One of my mentors recently used the term “escape velocity.” In science, escape velocity is the speed an object needs to achieve in order to break through the earth’s gravitational pull and enter outer space. In a business context, it’s a company’s ability to grow faster than the rest of the industry it is in.
Needless to say, if you’re in business, escape velocity is generally something all business owners wish to achieve. Of course, there’s also a cautionary tale or two out there about doing so unsustainably, but that’s another thought I’ll expound upon some other time.
Since that conversation, the concept of escape velocity has been stuck in my head. It’s impossible to know when a turnaround in the mortgage industry will happen, but I can guarantee it is going to happen. Just about every business in our industry is, to some degree or another, down right now from where it was even a year or two ago. But as the market shows signs of optimism, many of us are planning for that day. How can a company recover faster than the rest of their industry? How can you utilize down markets to your advantage to grow back bigger and better?
We’re already seeing the proverbial headlines shifting focus from layoffs and closures to mergers and acquisitions, and that’s one powerful way–if planned well–to win market share and position oneself to take advantage of an improving market. Of course, that assumes that the newly combined entity has its operations in order and its business model tight before the anticipated surge of new orders. Otherwise, all the positioning in the world won’t help that business if it botches its workflow and production process.
There are also new businesses. Some of the shrewdest entrepreneurs out there routinely start new businesses (and even new concepts or business models) at moments precisely like this. A lack of competition, lack of investment and lack of attention to a given industry can mean great opportunity. The barriers to entry are low and the timing could be right to present new options as older, more established entities struggle. We’re seeing some well-funded young businesses coming into view as we speak, and I’d bet we’re talking a lot more about some of them pretty soon.
And then there are those “in the middle.” These are the businesses that aren’t tiny start-ups, nor Fortune 500 behemoths. Most are small to mid-cap independents, and strategy is everything for these folks at this moment. We’ve also seen examples of firms in this weight class grow out of the pack to become market leaders in the next upcycle. We’ve also seen plenty of failures where firms have battened down the hatches when they should have been taking qualified risks.
As for LodeStar, we’re preparing by hiring and growing our team strategically. It also means we’re expanding our data offerings and creating more integrations with leading industry systems. We’re tripling down on our mission to being the leading closing cost provider in the industry. And we’re maintaining our focus on client service and industry leadership towards the ideals of clarity, community and connectivity. It’s worked for us so far, and it’s a proven approach that’s worked for others in the past. We’re not just here to harvest profit during a market boom. We’re building for the long run and thinking ahead. Right now, that includes a run up to escape velocity. We hope you’ll continue along for the ride when that happens!
We at LodeStar are grateful to all of our clients, friends and colleagues who take the time to view Deeper Thoughts. Please consider having a look as well at some of our other great content, including our podcast, “LodeStar’s Lending Leaders,” and “A Tale of Two Mortgages: an original webcomic for the mortgage industry, presented by LodeStar.”
As always, your feedback is welcomed and appreciated!