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The “E-Myth Appraiser”

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[fusion_dropcap boxed=”no” boxed_radius=”” class=”” id=”” color=””]A[/fusion_dropcap]re you stuck working in your CRE appraisal business instead of on it? Like many appraisers, I have often struggled to balance my time between working in my business (producing appraisal reports) and working on my business (growing my business by attracting top talent and making it more efficient, profitable, and valuable). It is so easy to fall into the trap of spending all of your working hours focused on generating as many appraisal reports as possible. After all, the reason you are running your own business is you’re a good appraiser and you like to run your own thing. Unfortunately, this is a very common trap not just in commercial real estate appraisal businesses, but for all business owners and identified in The E-Myth – Why most businesses don’t work and what to do about it by Michael E. Gerber. Fortunately, there is a real solution. In my opinion, this book is a must-read for every small business owner. That’s why I’m coining the phrase “The E Myth Appraiser.”

Get Big-Business Economies with Small Business Efficiency

Wendy Tadokoro is a business productivity consultant and has written excellent blogs on this topic. Here’s a good one to start with: https://www.process.st/what-is-business-systemisation/. She makes several references to The E-Myth concept as well as the franchise method of growing a business. Consider the larger regional, national and international appraisal firms. They have obviously taken a page from The E-Myth to achieve their current scale.

The good news for small- and medium-sized commercial appraisal firms is that they can use these same concepts to grow their businesses.  What’s more, it’s possible to do so while maintaining a low overhead, something that those large firms struggle to achieve. Think about that for a moment. A small appraisal firm with the efficiencies of a large business, yet without the overhead. It’s a powerful combination to make a very successful business. There are several ways to do this. For example, advances in information technology and cloud-based software applications make systemization easier today than ever before.

What is Systemization and Why Should I Care About it?

According to The Personal MBA, “Systemization is the act of creating a new system. The primary benefit of creating a System is that you can examine the process and make improvements. Developing Systems helps everyone do what they have to do with minimum misunderstanding.”

This blog: https://redbooth.com/blog/systemization does a good job explaining and I can’t improve on it so here’s an excerpt:

“Systemization doesn’t mean metaphorical conveyor belts, workers who don’t think for themselves, or an end product stamped out in cookie-cutter fashion.

At its most basic, systemization is:

• Creating a process for handling a task you do over and over again
• Finding the most streamlined way to accomplish it
• Capturing that process in some way

Once you document a process, it becomes easy to repeat the steps — even automatic, you might say.

This doesn’t mean your work becomes a paint-by-numbers operation. But it does mean that routine tasks become efficient and easy to execute, which frees up valuable time for you.

[…] here are 5 compelling reasons to embrace systemization:

• Systemization motivator #1: You want happy clients

• Systemization motivator #2: You want a more efficient team

• Systemization motivator #3: You can’t grow your team or increase the budget

• Systemization motivator #4: You want to create built-in quality improvement triggers

• Systemization motivator #5: You want to make room for creativity”

Here’s How to Relate these 5 Points to a CRE Appraisal Business

1. A systemized appraisal system that produces a predictable error free report will make your clients happy.
2. Eliminating redundant clerical work for your appraisers will make them more efficient and increase their job satisfaction.
3. Systemization will allow you to increase your production without adding additional appraisers or significantly increasing your overhead.
4. Integrating the database, spreadsheet, word processor, mapping and exhibits system into one cloud based product will drastically improve consistency and accuracy.
5. Let’s face it, some relatively small percentage of our appraisal work involves unusual properties and markets that are difficult to fit within a systemized approach. By automating as many repetitive tasks as possible, you can empower your team to focus on specialized analyses with additional time and resources when needed. What’s more, a business owner that isn’t bogged down in the day-to-day will find new opportunities to grow. To put it another way, when a leader spends all day hacking through the jungle, there’s no time to climb a tree and get a little perspective on what’s ahead.

Delegate to Grow

A business owner’s time is valuable; so why work on tasks that can be accomplished by lower cost personnel? https://www.process.st/delegate-tasks/#more-7895 … or accomplished by even lower cost software? A key tenet from E-Myth is to use the lowest cost personnel that can competently perform each task. I am often shocked by appraisers that spend valuable time entering data into a database or worse, into spreadsheets. Highly-trained appraisers gathering information from public records when these tasks could be completed by a much lower cost resource. A clerical assistant could even work at home using modern collaboration software which saves on workspace. Some larger companies have offshored this work.

