanisms in place to prepare for the future
Put in place measures, business or financial mechanisms to prepare for challenges which you know will come in future. If you discover a ‘hole’ in your business, put measures in place that will avoid this being an issue in future. It may mean diversifying, changing business processes, or building a bigger financial buffer. Use your team of experts to help you plan these measures and put them into place.
- Spot opportunities
Whenever there’s a crisis from a business point of view, many businesspeople ‘buy into’ the crisis. I’m lucky to have the mindset of always looking at the positive side. In an industry crisis, this can make our competitors weaker; a time when we can show our strength. After all, at Ironfish, our customers are investing for long term, not for what’s happening just now.
When the market changed a couple of years ago, lending becoming harder; a lot of companies made significant cutbacks. We have done the opposite – even now in the pandemic – we are looking to grow our team and capability, so that we can come through stronger as a business to support our customers long term.
Our business model helps, of course – we’re not a traditional real estate agent whose success is pinned against the market cycle. Our goal to help customers build and hold a portfolio of assets means we have many existing customers who trust us, and are with us long-term as we are with them. During this period, we have worked hard to continue communicating with our customers and adding further value – keeping investors up to date on all the changes to legislation etc during Covid-19 and even providing personal development courses and webinars free of charge. The Ironfish mindset is always about the relationship and the journey – and never transactional.
In crisis there is opportunity and because of Covid-19 there may be some incentives or potential bargains around for investors who are ready – financially and mentally to take advantage of these temporary offers. At Ironfish we do have astute investors who are spotting these opportunities and we are helping them to make the most of it.
But do note that these offers may help you in the short term to make the initial decision to purchase, but they won’t guarantee your success as an investor.
Like anything in life, crisis or otherwise, it’s about weathering the challenges and sticking till the end. We can never know for sure what may come, exactly when the market will drop or grow, if or when we will experience another pandemic or GFC. But we can pre-empt and prepare as much as possible financially or otherwise; we can be calm and positive and solutions-driven; and ensure we’re surrounded with the best team to support us through.
Covid-19 has had a major impact on us all, Ironfish and myself included. But the pandemic has made us think so much harder about how Ironfish can grow, evolve and improve for our staff and partners and our customers. Right now, I feel like when I first came to Australia as a young, new migrant – full of energy and determination to succeed – that’s the drive I have. I feel mentally and physically ready to work together with our leadership team and our customers to take our business to a whole new level. Crises may come and go, but we will continue in our core promise:
– together in property.
Joseph Chou is the CEO and Founder of Ironfish. He presents regularly on the topics of investment, wealth and personal development.
He will be presenting at a live national webinar on June 11 – ‘From Bicycles to Bentleys’ – book your seat below