Is your portfolio prepared for a recession?
Simon Severino is a Business Strategy Advisor who has executed hundreds of go-to-market strategies with B2B teams around the globe in his 19 years of entrepreneurship. After 17 years of strategy execution from NY to Sydney, he created the Strategy Sprints Method, a practical method to run an agile and resilient company. He has fired himself from client work and now enjoys working above the business.
In this episode, he shares how you could prepare your business for a recession and thrive. He also talks about the strategies you could implement in your business to increase revenue and investments.
[00:01] – [04:29] Opening Segment
- Welcoming Simon to the show
- The one big problem that Simon fell in love with
[04:28] – [15:57] It’s More Than Just Business
- Here are common company problems that Simon thinks are easy to solve:
- Revenue
- Focus on organic marketing and less on paid ads perform activities that increase conversion
- Improve monthly cash flow by paying marketing partners on a performance-based instead of a monthly retainer
- Investing
- Build your cash during a recession and take advantage of many investment opportunities
- How to identify weak assets versus strong assets
- Weak assets – something that deteriorates in value
- Strong assets – limited supply but high demand
- Opportunities in recession: Buy competitors and strong assets for a cheaper price
[15:56] – [23:18] Prepare Your Business for a Recession
- The investing system that makes Simon gain more market share during a downturn
- How to prepare yourself for opportunities
- The critical move you should be doing right now to keep up with recession and stagflation
- Increase your business resilience
- Simon shares the only three things you can control: Daily habits, weekly habits, and your monthly habits
[23:19] – [24:40] Closing Segment
- Reach out to Simon!
- Final words
Tweetable Quotes
“Earnings is one part, that’s the revenue part. Liquidity and cash flow is what will keep you in the game.” – Simon Severino
“Real wealth is of course created during recessions.” – Simon Severino
“Prepare yourself for the opportunity, so when the opportunity comes, you know exactly what to do.” – Simon Severino
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Connect with Simon on LinkedIn or check out strategysprints.com if you want to know how you could scale your business faster. Find his book, Strategy Sprints, on Amazon and leave him a review!
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
[00:00:00] Simon Severino: How do we create an investing system? Because this is important, it starts before you start building your cash position before the recession. So you build cash in the bull market. And when you’re in the bear market, you have now an increased cash position.
[00:00:28] Sam Wilson: Thank you to everyone who is a dedicated listener to the How to Scale Commercial Real Estate podcast, just want to give you a heads up that today we had some audio issues on actually three or four episodes that we recorded in a row. They were such good episodes, and the guests were so kind, of course, to share their time and insight with us that I couldn’t ask him to rerecord it. So we’re gonna go ahead and publish these episodes, I am aware of it. The audio is not what I like to put out. But being a daily show at some point in time, we’re gonna run into a hiccup along the way. And today is one of those days where I get to share my mistakes and hiccups right along with you. But again, it’s a great episode, you can hear the guest a lot better than you can hear me, and it’s just part of what it is that we do. Nevertheless, here it is. Thanks so much for tuning in. Certainly appreciate it.
[00:01:12] Sam Wilson: Simon Severino helps business owners in SaaS and services run their company more effectively with results in sales that soar. Simon, welcome to the show.
[00:01:22] Simon Severino: Hello, everybody. Happy to be here.
[00:01:23] Sam Wilson: Simon, thanks for coming on today. We’re having some major tech issue on my end, my sincere apologies. But appreciate you working with me here today. And making sure we get this episode in. You’re calling all the way in from Vienna, Austria. I certainly appreciate you taking the time to on today. There are three questions, Simon, I asked every guest who comes to the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?
