Company Overview:
May’s Realty is a website that allows agents to handle all the real estate activities, typically done by visiting a designated office, online. The website allows clients to post their listings, and from there realtors can step in to help make a sale. Realtors can choose a listing to work with and report their sales, while being placed on the appropriate page for accomplishing that task. Although the business operates primarily online, it will open 1 initial regional office in the state of Illinois (likely positioned within the starting target region; the suburbs). May’s Realty is envisioned to become widespread across the United States, as it provides both homeowners and realtors with efficient, self-driven, and lower cost alternatives to listing and selling homes with reduced brokerage fees (Hall, 2000).
Those in the established realtor market are always looking for new ways to increase their profit margin and are typically technology-savvy. May’s will enable them to work online from a home office, while also earning 100% commission on sales. The established realtors make up much of the market and have embraced technology (predicted growth rate of 43.00%, 15,000 potential customers to 62,726). Therefore, the starting target market will be the more experienced, computer-literate agents within the state of Illinois. The clientele is predicted to be centered around the northwest suburbs, then expand to the western suburbs, followed by greater metropolitan Chicago, and then rural Illinois and in the beginning, clients will be between 30-45 years old. May’s is looking to expand across the US in the distant future, starting within the midwestern region for the near future (Hall, 2000).
SWOT Analysis:
| Strengths | Weaknesses |
| Industry is in the growth life cycle stageImplementation of technology reduce overhead and wage costs | Lack of credibility Copycat competitors Primarily focuses on recruiting agents Agents do the selling |
| Opportunities | Threats |
| High revenue growth and high predicted revenue growth in the industry | High and increasing competition within the industry Increasing barriers to entry in the industry Low barriers to entry creates potential for companies copying their general ideas, software, and format |
PESTEL Analysis:
| Factor | Opportunity | Threat | |
| Political | COVID-19 pandemic | Freedom & flexibility | Economic downturns |
| Economic | Increasing home pricesInflation | Reduce additional feesFocus on home sales | Increase in rentersLess people looking to own a home |
| Socio-Cultural | Desire for workplace flexibility | Virtual | Less personalized Consistency |
| Technological | mobile apps, augmented reality, 3D imaging, virtual tours, online document management, artificial intelligence, virtual assistants, and chatbots | elevate the listings search experience for expectant buyers/clients, while also streamlining and enhancing the seller’s process. These system technologies will eliminate additional costs, such as wages | increasingly strict data privacy regulations reduced personalization |
| Legal | include fair housing laws, real estate licensing laws, data privacy and protection, advertising regulations, and intellectual property laws | build credibility | increased operating costsdata breach |
| Environmental | trends towards sustainability | online can promote homes with sustainable features |
Technology Trends
Today, much of innovation and business is driven by the trends and pressures of technology, its increased implementation, new uses, and advancements. Research shows that the top three influencing pressures of social media as a key feature to engage with customers are continuation of social commerce growth, increased micro-influencer and creator brand partnerships, and sustainability. Projections show that “in 2023, it is forecasted that social commerce [the practice of using social channels to sell products and services] across the globe will total $1.298 billion” (Davey, 2023). For businesses, this means increasing involvement in this trend by creating shoppable posts, linking product pages on posts and social media platforms, and increasing the overall interactivity and interconnectivity between all web and social media channels. Furthermore, business partnerships with micro-influencers, who have highly focused audiences, relating to your business’ target market, typically generate up to a 60% higher engagement rate, opposed to companies partnering will large-scale, wide-range macro influencers. Lastly, sustainability has become a prominent focus, especially for the Gen Z population, which comprises almost half of the global consumer market. These individuals want to purchase from brands that support initiatives that align with their personal values, and environmental concerns have become a popular target among this generation. For example, “more than 40% of this generational group ranks the climate crisis as one of their top three concerns” (Davey, 2023). With this, businesses, such as May’s, should introduce sustainable ways to maintain and purchase new technologies.
