Profitability and Process
Progressive commercial appraisal firms are making significant investment in technology. Those that delay don’t truly understand the efficiencies gained through implementing software solutions.
Many appraisers are so busy they have little time to create, let alone execute a strategy. What’s your game plan?
It comes down to technology and process.
Ability to execute strategy
Take an audit of your firm. Is everyone on the team open to improving their processes? You may be met with resistance by uncovering operational inefficiencies. Will the promise of revenue opportunities facilitate an improvement in your office culture?
Ability to respond quickly
Your clients want quick service. We appraisers have deadlines with all our clients including banks, attorneys, brokers, buyers, sellers, etc. Are you making your clients happy by providing best in class service?
Uncovering operational inefficiencies
Net interest margins for appraisal firms that lack software and process is tight. Revenue growth can also be stymied by increasing costs from data providers, office rent and fee splits. Key to your success is structuring your processes to maximize revenues and reduce operational inefficiencies. The latter of which drains your resources from other more profitable opportunities.
Appraisal firm owners need the confidence to know if your staff is performing at peak efficiency. It may take a third-party review to give your firm a new perspective to identify the bottlenecks. This can serve to highlight areas to improve profit and performance. Appraisal firms when operating with fully implemented software and process engagement should experience a minimum 25% profit margin. Most fee appraisers are somewhat profitable, but don’t know what their margins are since it’s not measured.
Having your metrics is step No. 1. This allows you to create specific meaningful projects that can move the football down the field. Metrics are the outline for defining your success. Take the time to write down the successful outcome of a specific project. Resist the urge to just give it a quick thought and not actually take pen to paper.
Give the project a name and define the success criteria. Identify the best and worst results, this will help visualize the upside and the downside, the latter of which is if you do nothing different.
What’s the upside?
1. Financial performance
2. Achieve growth
3. Lower operating expenses
Technology hostage situation
Sometimes technology implementation can be stopped due to internal employees resisting change.
Those afraid to change might find an “issue” with a solution and stop it in its tracks. They complain the software can’t do X or Y. Unproductively, this is often a red herring so they can go back to their comfortable old ways of doing things. Usually old platforms, spreadsheets or manual processes.
Uncovering operational inefficiencies and revenue opportunities is a “mike drop” to obtaining significant strides in productivity. In order to not disrupt the workflow, the folks that implement new software platforms need to be cognizant of respecting each organization’s culture.
How do you compare to your peers? Having a distributed workforce and hoping nobody notices your specific performance isn’t a plan for success. Taking ownership of your position will be reflected in benchmarking and peer comparison. Analyzing operating expenses to other appraisal firms, highlight opportunities for improved efficiencies.
Key to scoring a lot of touchdowns is technology utilization. It’s important to match up the capabilities of your appraisal software solutions to your long-term objectives. As an appraiser, you might be surprised to know that you’re being graded by your bank clients (A, B, C, D or F) usually based on the number of reviews and late reports delivered.
Want to win?
Professional football teams don’t take the field without a plan. As a professional in the valuation space, neither should you. Profitability and process. That’s a winning strategy. This will get you into the end zone every time. Plan to win next Sunday’s game.