[00:01:50] Simon Severino: Well, it’s easy. 21 years ago, I did fall in love with one big problem, which is how do you solve the go-to-market problem? So landing products in the right market and dominate the market? How do you do that? How do you launch etcetera? It’s a big problem, right? How you dominate the market? And I did fall in love with that problem. And I did nothing else for 21 years. Every day I have been, you know, immersed in those problems with teams around the globe, from New York to Singapore. And that’s what I do. And so there’s they started asking for more. And I had some templates and some stuff working. And now it’s a global business. But it started really just by Simon solving the big go-to-market problems of teams. And that led to more teams. And that leads to learning and knowing more and having more knowledge and more tools in that space.
[00:02:49] Sam Wilson: What was the thing that kind of turned you on to that idea that, hey, there’s a go-to-market problem, whatever it is, you know, there had to have been a moment where you go, Wait, there’s a problem here that I can help solve.
[00:03:01] Simon Severino: So I want to spend my life on exciting things that are intellectually stimulating, and that are tougher for most people to solve because I’m competitive. But I don’t want to do something that everybody can do. I want to find the edge. Where can I be slightly better than whatever there is right now? Because that creates interest for me and energy. So I’m, in my free time, I’m a triathlete. So I like to explore my limits and to go a little bit beyond because that keeps me awake, keeps me healthy, keeps me moving, right? And so the intellectual stimulation of one big market domination problem. I love that and sometimes have to be five days, six days, seven days in one room with a team, like a team of BMW. Before we came out with the Born Electric strategy, we were days, multiple days in one room, before we get out, we need a plan. But we don’t have a plan how to beat Audi, there is no plan, we have to create one. And so that’s intellectually stimulating, it brings me to the limits and beyond hopefully, so it makes me a little bit of a smarter person or a better person because I couldn’t use something, I could learn something and I could improve the quality of something. That makes me proud. And then I go home and I’m a better dad and I’m a better husband. That’s basically the loop that motivates me.
[00:04:29] Sam Wilson: What are some of the key and I think about this as it pertains to commercial real estate and for us that are scaling a business and growing in our own right we are we have our own go-to-market problem. Because we can have some really tremendous asset. We could have you know even the financing lined up but one of the components of this business is that we always need passive investors. We always need to be expanding our investor base when it comes to our company. What are some things that we commonly see inside of companies, big and small, that you can say are the common problems as they go to market with their products, right? Got an amazing asset I need people to invest in. I just need to find investors. What are some common things that you see inside of every company you work with where you say, man, these are things that are easy or reasonably easy to solve.
[00:05:23] Simon Severino: So we have revenue problems, and we have investing problems. So the first problem is how do we generate multiple reliable streams of income, that ideally are passive, or become passive at some point. And then the second problem is alright, and now that we have those profits, how do we keep them around in an environment that is deteriorating, like the current recession, inflation, then the losing of purchasing power of most currencies, and even an even in real estate, the last, wonderful place where you, you would have value going up even that might be at the end of a certain cycle, and reach a moment where it’s not that easy anymore to increase your wealth by just putting it there. So first, problem revenue. When you create multiple revenue streams, we help people especially in this path conditions, wherever right now, like we have right now, to spend less time on marketing less time, in paid, especially paid marketing, we basically happen to stop paying for marketing and find sales activities that bring in more cash faster in a more organic way. So you can do that with different systems or joint venture systems, you can have multiple system, outreach system, cold calling, you can have email systems, you can have a ton of systems that you implement, you have to find your own. But the important thing is that you focus on three things. So basically, you go through your list of activities, what do you have on your, on your plate right now, and just pick the ones that contribute to those three things. They either raise by 25%, the conversion rates from your existing conversations, so same conversations, but 25% more closed deals, or they have you increased by 25%, the frequency of your sales, so shorter sales