In viewing influencing pressures within sharing community and networks, some of the top trends include a push to define and capitalize on the edge, investments in 5G architecture, and the cloudification of networks. Capitalizing on the edge for businesses means planning the best ways “to connect edge nodes to the cloud or regional data centers” (Forbes, 2022). Businesses also want to evaluate provider claims and choose partners that are ready to adapt and support the company in accessing the developing edge architecture in/around major tech hubs. 5G architecture offers low latency and high network speeds and it is generally accepted “as the next frontier for network connectivity”. Businesses want to work with IT services to improve and increase their 5G usage, while likewise maintaining privacy, security, and long-term cost benefits. Financial institutions are one of the sectors looking to reap the benefits of increased 5G investments, which applies to May’s, as it is not only a real estate listing service, but a brokerage as well. Due to the shift from physical infrastructures toward the cloudification of networks, businesses will need to fully overcome and “realize the agility, delivery, scalability of network cloudification” (Forbes, 2022). Operators must start adopting cloud-based networks to support these technologies and to reap the benefits of a self-adapting network (Forbes, 2022).
Another noteworthy area of current and future technology is digital add-on and physical freemium. Digital add-ons are a form of software enhancement and freemium is a no-cost product/service offering strategy that charges a premium for additional, advanced features. Digital add-ons can be used to implement freemium models, such as keeping sales and marketing costs low, quickly scaling up a massive user base, and tapping into virality and word of mouth. Covering fixed costs through using freemium requires a large customer base for businesses, which is what May’s is working to achieve (Rice, 2022). May’s is doing so through expanding into all regions across the US through virtual interaction. Word of mouth marketing is also a large factor in real estate, as clients often share their home selling/buying experiences with friends, family, and neighbors. May’s is also reducing marketing costs by partnering with Lowen Signs to have a website dedicated to May’s Realtors in purchasing their lawn signs.
Digitally reloaded products are also under increasing technological pressure in recent years, leading to trends of wider adoption of low-code platforms, quality assurance automation, and progress in Web3. Low-code development accelerates the development of software applications, such as May’s MLS website, by allowing them to be created with no coding expertise. Low-code development of software is highly scalable, and reduces time, cost, and risk. Traditionally, human testers have been responsible for running tests on the program(s) being developed by or for a company; however, “QA automation uses a separate piece of software to run tests on the program you’re developing” (Digital Product Trends That Will Shape 2023 – Uruit Blog, 2023). This takes this task away from human employees, as QA automation runs complex tests that cannot be performed manually, and it can run continuously to detect security flaws, critical bugs, and user experience concerns more efficiently than manual testing can. Progress in Web3 allows for blockchain technology to aid businesses in developing goods and services that are more widespread, opposed to controlled by a single body (decentralized). This will allow personal and transactional data to be more secure, as it will be encrypted and stored across various locations using blockchain (Digital Product Trends That Will Shape 2023 – Uruit Blog, 2023).
Sensor as a service (SaaS) is a business model pattern that generates new services based on sensor data to create added value for a business. As it applies to real estate and May’s Realty, Internet of Things (IoT) sensors can be used in support of the trend for smart homes. Some examples of sensor technologies in homes include motion, temperature, humidity, light, pressure, and smoke/fire sensors. While some of these sensors are required in homes across the US, some of the other sensor technologies listed are newer and will increasingly aid in marketability and sale in the coming years. May’s Realests can encourage clients selling their home to add value to their home before sale by implementing these technologies within their home. Agents might also be asked by clients looking to purchase a home to focus on and find smart home listings for them to view for potential purchase (IoT Sensors in Real Estate – Benefits & Use Cases, 2023).
Ideas and innovation surrounding integrated digital and physical experience encompass many rising current and future trends. AI is now being implemented into many business models to accomplish this seamless integration of the physical and digital world. For example, many business entities are providing customers with web-based virtual tours that allow customers to view products, services, and facilities virtually, from anywhere in the nation. AI chatbots and assistants are also being used to communicate with customers. This allows for 24-hour, immediate response that is less costly than employing humans to do so. AI can also be used to track customer search, product/service usage, and purchasing patterns to better adapt the company’s online and personnel model to suit customer needs.
