Challenges of Meeting Demand with a Reduced Labor Force
Supply and demand – the driving force behind a capitalist economy has impacted the U.S. housing market tremendously since the onset of the global Covid pandemic. Since 2020, housing costs have risen for both homebuyers and renters. This was great news for rental companies and everyone involved in real estate transactions including mortgage brokers, lenders, real estate agents, and homeowners making serious money from sales.
However, the tide has turned. The spring and summer of 2022 have been a time of change with multiple factors impacting the housing market – inflation and higher interest rates being at top of mind. This creates a unique opportunity for rental companies.
“Simply put, when there’s a lot of demand – that generally, is a good problem to have. For, example if you look at housing prices right now. Housing sales have declined because the mortgages are way more expensive because interest rates have risen. But the flip side is rental home companies have never done better. I mean, the amount of demand for multi-family rentals is just insane right now. If a company can figure out how to serve the demand, they’ll win,” said Zaid Rahman, Founder, and CEO at Flexbase; General Partner at 305 Ventures
Challenges of Meeting Demand with a Reduced Labor Force
This increase in demand is great for existing rental companies and anyone looking to get into the market; however, a common challenge is the inability to hire enough employees or contractors to take care of daily business. Rahman points out that the ability for a company to be successful when demand is high is to increase productivity.
“In order to be winning in this environment, i.e. serving the demand that exists, you need to figure out how to increase your productivity…. [Companies need] to figure out how to use this moment to actually increase their productivity with technology, with automation – just figuring out pieces of their business that they can run more efficiently,” continued Rahman.
When there are not enough employees to get the work done, it’s time for companies to investigate how to improve operations to increase efficiency which ultimately increases profitability. Boss Magazine highlights multiple ways a business can increase financial efficiency including:
- Automate Tasks
With studies showing that 40% of workers claim to spend at least 10 hours a week on repetitive tasks, automation is a simple way to get more done in less time. This frees up employees to attend to tasks that cannot be automated. When it comes to financials, many tasks such as invoicing, receipt tracking, and approving payments can be automated. Add in the benefits of fewer errors and the investment will quickly pay for itself. - Offer Multiple Payment Methods
Improving payment processes and ensuring the options are easy and user-friendly goes a long way to collecting debts in a timely manner. “Accounts receivable turnover ratios are one of the most common ways to measure financial efficiency” (Boss Magazine). This can be especially true for rental companies’ tenants. Offer multiple options that are easy to navigate so tenants can pay in the way that is most comfortable for them.
- Standardize Processes
Often overlooked, this is one of the simplest ways to increase operational efficiencies whether the techniques are applied to financials or any other aspect of business operations. Standardization also ensures that all employees complete a process such as billing clients in exactly the same way which saves time and reduces error. Templates and various software programs can help companies create standards while giving insight into potential automation opportunities.
With all these strategies, it’s important to take note of what is working and what is not working to measure progress and change course when needed. If businesses can “manage their expenses just 1% more efficiently such that they are getting better margins on their products and so on. This is the moment to make those changes where the market is just in an insane place,” noted Rahman.
