How-to guide for multi-property owners (Part 2 of 2). Find part one here.
In my last article, we dug into some details of identifying your business’s strengths and weaknesses. If you’ve not yet found the time to do this, now is your moment!
Today we’re moving onto opportunities and threats brought by change.
Every business is affected by changes that occur outside of its control. These can be positive changes – opportunities for your business or negatives – which are threats.
Evaluating these changes is something you do already, consciously and unconsciously. Property managers reading about new restrictions will consider how they will be affected. If they listen to a podcast about new technology, they’ll consider if they could benefit.
This process is about formalizing those thoughts to create the most effective strategies that make the best use of your business’s strengths and weaknesses.
Whether you’re an established rental business or just starting, your business will benefit from undertaking this activity.
Today I’ll cover 3 points:
Why evaluate your opportunities and threats?
It’s simple. It’s about preparation.
Preparing for the future puts your business in the best position to take advantage of the opportunities ahead and, importantly, reduce the threats’ negative effects.
It’s not possible to over-exaggerate the effect this could have on your business.
I am writing this from Scotland, where proposed restrictions threaten the existence of vacation rentals in the capital city. If brought in, they will undoubtedly lead to significant closures of vacation rental businesses.
Knowing this now, local businesses have the opportunity to influence the decisions, which may mean the difference between closure and success.
But usually, it’s not so dramatic.
Identifying opportunities could open new attractive markets to you.
It could lead to a competitive edge by attracting more bookings during the low season.
Or it could also reduce your overheads.
Here are some strategic decisions you’ll be able to consider.
By identifying your opportunities you’ll know which doors could open for you.
- Will you save time by using this incredible new bit of technology?
- Is Brexit going to bring you more local guests?
- Will staycations benefit your business?
- Will digital nomads fill a gap in off-season bookings?
- Should you add an electric car Charging Point to attract more local travelers?
By identifying threats, you’ll know what action to take to limit potential damage.
As with looking at your weaknesses, this can be a hard, but important, process.
- Will new legal restrictions for self-catering properties potentially close your business down?
- Can you limit the effect of local social groups campaigning against self-catering businesses?
- What will attract international visitors to your location?
- Post COVID19, how will you maintain safety for larger groups?
We’ll start with the research.
Change is one of the irrefutable laws of life.
Some changes will have a positive effect on your business; others may be negative. Some changes will have a significant impact, whereas others may pass you by unnoticed.
So which changes should you pay attention to?
It’s time for a fact-finding mission again.
Create two documents, title the first ‘Opportunities’ and the second ‘Threats.’
Opportunities are changes that are happening externally, which may create benefits for you, your company, or the vacation rental industry as a whole. These changes could:
- affect your profitability
- improve your competitiveness
- help provide a better service, and/or
- reduce your costs.
Threats are changes in your environment, including your competitors, which can damage your business outlook in these areas.
Think about these distinct areas –
- changes in the Political, Legal, Environmental, Social, and/or Economic landscapes
- technological developments.
Look around you, read the news, industry news, podcasts and webinars, and talk to friends, forum friends, and colleagues. What changes are on the horizon that could affect you, your business, your employees, and your guests?
Here are some questions to consider.
- What technologies exist in the market or are coming soon?
- What is the effect of Brexit on international guests to your area?
- Will staycations be a long-term effect of COVID19?
- Will digital nomads travel to your area?
- What is the trend for electric car Charging Points?
These are just some ideas to get you started, take your time.
Here are some questions to ask.
- What legal restrictions for self-catering properties are being discussed?
- Are there local social groups campaigning against self-catering businesses?
- Will vaccination passports reduce the number of international visitors to your location?
- How will COVID19 change the size and composition of groups traveling to your area? Will there be a surge in large family reunions, or will guests be cautious and travel alone or in small groups?
- Will your employees be likely to leave your business to follow the trend of working remotely?
Well done for getting this far into the process. It’s worth it, keep going!
Armed with your lists, you are now ready to take action. But where should you start?
There’s always a lot of emotion and feeling involved in deciding what strategies to follow. I know this because I add emotion to the decisions I make, and I see my clients struggling with this, too.
Realizing this, I sought advice on removing any emotion from my decisions and following the facts. Here’s how.
Choose 4 or 5 threats and opportunities that you would like to investigate further.
Place each threat and opportunity in a table with columns for Importance and Probability. For Importance, grade the degree that it will affect your business from 1-5 (low importance – high importance). For Probability, grade the likelihood to affect your business from 1-5 (low likelihood-high likelihood).
Here’s a simple example.
|Opportunity||Importance (1-5)||Probability (1-5)||Score|
|Opportunity 11. Digital Nomads will be attracted to my area||5||2||10|
|Opportunity 22. Staycation guests will be searching for properties with own garden||4||4||16|
|Threat 1 1. Competitor will open new rental closeby||3||2||6|
|Threat 22. Local council implement strict regulations in 2021||5||4||20|
It’s clear that Opportunity 2 and Threat 2 are scoring high, and these should be the focus of attention.
This is where you fine-tune your strategies. Bring together your strengths and weaknesses to enhance your opportunities and offset your threats.
If you’d like to read more about the background to this next step, search for ‘TOWS analysis’ (Threats, Opportunities, Weaknesses, and Strengths) in Google.
The goal is to create the best strategies for you by using your business’s existing and potential capabilities.
Create a table with your most important opportunities and threats and your 3 or 4 biggest strengths and weaknesses (that you created earlier).
You now have 4 empty squares to complete with strategy ideas. Consider how you will use your knowledge about your business strengths and weaknesses to best take advantage of the opportunities and threats.
- Strategies using your strengths to take advantage of opportunities.
- Strategies using opportunities to remove your weaknesses.
- Strategies using your strengths to minimize/ remove the effect of threats.
- Strategies that adjust weaknesses to minimize the effect of threats.
Here’s an example to get you started.
1. High customer service standards
2. Properties have own parking
1. Lack of technical skills
2. No company website.
1. Staycations predicted to stay high for 3 years.
|Strengths / Opportunities|
1. Communicate own parking in marketing.
|Weaknesses / Opportunities|
1. Employ a company to create a website with a staycation brand to attract direct bookings.
1. Long-term COVID19 effect reduces guest desire for face-to-face meetings.
|Strengths / Threats|
1. Send guests a pre-arrival video covering how to use the property features and the local area.
|Weaknesses / Threats|
1. Arrange an employee training course to learn technology for keyless entry software.
Completing this table means you’ve now got your plans for the month, or perhaps the next few years!
It will take time to do this, and you may need to leave it, and come back to it several times, and that’s a good thing.
Once you’re ready, select the strategies you’d like to start with and get together with your team to plan how you can implement these.
Need to prioritise which to do first? You have the skills – remember that removing emotion will help you make the right decision, so score each strategy as you did in the Evaluation section above.
You can choose different factors to score according to what suits your business needs. E.g.,
- Ease of implementation versus Cost
- Length of time to implement versus Level of competitive advantage created.
- Likelihood to close company versus Change expected
Are you ready?
It’s time to use your plan and make a difference to your business. This isn’t a one-off exercise; scanning your environment is a continuous process.
Threats and opportunities can appear and disappear quickly, and you need to be ready to respond.
I hope you find this activity useful. It’s not quick, and it’s not easy, but it will help you drive the difficult decisions you need to make to be a success. Good luck.