How's Your Business?
How's Your Business?
It’s a question that gets asked at cocktail parties all the time. And more often than not, the answer is something like “Just fine,” regardless of whether the real answer is good or bad. But if you were responding thoughtfully and honestly, what would you say?
Many real estate professionals these days would probably say they’re busier than they’ve ever been before—at least busier than they were three or four years ago. But many of them are having varying degrees of success on actually putting together and closing deals.
There are many reasons for that: short sales and foreclosures, tight credit, regulatory uncertainty, appraisals, consumer nervousness, inventories. These have been—and remain—major challenges for practitioners throughout the slow recovery. On top of that, changes in Web, social, and mobile technologies and their effect on how consumers access content have changed the ways in which practitioners run their marketing and communications strategies.
Figuring out how to successfully navigate deals in the face of all these developments is enough to keep anyone busy. Amid all that busy-ness, though, it’s very easy to neglect mapping out the future of your business. That entails identifying your customers, understanding your value proposition, and developing a business plan.
That was at the heart of this year’s RETSO (formerly Real Estate Tech South) conference in Atlanta last month. Instead of focusing on technology tools and techniques as it has in the past, the mantra of event this year — as articulated by RETSO presenter and Nashville-based broker Brian Copeland — was “Refresh. Reframe. Refocus.” In other words, it was about determining where your business model stands today and figuring out what changes you need to make, from minor tweaks to total reinventions, to survive a market in constant shift mode.
Here are some of the overarching themes that came out of the conference this year. Real estate pros can use these concepts to find success in times of turbulence and transition.
Be Capable of Change
In his presentation, Nick Niemann, founder and president of the BriefBack Business Institute, described groceries in the United States up to the 1930s. Niemann pointed out that grocery stores in that bygone era were very small, offered a limited selection, stayed open only during regular business hours, had few if any marketing expenditures, and were located in a central business district or neighborhood hub.
However, an assistant manager of a Kroger grocery store in downstate Illinois named Michael Cullen changed all that. He proposed a new kind of place to shop for food — one he said was "monstrous" in size, a "warehouse" grocery with a huge selection that stayed open at night, was aggressively marketed in multiple formats, and was not centrally located within a neighborhood or town (as these locations were generally less expensive). In other words, a supermarket.
He pitched this idea at his own company, which wasn’t too keen on upending its existing business model. Undaunted, he went to Wall Street to find financial backing for his own venture and succeeded. The chain of stores he founded, King Kullen, were an immediate hit in the New York metro area, and within a few years each location was generating more than 40 times the revenue of a typical corner grocery store, Niemann said.
Is the current conventional business model for real estate brokers and agents broken? Perhaps not, but as Copeland put it, “Do [consumers] need us to find a listing? No. Do they need us to communicate with the other parties? No. What the heck do they need us for?”
Whether your business needs an urgent overhaul or can survive for a few years more, one thing is certain: It will need to change at some point. “Each of your business models are perishable,” Niemann explained. “I don’t know when they’re going to die. I just know they’re going to die.”
Most real estate professionals understand, on an abstract level, that business models within their industry don’t last forever, but they don’t always fully appreciate how this applies to them personally. They continue to do what they’ve always done — with some slight modifications here and there — and don’t observe what’s changing and adapt accordingly.
This is hardly unique to real estate. Even large, established brands fail because they don’t innovate, or do it way too late. Consequently, any individual or company that hopes to have continued, long-term success in their field should shift from strategic-planning cycles that cover a span of several years to rapid-fire, continuous innovation, Niemann said.
Review and Refine
In order to innovate, you need to constantly assess your business model and sharpen certain aspects of it. Part of that process involves asking yourself questions like these, Niemann said:
· How well does my value proposition get the job done?
· Do I have enough customers?
· Am I earning before I spend?
· Do I have a platform from which multiple solutions emerge?
· Do I have recurring revenues built in?
· Is my business model based on a game-changing cost structure?
Figuring that out can help provide clarity around your business. Another way to get lucidity is to map out your business using online tools such as the Business Model Canvas developed by Swiss author and speaker Dr. Alex Osterwalder, said Matt Hames, CEO of Acru Wealth and another RETSO presenter. This can provide you with an at-a-glance view of your customers, resources, partners, activities, costs, revenues — essentially the elements that make up your business — and show how they relate to each other.
Being able to view the myriad parts of your business and understand how they connect is no small thing, Hames said. “Simplicity is the highest form of sophistication,” he explained. “It’s extremely complicated to take something as complex as a business model and make it simple.”
Always Know Your Customer
Knowing who you serve is certainly important, but it has to be more than just simple demographic data such as age range, earning power, family size, and so forth. You have to also understand their priorities, preferences, dislikes, hopes, and challenges. Jeff Turner, president and CEO of Zeek Interactive, provided a list of key questions to ask about your customers in his RETSO presentation:
· What does your customer find too costly?
· What’s keeping your customer awake at night?
· What common mistakes does your customer make?
· What risks does your customer fear?
· What benefits do your customers expect?
· How do your current solutions delight your customers?
· How do your customers measure success or failure?
· Do your products and services produce savings?
· Do they negate social consequences your customers fear?
· Do they eliminate risks your customers fear?
· Which savings would make them happy (not just in terms of costs, but also time and effort)?
· What outcomes would go beyond customer expectations?
· What do your customers dream about?
· Do you produce outcomes that go beyond their expectations?
· Do you create the social outcomes your customers desire?
By asking questions like these, we can get toward the empathic ideal expressed by the ancient orator and politician Cicero and cited by Hames in his presentation: “If you wish to persuade me, think my thoughts, feel my feelings and speak my words.”
“If we don’t think about what our customer truly desires or what problem they have that we can solve, then we’re going to be challenged with relevancy,” Hames added.