The real estate industry has many parts, and one of the most interesting sides of the industry is the one run by non-profits and charities. In Vancouver, where the high cost of living and a housing supply that does not meet demand have made it the least affordable real estate market in North America, housing run by non-profits is all the more important. It is also a type of real estate I never gave a second thought to when I worked in the private sector. Today though, I see how non-profits have become indispensable in delivering homes to thousands of people the private market has left behind. The crazy thing is that people in need of affordable housing range from those with very limited income to professionals that would be considered to be earning a good living by standards elsewhere in the world – or even elsewhere in Canada.
The challenge for non-profits/charities is knowing whether to/how to expand, partner, further penetrate the market or transfer assets to organizations better positioned to meet the challenges of the current market. Building is a long and costly process. On top of that you can add a tax regime that does not clearly recognize the need for affordable housing providers to build-up the cash reserves needed to maintain and replace real estate assets (think redevelopment or roofs and elevator replacements). It’s not like after responsibly breaking even over a number of years you can quickly raise $800,000 + to fix leaking pipes causing unsafe moldy environments for tenants. After all, being “not for profit” does not mean you can be “for loss” when people depend on you for shelter.
Many organizations are looking to rise to the challenge of building more affordable housing – including some community-based organizations that have never operated housing. In order to do this, most are looking to form strategic partnerships. Partnerships in this realm must take into account needs that go beyond building homes. It requires building capacity for effective long-term management of assets and clients under circumstances that are more complex than those faced by the private market. Furthermore, not every partnership is appropriate. Even with powerful partners, many longstanding operators are struggling to maintain the housing stock they have.
Entering into the (no-for-profit) business of building and operating affordable housing in today’s market requires the willingness to look for non-traditional partners. Even though there are promising initiatives from the provincial and federal governments, long-term success will still require taking the time to vet and let go of potential partnerships and funding offers until the right ones are found. Entering the realm of affordable housing requires a commitment to creativity and perseverance. It also requires stepping back and moving away from knee-jerk reactions in order to plan for long-term solutions.
In Vancouver, several organizations are now in the process of delivering affordable units. There is still a huge and growing need. Yet, the situation and top-of-mind interest from the community is setting the stage for non-market housing providers to become a driving force in the delivery of housing solutions.
The importance of making strategic contacts is fundamental to success – particularly when expanding into new territory. Relationships facilitate market penetration, assist in identifying new audiences, and measuring product performance. Partnerships can be formal or informal and require different levels of commitment in order to keep the relationship beneficial.
Rahul Samant CEO of Rehabtronics told us that… “it’s very critical to establish strong sales and distribution channels as well as relationships with key opinion leaders”. Cindy Collins founder of Mining Technology Partners noted relationships are …” huge and the focus of [her] company. [They] put providers together with contacts in Mexico and help them with distribution or [creating a] sales network. Not only this, but to find references and the who’s who of using your products… this industry [mining] is very dependent on the usual early adopters. We are often asked for who is using our customers’ products, especially for the more innovative or game changing products” . Alejandro Godoy founder of Seafood Business Solutionshighlighted “…it is very important to develop relationships with key decision makers, specialty seafood buyers in new markets.”Carlos Escobosa Commercial and Administrative Director of The Residences at Solaz observed that “contacts in target markets offer a direct line to what consumers in those markets want, and most importantly, how to reach them in a cost-efficient way”.
There will always be a variety of challenges to face in order to achieve successful business development. In pursuit of fresh perspectives, we interviewed business people from different industries including Fisheries, Med-Tech, Mining and Travel & Leisure. In the first of a series of posts on the subject, we explore the answers to our initial question: What is the biggest challenge faced by your industry today?
The top 4 responses – in no particular order- were the following:
Innovation
Sustainability
Regulatory Barriers
Security/Image
What is interesting is that the challenges identified by each respondent are not mutually exclusive to the sectors. In fact, each of the industries represented faces more than one at any given time. Cindy Collins founder of Mining Technology Partners, identified innovation as the primary challenge to the mining industry. She noted that “…the need for innovation is great due to minerals being more difficult to find and financing being in other industries such as tech… This is great for innovative providers of technology and services and the combination of the two”. Alejandro Godoy founder of Seafood Business Solutions, identified sustainability as “…the current low captures of wild seafood has increased all seafood prices… and aquaculture needs fish-meal to farm species. Seafood needs better sustainable standards to help future industry growth”. Rahul Samant, CEO of Rehabtronicssaid that “…in the medical device industry there are many challenges: Regulatory, Export barriers, R&D costs, health care procurement and adoption… Its very difficult to say one challenge that is the biggest, but if I had to I would say the pace of Health Care adoption which is slow in-part due to regulatory barriers”.Carlos Escobosa Commercial and Administrative Director of The Residences at Solazidentified “overall security and image issues that affect Mexico as a whole”.
The first step to overcoming such issues is identifying them. That also allows companies to seize on any areas of opportunity that present themselves by dealing with them in an effective way. Some barriers are more complex and systemic such as threats to environmental sustainability. Failing to address challenges early on risks creating unnecessary obstacles or complications in the future.
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