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The multifamily industry is evolving at a rapid pace, with best-in-class technologies like self-guided tours and virtual leasing AI accelerating the leasing process and creating new opportunities for growth.
These solutions can significantly enhance efficiency and boost profitability for any size operator, however, securing commitment from company leadership to allocate time, resources, and budget to exploring a new vendor can be challenging - even for the most experienced multifamily professionals.
In this context, let's take a deep-dive into how to craft a compelling business case for new technology, getting you the buy-in you need to modernize your multifamily tech stack.
1. Documenting the Problem
The first step in building a compelling business case is to identify the pain points that new technologies will address. In the multifamily industry, some of the common challenges faced by operators today could include:
Inefficient lead tracking, limiting visibility into which marketing sources are performing
Missed prospect phone calls or a lack of follow-up, leading to lost opportunities
Manual processes that create bottlenecks and increase the likelihood of human error
Difficulty staying compliant with ever-changing regulations
Once the problem and pain points have been clearly defined, it's time to document the specific requirements that the software or technology must fulfill to be a viable solution to the problem. Requirements are the specific features or functions that a product, system, or solution needs to have in order to be useful. Carefully considered and well articulated requirements are the absolute cornerstone for every successful business case. In fact, they are also the cornerstone for every successful technology implementation project, too.
For a deep dive into the concept of requirements, what they are, and how to write them, take a look at this article. Establishing the requirements for your business case ahead of time will help you stay focused during the research process.
2. Shopping for Solutions
Once the problem is clearly defined and your requirements have been written down, the next step is to research potential tools that can address these challenges head on. Search for multifamily technology solutions on search engines, vendor review platforms, software comparison sites, and industry-specific websites. Look for product reviews, case studies, and customer testimonials to leverage the experiences of other operators who have used the tools or technologies you are considering. Reach out to peers, colleagues, or industry experts for their insights and suggestions on the best solutions to address your specific problem. Online forums and professional associations can also be valuable sources of information.
During your research phase, compare the features and functionality of each tool or technology against your requirements. Look for solutions that not only address your immediate pain points, but also offer flexibility for future growth or changes in how your company operates. Ensure that the software or technology you're considering can easily integrate with your existing software systems and operational processes, as seamless integrations are crucial to avoid disruptions, data silos, and to maximize the benefits of the new solution. The most common integrations that multifamily professionals look for are integrations with core property management systems, such as accounting software, CRMs, or websites.
Once you've developed a short-list of options, it's time for product demos. These will give you first-hand experience of how the solution works and help you determine if it meets your needs. More and more vendors are embracing transparency and offering self-service product demos on platforms like Revyse, which allow you to tour the product on-demand, at any time that is convenient for you. If the vendor doesn't have a self-serve product demo available, you can still contact them to schedule a demo through a sales representative.
Be sure to also assess the quality of customer support provided by the vendor during your research phase, as well as the vendor’s track record for reliability and innovation. A strong support system and a commitment to continuous improvement are essential for a healthy long-term partnership.
Once you've conducted thorough research, you're ready to select the product that best addresses your problem, fits your requirements, and meets your goals, objectives, and budget. Now, let’s continue developing a winning business case.
3. Quantify the Benefits
To build a persuasive business case, it's crucial to quantify the benefits that the proposed solution can deliver. This data-driven approach will help you build a compelling business case, making it easier to gain buy-in from senior leadership and other project stakeholders. Typically, these benefits can be categorized into three main areas:
Revenue Enhancement: Calculate the potential increase in revenue from improved lead conversion rates, higher occupancy levels, or reduced vacancies and turn times.
Example: If your new software solution can help improve lead conversion rates by 10% and you usually generate $1,000,000 in annual revenue from leases, this would result in an additional $100,000 per year. Similarly, if the solution can help reduce turn times, you can estimate the increased revenue from shorter vacancies based on average rent prices.
Cost Savings: Estimate the reduction in costs due to streamlined marketing and leasing processes, lower employee workload, or fewer errors.
Example: With a more efficient marketing and leasing process, your team could save 15 hours per week, equating to a cost savings of $15,000 per year (assuming an average hourly wage of $20). Additionally, if the new software can automate certain tasks and reduce errors, you might save another $5,000 in expenses related to correcting mistakes or addressing resident dissatisfaction.
Risk Mitigation: Assess the impact of improved compliance and reduced exposure to fines and legal actions.
Example: Suppose your new software solution can help ensure that all leasing documents are compliant with local regulations, reducing the risk of fines or legal actions. If your organization has historically faced $10,000 per year in fines or legal fees due to non-compliance, implementing the new software could potentially eliminate those expenses.
By providing tangible examples and quantifying the benefits in each of these areas, you can demonstrate the value of the proposed technology solution more effectively.
