Commercial Real Estate Encyclopedia

Business Planning >> III. Design Business Processes and Operating Model

Business Process >>

Operating Model

  • Your operating model structures the people, processes, actvities, systems, and technology necessary to execute the business.
  • It's sole purpose is to provide the framework that gives you the capacity and capability to execute the business.
Executing The Business

Once you have defined your value proposition and developed your brand, how will you execute the business? The answer is your operating model. The operating model is the framework that brings together the people, processes, functions and technologies to deliver your value proposition to your clients.

There are many factors that influence your operating model. Among the most important influences to consider are:

  • Your Promise to Your Client: Your ability to deliver on your value proposition to your client.
  • Your Capacity: Your ability to execute the volume of business you need to meet your objectives without comprising your ability to deliver.
  • Your Resources: What resources are available to you to execute your business.

The table below illustrates how two seemingly similar businesses are actually very different in nature. The level of service required, the enormous volume of private capital investors, and the relatively small number of institutional investors means each business requires a differerent approach. The focus, types of activities and processes are different, and hence place different requirements on their operating models.

Institutional Private
# Of Sellers 100's 1000's
# Of Buyers 100's 1000's
Geography Unconstrained Focused
Service Customized Standardized
Relationship Personal Brand

As your business grows, or becomes more efficient, you will be able to scale your operating model to meet the demands of your business. As you and your team become more skilled at operating your business, you may become more skilled and efficient at employing techniques and technologies to deliver results.

Although there are endless opportunities to improve and innovate your operating model, we should make sure we are familiar with the three basic functions that many brokerage professionals and brokerage teams generally perform.

Business Generation: These are the processes and activities that reach out to the market and identify and attract business opportunities.

Conversion: This is the process of converting an opportunity into business.

Service Delivery: This area of processes and activities focuses on executing the business and delivering on your promise to your client.

An individual brokerage professional may start out performing all three single handedly, but as the business grows, a team will evolve and generally organize themselves around each area of activity. As this occurs, it will be important for each person to leverage their strengths by concentrating on a given role thereby increasing their effectiveness, capacity, and value to themselves and to their client.

With this understanding, we can now design an operating model that is focused on superior delivery of your value proposition to your client that takes into account all the external and internal variables we have addressed at each stage of our business planning process. This will then prepare us for the next stage on our journey which is selecting and aligning the appropriate professionals to build the team.

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