time, from awareness to closing. Or they increase by 25%, the price that you can charge for the same thing that can be done with better positioning. There are eight things in the book Strategy Sprints, where I walk people through to do those eight things so you have better positioning, takes you 10 days, 7-10 days, then you have a better positioning. And then you can increase by 25% your price for the same thing because there is a higher perceived value and the lower risk of working with you. Because you’re better positioned. So you’re de-risking the process for the other side. And then they can pay more. Now, if you increase those three things by 25%, there is compounding magic, it creates plus 99% revenue. And that’s what you want on the revenue side, you can double revenue in 90 days by just doing these three things. In the book, I explain exactly how you do that. It’s Strategy Sprints on Amazon. And we can go into the depths if you want of some parts of it here. But basically, you pick the three things that raise conversions that make sense time faster and that make you charge 20 represent more for the same thing. You focus on those three things. That’s what I will do in a recession because that keeps your cash flow high and keeps your liquidity. And this is what you want to have in a recession. Who stays in the game? Even Walmart today had problems because they don’t have enough earnings. But earnings is one thing. Will Walmart stay in the game? Yes. Why? Because they have liquidity and cash flow. That’s what you need. Earnings is one part, that’s the revenue part, that liquidity and cash flow is what will keep you in the game. So you don’t have to worry for Walmart, the stock will go down for a while. But the liquidity and cash flow is what makes the difference so they will still stay within
[00:09:25] Sam Wilson: That really I think insightful because we are I think entering and maybe I’m self-creating the problem, but I think we are entering a recessionary phase. And a lot of businesses, I remember for us in 2008 you know, I saw a lot of businesses in the industry I was in just completely go out. I’d say 90% of my competition died, and we certainly suffered pretty hard times ourselves in the business I was in. We weathered the storm, but I’ve thought a lot about this, but gosh, in the next recession, how, how am I going to position ourselves and our company to take market share? I think that’s one of the things that happens in a recession is that it provides incredible opportunities for those who are prepared to really expand their, what they own in the marketplace. And I said, Man, the next, the next go round, this is one thing that I’m hyper-focused on, is growing our company by leaps and bounds because there’s just new opportunities that present themselves like a good solid recession for you to take more money. So talk to us about that. I know you’ve said that the three strategies, and one of them is kind of like focusing on revenue, what are some other strategies that you are actively coaching your clients on right now for expanding the company on the time of recession?
[00:10:41] Simon Severino: The opportunities in recessions are to buy competitors and to buy strong assets for a cheap price. So before we go to investing, one last thing we have to check are our costs. How can we turn the costs, the main costs, let’s say personnel, etc, contractors, suppliers, how can you turn your main costs from fixed costs into variable costs? For example, a PR agency, instead of paying them 4k per month, say, hey, I want to be in Ink Magazine, I’m gonna pay you 3k for being in Ink, and I’m gonna pay you 7k for being in Harvard Business Review. And 40k for being in the New York Times. Instead of a monthly retainer, you do that performance-based, which means you are de-risking your site, and you’re also keeping them on their toes, which is better for everybody. And so you are distributing the risk 50-50. Same thing with SEO agencies, they land high-quality backlinks, you pay them $200 and low-quality backlink you will pay $70 Instead of paying them $1000 per month. So creates those situations where if you have more work, you pay more, if you have less work, you have less costs, that makes you resilient. Now with that cash flow, we have improved your cash flow, and we have reduced costs. Now we move to the investing side. And this is where stuff gets exciting. Because real wealth is of course created during recessions. And these, you know, your competitors will have a liquidity crunch, will have a cash crunch. If they don’t do the last four things that we were talking about, they have a liquidity problem. Now they will come to you and say can you buy us? So there will be opportunities. How do we create an investing system? Because this is important. It starts before you start building your cash position before the recession. So you build cash in the bull market. And when you’re in the bear market, you have now an increased cash position. So what do I do in a bull market? In a bull market, I am 25% in real estate, in commercial real estate. It’s