An REO Business You Can Carry With Two Hands.


I reached out to an accountant friend for help with my first year business taxes as I felt I had reached train-wreck status. I knew, because of his personal concern, that he would guide me and would speak to me straight as well. He told me to come to his office one evening after hours and to bring my documentation with me — everything I had.

When I showed up at his door I was carrying just two items — a bag with my laptop in one hand and a portable file box in the other. Actually three things…I brought a piece of birthday cake to thank him for his help! It dawned on me just then how portable my REO company really is. In two hands, I held every important record pertaining to all the daily processes and development of my contribution to the market.

Reading this might cause you to reflect on a time when your venture was that small, and say, “Just wait. There will come a time when you will not fit into a laptop and a file box.”

Encouraging! But, I think I like the idea of carrying everything with me.

We are living in a time when every market is following the trend of streamlining. CEOs now build companies with the specific goal of being the small guy — small in appearance, not effect. Small in terms of expense. Small around the waist and full of power.

The REO industry is still young, and is going through the normal industry life cycle (Introduction, Growth, Maturity, and Decline). We are currently in the Growth stage. At this stage, firms tend to spread out geographically, creating nationwide servicing organizations. The key issue in this stage is market rivalry, so large amounts of cash are invested in research, development, advertisement and branding. Standardization practices are implemented to bring order to a rapidly growing market. The band-wagon dynamic follows and in time the industry becomes saturated.

The natural progression from this stage is to deepen and expand (Maturity). Deepening through experience, fiscal growth, strategy, creativity, etc. The people in charge of REO companies are getting to the point where they see evidence that there little shop is actually going somewhere. Confidence rises. The accompanying expansion is a larger manifestation of the confidence felt by these companies. They feel strongly that they have outgrown their current box and think it’s time to buy a bigger box (service area). Nationwide. Global. They also arm themselves with staff by the hundreds. Soon they join the Big Guy Club.

The smart thing for an REO business to do in my opinion is to embrace thedeepening process and disregard as much as one can the pull to expand (grow bigger). A company that matures over time, providing a distinctive product, causing a unique result is more powerful and will last longer than a company that aims for BIG.

I truly believe the larger service providers in the REO industry will decline. It is only a matter of time — the giants in every industry takes this road. When that happens, the small guys whose companies can be carried in two hands will rule the day.

Advertisements

About this entry