Growth in a business is a good thing because it normally leads to other good things like greater profit, capital gain in an asset, stronger brand infiltration and increased efficiencies with scale. Yet, there are unique growing pains in a real estate business which make scaling up more difficult than in other industries. It all comes down to consistency, but not in the way that you might think.
We know the cliche that consistency builds success; there is a lot of coaching and modelling around how to try to create or even force some order from chaos. It is important to recognise that the reverse is also true – consistency creates an ideal incubator for success. Real estate though, is notoriously inconsistent.
What Creates Inconsistency In Real Estate?
There are seasonal cycles which are reasonably predictable. Leasing is intense in January and July. Spring selling season increases activity from September and the auction arena doesn’t hit straps until February.
Then there are market forces and economic policies which can affect consistency. Interest rates, macroprudential measures in lending, foreign investment regulation, tax and depreciation changes will impact market segments and remove some of the drivers of upward pricing and stock turnover. Sometimes the market forces will be more violent and manifest in events like the GFC – which takes both players and capital out of the property game.
The flux of real estate makes it incredibly risky and costly to scale in the traditional way.
Inconsistency In Action
Take, for example, this graph of work tasks completed by our digital employee, Rita. Rita is a skilled AI robot who works in real estate businesses as a digital assistant performing all kinds of tasks depending on the terms of her employment in that business. In this example, Rita has been employed to respond to all property enquiry.
Here is a graph of Rita’s workload across a few weeks as a standard snapshot of activity. Rita’s tasks in this scenario would normally be done by a human using software (albeit at a much higher cost). All of Rita’s performance is logged and so it makes analysis both possible and easy:
There is no consistency across this graph. So the problem with growing a real estate business is that, in order to deliver a service, you need human resources and scale to cope with the highest level of demand. If you service for the lowest level of demand (which is also the lowest level of fee earning activities), you will be stretched to service the demand.
WHAT IS THE TRADITIONAL APPROACH?
If you choose to resource below your capacity, you run the risk of under-delivering service due to lack of resources; which is death to businesses competing in the battleground of professional service.
However, if you employ enough people to cope with the full level demand, you are exposed financially and over-committed for the period that demand does not meet capacity.
Over-resourcing eats into precious profit.
Your option is to hedge and resource for some imagined and consistent median. What the middle-road strategy means is that your resources are, except rarely, either stretched or under-utilised. It is a hedged approach to growth, but it isn’t scalable and it isn’t geared towards profit nor towards creating an outstanding customer experience.
Growing Out Of Growing Pains
The tension between resourcing and demand in an inconsistent and volatile marketplace cripples businesses, which could be (and should be) scaling. For business owners too, something has got to give in the equation of increasingly complex regulations, rising customer expectations, high labour costs and the disappearance of balance between work and lifestyle.
Technology, so far, hasn’t solved the problem for us, in fact, we see technology requiring so much human interaction that it actually complicates workflow and torments businesses instead of freeing them. Here is where we need to shift thinking about how we use technology and start seeing it as a part of the workforce, just like Rita is, capable of scaling and heavy lifting.
Rita, and the capabilities that exist with botsourcing could be the answer to an affordable and inexhaustible workforce for capacity and profit creation in real estate businesses. Rita can free up human resources to be valuable at the customer interface – which is where customers want us to be.
Want to meet Rita? She is waiting at getaire.com.au