is the best. And I’m 25% in stocks. And I’m 25%, me personally, in digital assets, in crypto. And I am 25% cash. So that’s my general way, but I build those 25% up during the bull run because I skimmed the profits from stocks and from crypto when they run up. And so I layer out some of the profits. And that increases my cash position. Now before the recession comes I will be that the 27%, 8% 30% cash, ideally 35% cash this week. So if you had that, and I am doing that, since November that I’m selling so profits. November selling profits, December selling profits, January selling profits, and then it was over. The party was over, but I have increased the cash position. And now July, I am buying this week. I am buying. I’m looking for stocks, I’m looking for cryptos, I’m looking for, of course, competitors that I can buy. This is why you build the cash position because now this is shopping time if you are ready. And then there are strong assets and there are weak assets. This is something that I learned quite late. We don’t learn this in school, unfortunately. We should. So weak asset is something that deteriorates in value. So you buy a car, that’s the worst thing that you can buy because like one week later, it’s worth less. So why should I buy a car? And the opposite of it is a strong asset. For example, real estate, prime real estate, prime commercial real estate in a limited area like in Miami Beach, in Manhattan, New York, that’s an strong asset. Because we are trying to try to build in Miami and you will see it. It’s limited and everybody wants it. And that combination, limited supply and high demand. That’s a strong asset. And now you might go through your assets and identify some of those for me, it’s commercial real estate in prime zones. It was gold. It’s not working so much anymore. Right now, it’s more Bitcoin probably. It’s not completely sure. But that’s where my bets go. I think Bitcoin is limited enough is enough in demand, but we will see if that’s true, right? It’s a bet right now. But it’s limited in supply. Some energy companies right now, if you look at coal, natural gas, there is some limited supply in Europe for energy, that might be something you want to play with. But when do you build your cash position in the bull market? So that was up until November. And now it’s time to buy and to deploy your cash and then to go low cash for the next bull run.
[00:15:15]6] Sam Wilson: Right. Yeah, absolutely. I like how you have broken down your own personal portfolio there. And also, like what you said there are when it comes to taking fixed expenses, you know, when things start getting tougher in the economy, taking fixed expenses, converting those variable expenses, making sure that people are more of a performance-based trajectory. Is there a way that people should be thinking in terms, you mentioned some of that on the marketing side of things, but is there is there a strategy or something that comes to mind when you say, Hey, here’s just kind of a broad way to take more market share in a recessionary environment?
[00:16:36] Simon Severino: Yeah, the difference is, how much cash did you skim from your profits during the bull runs? Because that’s exactly now your possibility, your liquidity that you can add, that’s what you can do right now. And so the opportunities come, all of a sudden, like this week, will be full of opportunities. We have earnings coming up from Google, Amazon, etc, Walmart have just earnings and boom, down 10% after earnings. So there will be opportunities. I hope I can buy some Berkshire this week or some Amazon because they will have heavy dips after announcing earnings, but we don’t know. So I’m ready. That’s why I call it an investing system. Because you see, it’s not just a one-time thing. It’s you to prepare yourself for the opportunity, when the opportunity comes you know exactly what to do. You have some price goals, you have some enter zone, some exit zones, and you have a way of checking in which part of the cycle are you. Is this now an uptrend and downtrend? Is it a 10-year cycle? Is it a one-year cycle, what kind of cycle is this? And so when should I layer in, when should I layer out, when to increase the cash position and when to decrease the cash position, when to deploy it, when to be in the market? Because generally being in the market beats timing the market. Most people cannot time tops and bottoms. It’s better to be long-term, like 40 years in a market. And imagine if you have bought 40 years ago if you had bought Apple, now you would be very happy. And so just stick around with something that is fundamentally strong. That’s definitely better. And then you might have a 20% maybe have a trading position where you go in and out of things as the opportunities arise. For example, competitors, you cannot really plan that at some point, some supplier that you are working with will say I can’t work anymore. And then you might say, well, I can buy you. So these things happen spontaneous and quick. And you can use them but you can prepare for them. That’s why I call it an investing system.
