THIS MONTH’S WISE OWL
Daniel Norman is the co-founder and CEO of Aprao, a cloud-based development appraisal and feasibility tool. Prior to launching Aprao, Daniel spent 10 years working in property development finance. For a free 14 day trial of Aprao, head to Aprao.com
Could your business be more productive?
I am a massive fan of efficiency in both my work and personal life.
Who wouldn’t be?
As it turns out, quite a lot of people and businesses. Whilst most people say that efficiency is important to them, for many their actions tend not to follow. Most are stuck doing the same things, in the same way that they always have.
Businesses find it easy to stay the same. How many times have you heard these phrases?
“That’s just how it’s done”
“We always do it this way”
“It’s worked in the past, so why change it?”
Harsh? Well let’s have a look. Take the example of how housebuilders and developers create their development appraisals. Many use Excel, the most popular spreadsheet software in the world, for their development appraisals. Why? Because they started with it. When someone starts a new business, they establish a way of doing most of the business functions over the first few months of operating but then they rarely revisit these processes over time, even if the company has undergone significant growth or adjustment. What was a reasonable process in start-up, may not be suitable for a busy, thriving business a year or two later.
Excel is an incredibly comprehensive tool, but its complex features require training and only a select few qualified professionals truly understand how to fully maximise these tools. I would suggest that a very small proportion of housebuilders and developers have had any formal training on its use. Partly due to the cost, the time commitment and because users feel they have a good enough grasp of what it does for what they need.
The flexibility and huge functionality of Excel can also be its downfall in some applications. There are a huge range of appraisals out there, all different and potentially creating inconsistencies that result in mistakes, time lost, and general inefficiency. Research once suggested that 88% of spreadsheets contained at least one error.
Let’s go back to that home-made spreadsheet the fledgling developer started with. As the business grew the developer and the various third parties they worked with, all operating under different assumptions and models, contributed to the evolution of the appraisal. The format is adapted several times to cater for different projects, new lines and columns are added, formulas changed. Every time someone alters the spreadsheet there’s an opportunity for an error or inconsistency to creep in. Skip forward 5 years and what started out a simple spreadsheet has become a Frankenstein’s Monster being used on far more complex projects, projects it was never intended to cope with.
Granted there are lots of SME housebuilders and developers out there who have created their own solutions to development appraisals, and they work very well for them. That’s great! However, I’ve also seen lots of horror shows.
A few years ago when working for a development finance lender I noticed that development appraisals would often arrive poorly formatted, inconsistent and riddled with errors. Each one was different. I saw an opportunity and launched a software company.
3 years later we have hundreds of property companies using Aprao to appraise thousands of developments each month. Our customers tell us that they are spending around 80% less time appraising projects compared to their old methods. SME housebuilders, who previously spent 20-25 hours each month working on appraisals are now creating just as many in 4-5 hours instead. Nearly a week’s work condensed to half a day. We frequently hear that they can now move faster on sites, have a better success rate of securing funding and be more confident in the accuracy of their financial models.
Aprao is just one of many smart tools SME housebuilders and developers can use to help increase efficiency in their business and free up time. If you’re spending hours and hours doing something one way because that’s just how you’ve always done it, perhaps it’s time to have a really close look at why you’re still doing things that way. Your business may have changed significantly but if your processes are stuck in the past you may only have yourself to blame for there not being enough hours in the day.