How many of your management teams set your revenue budget by looking at last year’s sales goals and then bumping them up by some percentage (usually a stretch sales goal)?

How many of you have set your sales goals with an eye towards the news of a housing market slowdown?

“In November, we saw the market soften further, which we attribute to the cumulative impact of rising interest rates and the effect on buyer sentiment of well-publicized reports of a housing slowdown,” said Douglas Yearley, Toll Brothers Chairman and CEO.

According to U.S. Census data, November marked the eleventh month in a row that new home sales have declined.

Now, I am not an economist, nor am I a professional prognosticator. But I am a conservative planner. As Benjamin Disraeli once said, “I am prepared for the worst, but hope for the best.” What this should mean to your management team is that you should be budgeting sales conservatively. How many move-ins did you have this year? Put that in your 2019 budget (unless you have a dramatic change happening, like a new expansion).

Why? Because budgeting sales too aggressively places your operations team in a precarious position. What happens if six months in, you are not hitting your sales goals? You’ll most likely have to cut something. Playing catch up is much harder to do on the operational side than planning conservatively.

As a management team, I would much rather under promise and over deliver.

An important note, I am not saying I’m against stretch sales goals. I’m just saying that shouldn’t be the number in your operational budget.

By the way, this slowdown in housing market is an excellent tool for your sales team to immediately impact sales (and sales goals) with a strong close, “Mrs. Jones, the market is slowing down. Now is the time to sell. Lock in your equity before we see a real decline in the housing market.”

Senior Housing Is Predicted to Outperform Other Real Estate Classes in 2019

Fortunately, many, including myself, believe that while the US housing market is slowing down, it is not collapsing. And for those of us in the business of senior living, the growing need for Life Plan Communities still places us in a bull market. So, as we approach the new year, remember, “Under promise and over deliver!”

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