Economic slump forces big decisions for Basalt business
December 22, 2008
BASALT ” This year will go down as the best of times and as the worst of times for small-business owner Wendy Lucas of Basalt.
She tasted success last summer closing the sales of 50 Market Street Lofts in the Willits Town Center. But now, the national economic downturn has hit the local real estate market so hard that her namesake real estate company is in a pinch ” like many in the Roaring Fork Valley.
“Since August, it has really become apparent that we’re not making any new deals,” Lucas said. “I have no income right now.”
She slashed expenses this fall ” laying off one employee, urging her agents to work out of their home offices, eliminating newspaper advertisements and taking on more duties in-house that used to be farmed to independent contractors.
Still she wonders if it’s enough to survive a sustained recession. Lucas established her own business two years ago, borrowing money to buy and equip a 1,500-square-foot office at Willits. She hired four administrative aides and enlisted 10 real estate agents to work under her umbrella.
The economic uncertainty is nerve-racking, she said, but she is determined to persevere.
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“I’ve worked a long time to get to this. It’s just bad timing. I love what I do. I’m just going to keep plugging away,” Lucas said.
Lucas was upfront with her administrative staff about her concerns this fall. It’s a tight-knit group and a small office so they were well aware of the financial picture. The staff of four brainstormed on various cost-cutting ideas. They offered to each sacrifice one day so that all of them could remain employed.
Ultimately, the office manager approached Lucas with an offer to leave. Lucas reluctantly agreed, reasoning that the manager was most likely to find another job in this tight market because of her excellent skills. Nevertheless, laying off a trusted employee was hard.
“I cried. Are you kidding me?” Lucas said. “She was here when I started. She helped me set up my business. She’s extremely capable, very smart.”
As part of their bargain, Lucas gave the office manager 45 days notice so she could find another job. (It paid off. The office manger landed another job.) Other real estate offices weren’t so kind ” they let employees go on a moment’s notice. Lucas has maintained the same benefits package for her staff.
“I’m still taking care of my people the way I would if they were related to me,” she said. “Everybody is trying to work together to make it work.”
The remaining employees took on additional duties. Wendy Lucas and Co.’s property management branch used to contract for housekeeping. Now her staff cleans the houses instead.
“They said they would rather continue to work for me and do whatever it takes then go somewhere else,” she said.
The real estate agents don’t receive a salary, and they don’t pay a “desk fee” to Lucas as brokers do at some firms. She supplies their office space and covers their overhead. In return, they give the company a cut of their sales, and that gets shared among all employees.
“If they sell nothing, I get nothing,” Lucas said.
Lucas’ experiences this fall demonstrate the ripple effect in the local economy. Slow sales in the real estate market have led to her severing ties with a cleaning service. That might mean a maid or two getting laid off.
She also dropped the $3,000 in display advertising she purchased each week. That has a direct effect on the bottom line of Aspen’s newspapers.
Lucas is even studying photography so that she can tackle more of her marketing herself. She said it costs up to $1,500 to hire a professional photographer to work three hours getting the necessary shots of a property for marketing purposes. Her goal is to learn enough about her camera and photography to take those shots herself. She views it as survival.
“If you can work in this market and get through this market, you will be a better Realtor in the future, because you will learn how to do the things that get things sold today,” Lucas said.
The ripple effect in the economy has come full circle to hit Lucas as a property owner. Fewer employees in the valley mean fewer renters. Lucas said four of the 10 investment homes she owns are vacant. Slow real estate sales have forced more people to try to rent, and that’s flooded the rental market.
Lucas said her real estate firm’s challenges have had a direct effect on her family’s spending and her investments.
Her family has turned down the heat this winter. They’ve reduced travel. She’s dropped Pilates classes.
“Everything has changed, absolutely everything,” Lucas said. “The quality of food I feed my dog has changed. Seriously. It used to be all-natural, organic expensive food. Now she’s getting kibble from City Market.”
Rover will survive, but more troubling to Lucas is the status of her investments. Lucas said she plowed money into real estate investments after handling the sales of the 50 Market Street Lofts.
“I paid top dollar for properties that are down in value,” she said. “I’m bleeding at this point. I have properties that don’t have tenants in them. I have a business where I have to pay a mortgage and I don’t have an income.”
But she still has hope ” and determination to hang on until the market recovers.