I’ve seen smart delegation work well.  Our company has found great success specifically by hiring parents of school-age children. They work in the office during school hours and at home as necessary without losing a beat. Snow days or sick children are no longer an issue for us or our employees. They do great work, are highly-motivated and are really happy. We have also delegated our IT functions to providers that are fully cloud-based.  Therefore, we no longer have outside IT personnel. One realquantum blog has addressed a few of these in detail:

• 5 Ways to Maximize Your Appraisal Business Bottom Line

Take Time to “Appraise” Your Workday

I encourage everyone to log all of their time spent working for a week or two. This log will highlight areas that are ripe for improvement.  Next, examine the list and envision how you would turn your appraisal business into a franchise – not because you actually want to franchise it, but because it helps to view the business more as an outsider. Then, think about how to delegate those tasks and design efficient processes to be performed by lower-cost staff. Here’s another good Wendy Tadokoro blog that really drives the point home: https://www.process.st/how-automate-mcdonalds-systems-for-your-business/#more-4617

For example, think about how to document the process of onboarding new employees so it’s a smooth and seamless experience. What are major time wasters and how can they be eliminated? Or, how can data collection and entry tasks be moved from your to-do list to clerical staff?  At my office we already had clerical staff working in our teams to offload work from appraisers.  When we rolled out realquantum, we then moved them to higher-level work and saved even more time.  Here’s an overview of what we did:

• Maximize Admin Staff Value When They Do 40% of a Commercial Appraisal Report

Systemization is Not Once and Done

Every time, I have reviewed my commercial real estate appraisal business processes over the years, the return on that time spent has been exponential. So, I learned that systemization is a process, not an endpoint. The appraisal process and related technologies continue to evolve. Business conditions are always in flux. Regulations change and force us to change as well. Our personal circumstances as business owners evolve and as always, technology is constantly changing.

Think about the transition from typewriters to word processors, the use of databases, and now the power of cloud-hosted technologies. It is now possible to run a completely integrated, cloud-native database and appraisal report writing system that no longer relies on a separate spreadsheet and word processor installed on your desktop computer. We are no longer in a world when things need to be stored locally at all.

A Smart Application of Technology

At my appraisal office, we deployed realquantum and learned that scaling a business has never been simpler. The availability of modern, easy to learn software made it possible. The reason is because Realquantum has the “E-Myth Appraiser” in mind and continuously improves based on user feedback. The business environment is constantly changing so make sure all the tools you choose are constantly improving. If they are not, then consider switching. The good ones do this. Specifically, there are a few ways in which realquantum helped our firm achieve the goals of the E-Myth Appraiser and ties back to the systemization motivators listed above:

1. Happy Customers: It’s easy to stay USPAP-compliant and provide the types of reports our clients want.
2. Efficient: Everything is in the cloud. There are no other products to buy and no servers to maintain. There is no double-entering of data. The app is easy to use so new staff learn quickly. We delegate more work faster.
3. No New Budget: Because we get more done with the same people, we not only avoided new costs, but now generate more revenue per employee.
4. Quality is Built-In: Realquantum reduces errors because it uses no spreadsheet templates (i.e. Excel). There is no syncing step to forget at the last minute.
5. Creativity: All the appraisers in the office have more time to spend on excellent analysis.

Systemization Gets You out of Reaction-Mode

While the real estate environment continues to change, it also presents new opportunities. Examples include changes in USPAP, IVS, evaluations, trending analyses, and AVM’s. There are macro-economic factors always at play.  We have no control over them, but they sure impact the success of our businesses. Business owners that have not dedicated time to review their processes will one day find themselves no longer relevant in the marketplace. (Systemization motivator #5 – make room for creativity)

We have all seen appraisal offices that were highly respected for many years simply close their doors as the founders retire and sell their office furniture, antiquated IT systems and file cabinets for a pittance of what they could have been worth. Think about how a modern, systemized business would be a valuable asset to eventually sell and create income for retirement.

At the same time, this presents an opportunity for younger appraisers too. The young “E-Myth Appraiser” is ready to systemize and grow a business.

Think about how you can work ON your business and not IN your business. Become an E-Myth Appraiser. Your business will grow and you will spend more time doing what you love.

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About the Author

Dan Craig, MAI

As director at Keller Craig for the Kansas City market, accomplished commercial real estate appraiser, investor, developer, and attorney, Dan is a thought leader in the industry and past president of the local chapter. Dan has a BS in business and a Juris Doctor in law from the University of Kansas.

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Let’s Talk

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Are you ready to work ON your appraisal business and not just IN it?

Schedule a demo today.

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