4. Understand the Timeline
While vendors typically provide implementation timeline estimates as part of standard deal negotiations, it’s always wise to consider your own implementation timeline, through the lens of your organization’s behaviors and patterns. Does your company tend to adopt new tools more slowly, through phased approaches? Or does your company take a ‘rip-the-band-aid-off’ approach and prefer to minimize the length of a roll-out period? Here are a few tips on how to consider the implementation timeline in your business case:
Evaluate the complexity of the new software or technology, as this will influence the time needed for implementation. Consider factors like integration with existing systems, customization requirements, and the learning curve for users. Are you going to be reliant on other departments or leaders to allocate resources to the project? Consider this in your timeline.
Next, break down the implementation process into key milestones, such as signing contracts, setting up the infrastructure, configuring the software, training staff, and conducting a pilot test. Estimate the time required for each milestone and establish deadlines accordingly.
And be sure to identify any potential risks or challenges that could impact the implementation timeline, such as technical difficulties, organizational resistance, or competing priorities. Think about any contingency plans that you may need to have in place, and how those plans may disrupt the timeline. By thoughtfully considering the implementation timeline in the business case, you can demonstrate a well-rounded understanding of the project's scope, requirements, and potential challenges.
5. Estimate the Investment and Calculate the ROI
This is an essential step in demonstrating the value of your new solution to stakeholders. Here's the nitty gritty on how to approach these calculations:
Start by identifying all the costs associated with the software investment. These may include:
Software license or monthly subscription fees
Hardware costs
Implementation and setup fees
Any consulting services required
Training costs for staff
Ongoing maintenance, support, and upgrade costs
Next, quantify the potential benefits that the software can bring to your organization. You already did most of these calculations in step 3, so it should be quick and easy to include them here as well:
Improved operational efficiency, resulting in reduced labor costs
Increased revenue, due to higher productivity or additional leases signed
Enhanced resident satisfaction, leading to higher renewal rates
Cost savings from automating manual processes or reducing errors
Now you're ready to calculate the ROI. To determine the ROI, use the following formula:
ROI (%) = [(Total Benefits - Total Costs) / Total Costs] x 100
The ROI is expressed as a percentage, indicating the return on each dollar invested in the software. A positive ROI demonstrates that the investment is worthwhile, while a negative ROI indicates the costs outweigh the benefits.
Another useful metric to include in your business case is the payback period, which represents the amount of time it will take for the investment to break even. Calculate the payback period by dividing the total costs by the annual net benefits (annual benefits minus annual costs). A shorter payback period is generally more favorable.
Once you've calculated the investment and ROI, add these numbers to your business case. Presenting a comprehensive analysis and showing your commitment to the financials will help stakeholders understand the value of the software investment and increase the likelihood of gaining buy-in.
6. Address Potential Risks
Every good business case makes its own counter arguments, diffusing objections before they have a chance to be made, reinforcing the credibility of your proposal. Begin by brainstorming and listing potential risks that could impact the project's success. Risks can stem from various sources, including technology, organization, budget, timeline, and external factors. This should include anything that could feasibly go wrong, such as:
Disruption to existing processes is too great
Employee resistance to change
Incompatibility with current systems
Vendor goes out of business
Budget overruns or timeline delays
Regulatory environment changes without warning
For each identified risk, evaluate the likelihood that it would occur, and the potential impact on the project if it were to materialize. This assessment will help prioritize the risks that require more attention and resources. For each significant risk, develop a plan outlining how you’d mitigate it. This proactive approach shows that you’re prepared to address challenges, and your transparency will build trust with stakeholders and show that you have thoroughly considered the proposal from various angles.
7. Present the Business Case
Congratulations! You've successfully crafted your very first business case, and it's time to showcase your hard work to senior leadership. Presenting your business case is a fantastic opportunity to demonstrate your strategic thinking, problem-solving skills, and commitment to innovation.
As you prepare to take the stage, remember to be concise, clear, and persuasive in your delivery. Your enthusiasm and confidence in the proposed solution will be contagious, so let it shine. Focus on highlighting the most captivating aspects of your case, such as the quantifiable benefits and the impressive return on investment. These key points will make a lasting impression on your audience and illustrate the potential value of your proposal.
It's natural for company leaders to have questions or concerns, so be prepared to address them with confidence and clarity. Anticipate their inquiries, and arm yourself with additional details, examples, and data to reinforce your case. This readiness will showcase your thorough understanding of the project and your ability to navigate challenges with ease.
So, take a moment to revel in your accomplishment, and get ready to make a powerful impact. Presenting your well-crafted business case to senior leadership is an incredible milestone, and you should be proud of what you've achieved. Here's to the beginning of an exciting new technology journey that could significantly impact your career - and your company’s portfolio.
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Team Revyse