[00:19:00] Sam Wilson: Right now, I think what you mentioned there was, it was again, skimming the profits over the year in the bull run. One of the other things I think that you pointed out was interesting, obviously, no one can time the market. But when we see things softening, and certainly we’re seeing that in, in the commercial real estate sector. You know, just I’ve just finished a call with somebody here before you and I jumped on, and he was talking about how you know now that now they’re getting what they call for offers on multifamily real estate, whereas before there were no call for offers. It was 20 people bidding on the same asset. And his contention was that we’re down to at least we have a third of the buyers in the market maybe now that we did six to nine months ago, which to me, that just screams gosh, now’s the opportunity, or at least the beginning of the opportunity to go out and, you know, continue to acquire, which that again, I love your point there that being in the market is more important than attempting to time the market. I think that was really, really sound advice. So certainly appreciate that. Is there any other things that come to mind when you think about this and you think about entering and recessionary slash inflationary, potentially stagflation environment that you’re telling your clients right now you say, Hey, here’s some, other than stacking cash, are there any other things coming to mind you where you say this is the critical move that people should be making right now.
[00:20:22] Simon Severino: Yes, simplify your business. So in the book Strategy Sprints, we start with the first chapter how you simplify your business. So you go through the activities that you do, and you identify your winning horses, you will have probably four or five up to 17 different things that you actually offer for three to four different segments of people. That’s an average, when we’re working with so many hundreds of entrepreneurs, that’s an average. In average, they have 17 different offers, at different prices, what we call for ideal clients. And so simplifying a business means pick the winner from your offer, and pick the winner from your ideal clients. So now you simplify. Now, your sales becomes easier, your marketing can work better for sales, and your operations are easier. Now every week, you can improve by 1% your operations. This makes everything, you know, frictionless and effortless, now your people are happier, they will stick around longer. Now you are happier because you have now something that works actually. So you can relax, it works also a little bit more independent from you. And it all starts by simplifying. We call it the value ladder, where you start mapping out your business in a specific way. And in chapter one, I show examples and there are clients of us explaining how they did it, to simplify their business, because when you’ve simplified it, now you can manage it better. And it’s much more resilient. And the second part is you go through the costs and make them variable costs. So with all your contractors, you start having performance-based contracts, and weekly check-ins, weekly progress reports that they are actually meeting those goals because then they will get paid. You increase the resilience of your business. And that is the only thing in your control. 95% is not in your control, market is not in your control, sales is not in your control. So what is actually in your control? I always say it’s just three things, your daily habits, your weekly habit, and your monthly. Daily habit is how did you allocate your time today and d what will you delegate tomorrow? What will you automate? What will you systemize? The weekly habit, getting your sales numbers, marketing numbers, operations numbers reported every seven days in a simple dashboard. Monthly habit is doing a strategic analysis, what is the market doing what our competitors doing? Do we need to change something? Where do we cut costs? Where do we reinvest? These three things, daily habit, weekly habit, and monthly habit are the only things that are always in your control, recession, bull run, stagflation, whatever, war, these three things are always in your control. The rest is actually never in your control.
[00:23:19] Sam Wilson: I love it. I love it. Simon, thank you for taking the time to come on today. This was certainly insightful. I love everything you shared with us here today. It is a great timing on this episode, just getting people to think about how to expand their companies and how to really take market share in times of, you know, potential recession. So certainly appreciate it. Thank you for that. If our listeners want to get in touch with you learn more about you and or get a copy of your book, what is the best way to do that?
[00:23:45] Simon Severino: So I hang out at strategysprints.com. And the book is on Amazon. It’s called Strategy Sprints. And it tackles the biggest problem, the marketing problem, the sales problem, the operations problem, the hiring problem. And if you go, if you buy it on Amazon, leave me a review. I’m super curious how you experienced the book.
[00:24:06] Sam Wilson: Awesome. Certainly, I will make sure I get a copy of that myself. Simon. Thank you again for coming on the show today. I certainly appreciate it.
[00:24:13] Simon Severino: Thank you. Keep rolling everybody.