With the growth of technology today, big data analytics are gaining steadfast importance. An exponentially increasing amount of data is collected and stored each day, resulting in many emerging trends to keep up with this capacity. These trends embody the technological advancements explored above, such as AI implementation, growth of edge computing, popularity of IoT devices, and strong reliance on cloud storage (Matthews, 2022).
May’s Realty primarily falls within the Online Residential Home Sale in the US industry and thus has many influencing pressures in areas of technology. First and foremost, the COVID-19 pandemic has caused an increasing trend towards working from home and online business transactions. This trend aligns with May’s Realty’s business plan to the T, as the business model is centered around recruiting experienced realtors from around the US to work for our company through online calls and web applications. Realtors also receive flexible hours and choose which clients they would like to work with to sell their homes and/or to purchase new properties. Flexibility is a huge advantage of a virtual workplace, and it has become an increasingly key factor for younger generations in choosing their employer. In the future, as these younger generations become the primary focus of employment for May’s Realty, this virtual flexibility and freedom will be of rising importance (Fine, 2023).
Megatrends
One trend that is impacting the Online Residential Home Sale Listings in the US industry is increasing home prices. This is an external environmental factor that is caused by economic changes and shifts. As home prices increase, more homeowners will choose to sell their property to receive the heightened return. More industry services to list properties will be needed. There remains a possibility that home prices will be pushed into unsustainable territory, which will limit demand, as buyers will not be able to afford these home listings. May’s can help alleviate some of these economic stressors by cutting out the additional fees, as described in their business plan. Both relators and clients pay minimal fees on listing, selling, and purchasing homes through May’s Realty (Fine, 2023).
There are many legal regulations that impact this industry and will thus impact May’s business model. These include fair housing laws, which ensure listings and advertisements do not discriminate against protected classes, real estate licensing laws (realtors must be licensed, even when working for online firms), data privacy and protection, advertising regulations, which ensure promotional content is truthful, transparent, and compliant, and intellectual property laws. May’s Realty must comply with all these legalities. The company will particularly be a step ahead, as they will be recruiting well-versed realtors; opposed to offering licensing programs through the company to employ new relators. They will also have patented script material for Realests to reduce the risk of copycat competitors.
Another megatrend within the industry is that “companies focusing on a specific market or product segment will likely be more specialized” (Fine, 2023). This is a key success factor for businesses within this industry that focuses on socio-demographics. May’s is capitalizing on this trend in our business model, as we are focusing on enticing realtors from the established relator market because they are looking for new ways to increase their profit margin, typically technology-savvy, and will already have the proper licensing and computer-literacy skills (Hall, 2000).
Within this industry, a key metric success “is the number of connections and leads generated by industry-relevant real estate listing activity,” so businesses who continuously invest in their digital infrastructure will continue to maintain competitive advantage (Fine, 2023). This trend creates opportunities for May’s Realty to center our business model around our digital infrastructure through implementing many of the technological trends above to promote user efficiency, reliability, and security. Due to past social distancing mandates, showing homes and apartments via video conference and virtual reality has become a business strategy, which is a key trend that May’s is homing in on with its web-based business model. Furthermore, “by adopting electronic listing management software, views and connections across platforms can be tracked more easily, reducing employee need and wage costs” (Fine, 2023). This greatly amplifies a strength within May’s business plan, and not only does this implementation of technology reduce wage costs, but overhead costs as well. Another trend within the industry is that “high costs of sales generally inhibit margin growth, however, companies that invest in the appropriate digital infrastructure and research and development will reflect higher operating efficiency and wider margins due to the driving down of costs over time” (Fine, 2023). This amplifies a weakness within our business model because, although our proposed budget leaves funds for research and development, we do not describe a distinct research and development team and what/who that entails. This is something that can be revised moving forward in order to not miss the opportunity presented by this key success factor.
