Risk just got dialled up to a new level with Covid-19. When we get back to the new normal no one can afford to make mistakes. If you’re a property developer you already know that every time you embark on a new property development project you literally bet the house. Oh, and your reputation. And your ability to put food on the table.
As a business model it stinks. And Covid has 10x-ed this. So how do we make it safe?
I have been involved in the launch of large-scale property developments for nearly three decades. I love it. It’s like lego for grown ups. With projects that have raced off the line like Usain Bolt, and with others that have lurched forward with little or no chance of success. To the absolute cost of the developer.
Over the years I have built up a knowledge bank of what works and what doesn’t. A system if you like. What I’ve noticed is that many property developers don’t fully understand the full reach of marketing. They see it as just promotion, communications or even just as sales activity.
But ignoring the full extent of what Marketing covers adds massively to your property development risk. Marketing Promotion is sub-set of a far wider subject: Strategic Marketing. Marketing Promotion is dependent on Strategic Marketing being right if it is to work. If your Strategic Marketing is wrong your project is doomed before you’ve even broken soil.
“Your project’s success is dependent on the quality of your Strategic Marketing. Your success is determined before you’ve even broken soil.”
In short, Strategic Marketing applied correctly in the run up to developing property can help eliminate many of the risks associated with the sector.
PROPERTY DEVELOPMENT RISK
The problem with property development as a business model is cash flow. All of the risk is up front. In most cases, you have to buy the land, get planning permission, and start construction before any money starts coming in from sales. Worse still, the balance of income from a sale is only paid on completion of the property, so cash flow is a nightmare. You do it for profit, of course, but also for fun, pride, legacy, lifestyle and all sorts of other good reasons.
But if you get it wrong you go bust, and that hurts a lot of people—your family, employees, contractors and even buyers. Heaven knows there are enough things that can go wrong with property development without us being the cause ourselves.
8 OUT OF 10 REASONS WHY DEVELOPMENTS FAIL ARE DOWN TO STRATEGIC MARKETING
In a survey carried out a few years ago by Charlston Consulting, these were the top 10 development killers:
- Failure To Understand The Market and Customer
- Paying Too Much Money For The Land Component
- Poor Project Feasibility, Risk Assessment and Financial Analysis
- An Inadequate Project Brief
- Failing To Consider Operational Issues
- Project Size & Scale
- A Poor Sales & Marketing Plan
- A Lack of Focus and Engagement
- Design & Contract Variations
- Inadequate Project Contingency
Only “Failing To Consider Operational Issues” and “Inadequate Project Contingency” are not affected by strategic marketing. In other words, 8 out of 10 “development killers” are caused by strategic marketing-related factors.
THE CLASSIC 4 Ps OF MARKETING
Marketing isn’t just about promoting your development. Marketing in its broader sense—Strategic Marketing—includes the four classic Ps of marketing:
INTRODUCING THE 7 Ps OF PROPERTY MARKETING
In over 25 years of property marketing, I’ve learned that three more Ps are essential to make a property development successful:
What do all these mean, and how do they work with the previous four? Here are my 7 Ps of Property Marketing – the Strategic Marketing checklist for property developers:
- Place – your property development’s location
- People – your target market of buyers
- Positioning – what makes you stand out from your competitive set
- Product – what you physically build and ancillary services
- Price – your value proposition. Not just your list price
- Promotion – how you let your market know about you
- Pace – How quickly you can sell. Because time lost is money wasted
“If you get your marketing thinking right,
8 out of 10 development risks can be eliminated!”
THIS CHECK LIST WILL HELP YOU ELIMINATE 8 OUT OF 10 RISKS YOU WILL FACE WITH YOUR PROPERTY DEVELOPMENT
In this blog series, I’m going to go into the 7 Ps of Property Marketing one by one. You’ll learn how to launch your own property development while eliminating 8 out of 10 property development risks. Giving due consideration to the 7 Ps costs nothing other than time. Failing to apply the 7 Ps of property marketing could mean building the wrong thing in the wrong place and selling it at the wrong price. It could mean you lose your shirt. So whether you’re involved in residential, leisure or commercial property development … why take that risk?
If you are interested in reading more about The 7 Ps of Property Marketing why not read the next blog: Why Place is the First of the 7 Ps of Property Marketing
Meanwhile, applying the 7 Ps of Property Marketing will eliminate 8 out of 10 property development risks. Get started now and download our Property Marketing Checklist!