Preparing for the Worst and the What Ifs
If the Coronavirus has taught businesses within the mortgage industry anything, RCN Capital included, it is that they need to be prepared for the worst, and more importantly, the “what ifs.” What if something happens to a member of the Executive Management team? Is there a succession plan in place? If the market faces a significant challenge, is your business equipped to ride out a downturn? If a once-in-a lifetime pandemic hits the United States, what is your plan? It is so easy to become focused on growth initiatives, especially when things are going well and opportunities abound, that those “what ifs” fade into the background. But any good business leader knows, having a plan in place to deal with all of the “what ifs” is how you ensure that your business can not only survive, but thrive when it matters most, during the worst of times.
I’ll never forget the looks on the faces of RCN Capital’s Head of Treasury and RCN’s Comptroller when I met with them at the beginning of March to request they run a P&L that showed zero closings. I’m pretty sure they thought I had lost my mind. Why was this request so unusual? Because RCN was having one of the busiest, most profitable first quarters in the company’s history. Coronavirus was just making its first rumblings in the United States, and RCN was in growth mode as far as the team was concerned.
The very next day, I called an emergency meeting with all of RCN’s managers to discuss remote protocols and discuss with each of them what their departments would need to successfully transition to working remotely should the situation arise. Less than a week later, RCN’s first round of employees went remote and the following week, the entire company was working remotely.
I don’t relay these experiences to brag about the foresight I had, because I did not think the worst would happen. But as the CEO of a company with over 100 employees that are counting on me to make sure they continue to receive a paycheck, even when unprecedented times occur, it would have been foolish of me not to prepare and know what a “worst case scenario” would look like.
I share these two stories as a warning to other business leaders. If you do not have a plan in place to shore up your business so that it can survive even the most incomprehensible situations, you are not doing your job. That’s not to say you have to do this all on your own, in fact, I strongly encourage you to enlist the help of other members of your Executive Team to help you identify any and all blind spots.
Create clearly defined plans that can be implemented in times of emergency. Run your financials to see what would happen if business dried up for several months and figure out what the company would need to do to stay afloat. Develop a succession plan for yourself and other members of your Executive Management team. Whatever you develop, make sure the items within your plan are not only clearly defined but actionable.
Communication Is Key
When COVID hit the U.S., it seemed like every company sent out an email to customers letting them know how their business was going to handle the impending crisis. Communicating with customers when crises arise is crucial to the future success of the company, but that’s only one half of the coin. When I talk about communication being key when a situation arises, I am referring to internal as well as external. Many business owners become so focused on external communication with customers that they completely neglect relaying information to their employees.
When RCN had to temporarily suspend origination, we were not only increasing the number of updates being sent to our clients, but I was making sure to increase internal communication as well to ensure our employees knew what was going on. High-level strategy meetings with our executive team went from happening once every two weeks to twice a week; I worked with our Head of Treasury and Marketing to update employees on what was going on in the industry at least once a week, and most importantly, I made sure to be available and transparent with my employees as opposed to shying away from tough conversations.
This level of communication allowed the RCN team not only to get on the same page but it allowed us to move forward and plan what we could do during our down time to improve our processes, and be better, so that when we could lend again, we could come back stronger than ever. Even when we couldn’t lend, my mind was still in growth mode. The one thing I continued to tell my team during all of this was be patient, because your patience will pay off, and did it ever. This planning allowed us to hit the ground running and ramp up like never before once we were originating again.
Looking to the Future
You can still look towards the future and work to grow your business even while dealing with issues in the present, but that is only possible if you have laid the proper groundwork. Having your plans in place for the worst-case scenarios is what allows you to continue to execute your company’s growth strategy, or only be forced to take a detour before continuing, instead of getting lost in the weeds.
And during the worst times, remember that your employees continue to be your greatest allies. As the head of your company, this is your time to lead. It is up to no one else but you to make sure they are informed, their concerns are being addressed, and they know what happens next to move the company forward. The best thing you can do to take your company out of crisis is eliminate uncertainty and provide the leadership your team needs.
About the Author:
Jeffrey Tesch, Chief Executive Officer, is responsible for overseeing the operations of RCN Capital, including sales growth initiatives, underwriting review with compliance oversight and leadership of senior level strategic planning.
Joining the Company in 2010 as Managing Director, Tesch led efforts to develop a national brand in private lending with the best practices and transparent products for a diverse customer base. Since RCN’s inception, Jeff has personally overseen over $1 Billion in originations.
Jeff’s previous real estate experience was as an investor in both commercial and residential properties, ranging from single family homes to commercial retail centers.
Jeff currently serves as a member of the American Association of Private Lenders’ (AAPL) Ethics Advisory Committee and a member of the Advisory Council for the National Private Lenders Association (NPLA).