Michael Porter’s Five Forces:
| Power of Buyers | Threat of New Entrants | Competitive Rivalry | Power of Suppliers | Threat of Substitutes |
| Many buyers Increasing housing costsRentals | Low barriers to entryLegal DifferientiationCapital intensity (technology) | ReMax & Century 21Credibility | Need developer to create MLS softwareConstant software maintenance | · Real estate firms and real estate brokers/agents · Newspapers (homeowners can list properties and competitors can advertise) · Social media sites · Online marketplaces & Online auction platforms (independent transactions) · Do it yourself |
Michael Porter’s Value Chain:
| Support Activities | |
| Firm Infrastructure | The business is online with 1 regional office in the starting state of Illinois (likely positioned within the starting target region; the suburbs)The office can accommodate up to 1,000 agents before new facilities are needed.Each state-represented office will have 3 full-time personnel and a corporate office with 13 employees, allowing the company to man the entire country with just 163-170 employees |
| Human Resource Management | Agents pay $200 per month to May’s to work for the company and $100 per transaction A 2.5-3.5% fee will be taken from clients listing their home |
| Technology Development | The breakdown of the additional start-up costs, including marketing expenses, goes as follows: $12,000 for expensed equipment, $20,000 for research and development, $1,200 for stationary/business cards, $6,000 for brochures/pamphlets/other descriptive material, $850 for insurance, $2,000 consultants (design/technical and marketing/management), and approximately $3,000 is allotted for other costs |
| Procurement | $20,000 for computers and software and $15,000 for legal needs. |
| Primary Activities | |
| Inbound Logistics | Software maintenance |
| Operations | Partnerships |
| Outbound Logistics | Agents pay $200 per month to May’s to work for the company and $100 per transaction A 2.5-3.5% fee will be taken from clients listing their home |
| Marketing & Sales | Flexibility Preexisting homeowners looking to sell their homeYoung Adults (24-35)Established Realtor Market |
| Service | Team Sales force Outlined scripts |
Value Chain Overview:
- Agents pay $200 per month to May’s to work for the company and $100 per transaction
- A 2.5-3.5% fee will be taken from clients listing their home
- The fixed costs are predicted to be $37,000 per month
- They need to make $45,000 to cover costs
- $20,000 for computers and software and $15,000 for legal needs
- The breakdown of the additional start-up costs, including marketing expenses, goes as follows: $12,000 for expensed equipment, $20,000 for research and development, $1,200 for stationary/business cards, $6,000 for brochures/pamphlets/other descriptive material, $850 for insurance, $2,000 consultants (design/technical and marketing/management), and approximately $3,000 is allotted for other costs
- Additional average per-unit variable cost is $64.51
- The assumed average per-unit revenue is $389.71
- The company was founded in 2000 and our figures should be placed at the low end of $1 million (have been with no financing) (3)
- The owner (Maddie Duffield) has invested $125,000 into the company, the rest is to be funded by new membership and sales and services
- The business is online with 1 regional office in the starting state of Illinois (likely positioned within the starting target region; the suburbs)
- The office can accommodate up to 1,000 agents before new facilities are needed.
- Each state-represented office will have 3 full-time personnel and a corporate office with 13 employees, allowing the company to man the entire country with just 163-170 employees
- Employees: Corporate Secretary, Director of Conventions/Sales, National Convention Staff, Online Help, Director of Realest Relations, Clerical Secretary, Managing Director, Regional Sales Administrator, Managing Broker (in-house, year one will have 7 people, then 9 and 41 for years two and three, respectively).
- The sales force will be comprised of Realest Realtors and freelance agents that work individually to help clients sell their home listings
- The company will develop outlined scripts to help sales staff manage inquiries to ensure that all incoming calls are dealt with in the same way and meet a high standard
- Windows 98, AT&T phone service, licenses and insurance will be required and used
- Agents will receive easy sign-up and a discounted installation program with AT&T
- The company has a registered Trademark on the term Realest for their Realest Realtors
- Owns franchise rights for a residential real estate franchise (D.B.A. Re/Max Junction)
- Partnered with Lowen Signs to develop a dedicated Web page for the agents to order personalized May’s Realty signs and ship them directly to the agents
- Sterling Capital Mortgage has allowed the May’s agents to go through the site and run a brief history on clients that will automatically print a prequalification letter at no cost (allows the agent and client to immediately submit an offer to purchase a particular property)
- Bank of America allows May’s agents to deposit their escrow checks directly into the corporate account right from their virtual office
- The bank will also certify the escrow accounts monthly, which provides clients with the highest quality control in the industry