How much wasted time, money and effort exists in your business? John Knight from BusinessDEPOT applies the ‘seven deadly wastes’ criteria to real estate and asks: What are you going to do about it?
LET ME PUT my cards very clearly on the table – I hate waste, yet it is rife in most real estate businesses. The word ‘waste’ itself has such a negative connotation. Nobody likes the rubbish overflowing from the bin, so why do we tolerate it in our businesses?
Just because in real estate we don’t manufacture widgets, it does not mean we are exempt from the scurvy that is waste. I call it scurvy because it is a disease. If you let waste flow freely in your business, you create a culture where it becomes the norm to accept inefficiencies and defects – even to accept a culture that tolerates these inefficiencies.
When I help people fight the infectious disease that is waste, I always refer back to the seven deadly wastes identified by Toyota.
The seven deadly wastes:
- Inappropriate Processing
- Unnecessary Inventory
- Unnecessary Motion
Yes, the seven deadly wastes do sound more akin to a motor vehicle manufacturing line than to a company that buys and sells property, but they are all just as applicable for real estate businesses.
It is important to note that something is only waste if it doesn’t add value. As you review the following examples of waste, ask yourself how much in time and dollars each of these cost your business. I am fully aware that it is contentious to suggest some of these activities do not provide value.
WASTE #1: OVERPRODUCTION
- Marketing that is over-the-top or not suited to the property or market
- Reports in excess of what vendors, prospects or landlords value.
WASTE #2: WAITING
- Waiting for offers to come in or phone calls to be returned
- Waiting for conditions to be met and properties to settle
WASTE #3: TRANSPORTATION
- Travelling to meet vendors, buyers, tenants and landlords
- Servicing clients outside of target area.
WASTE #4: INAPPROPRIATE PROCESSING
- No clear roles and responsibilities – someone else could be doing that job
- Sales team doing administrative tasks when they could be freed up to make another sale.
WASTE #5: UNNECESSARY INVENTORY
Yes, even real estate businesses can have unnecessary inventory including:
- Listings that will not sell, including vendors with unrealistic expectations
- Unpaid VPA.
WASTE #6: UNNECESSARY MOTION
- Going back to the office to get a document you could access electronically
- Transferring an accounting file to your accountant – a cloud accounting system would solve that.
WASTE #7: DEFECTS
- Errors in contracts or marketing, for example wrong open-house time
- Lost listings or managements.
So how much waste is in your business? And what are you going to do about it?
Firstly, find the opportunities to improve profits, cashflow and values, and recognise they can be enormous.
The second step is to set about creating a culture that does not tolerate waste. If you can do this, your team will continuously be improving the internal processes and procedures to make a real difference.
If you hate waste, like me, you will love the well-oiled machine your business will become when it no longer tolerates waste.