The hidden cost of the holding pattern.

CRE Success Principle: The true cost of inaction is not what you are missing out on; it is what continues to accumulate in the background every week while you wait.

Commercial real estate principals are good at recognising problems.

The challenge isn't awareness. The challenge is action.

Over the years, I've spoken with principals right across Australia who knew their business was too dependent on them. They knew they were spending too much time on tasks their team could handle. They knew they were holding too many client relationships personally.

Yet months, and sometimes even years, passed before they did anything about it.

Waiting Is Still a Decision

Many commercial real estate principals describe this period as waiting.

Waiting for the market to improve.

Waiting until after a major deal settles.

Waiting until they hire the right person.

But the reality is that every week spent waiting is still a decision to keep things as they are.

And that decision has a cost.

The Costs Keep Accumulating

The most obvious cost is time.

If you're spending 20 hours each week on work that doesn't require principal-level involvement, that cost compounds quickly.

But there are other costs too:

•  Reduced enterprise value
•  Slower team development
•  Lost momentum
•  Lower energy and engagement

These costs don't pause while you're considering your options.

Three Questions Worth Asking

Ask yourself:

1. Could your business maintain similar revenue for three weeks if you were unavailable?
2. Is the gap between where your business is and where you want it to be getting smaller or larger?
3. Are you more energised by your business today than you were two or three years ago?

Your answers will tell you a lot about the structure of your business.

If those answers make you uncomfortable, that doesn’t have to be a problem. It can be viewed as simply a sign that your business now requires a different approach.

If this topic resonates with you, you’re invited to take a listen to episode 273 of Commercial Real Estate Leadership.

Episode transcript:

I want to do something a little bit different in today's episode.

If you've been listening to this podcast for a while, I know some of you have been listening for a long time, there's a pretty good chance that at some point in the last few months, I've said something that's resonated with you. After all, you're still here and listening.

And when I say resonated, I don't mean in a, "Oh, that was interesting," kind of a way. I mean more like, "That's my business," kind of way.

And if that's happened, there's a reasonable chance that you haven't done anything about it, yet.

You possibly thought about it. Perhaps you even mentioned it to someone, or maybe you didn't.

But then the week moved on, and the deals were there to be done, and everything kept going, and the thing that you recognized in yourself that you heard on this podcast then went back underneath the surface.

Well, today's episode is for you specifically. It's not for someone who's just discovered this podcast. It's not for someone who's still trying to figure out if any of this applies to them.

This is for the person who already knows it applies and has been finding reasons week after week, month after month, to not act on that knowledge.

I'm not here to pressure you into anything. That's not how I work, and it's certainly not how the commercial real estate principals I work with make decisions.

But I do want to spend some time today looking honestly at what that holding pattern is costing you.

And I want to give you a way to think about it clearly so you can determine whether now is actually the right time to be doing something about it.

This is episode 273 of Commercial Real Estate Leadership. My name is Darren Krakowiak. I help commercial real estate principals to build an agency that can run without them so they have the choice to work on or off the tools.

And in today's episode, I want to talk about a state that I see a lot of commercial real estate principals in, and I want to give it a name.

Let's call it the holding pattern.

Now, the holding pattern is what happens after the recognition that I spoke about at the top of the episode.

You hear something, maybe in a podcast, maybe in a conversation, or it might be in a moment of honest self-reflection, and that told you something that is true about your business.

Not a new idea, more like a thing that you already knew, but it was being said so clearly that you couldn't just dismiss it offhand.

And then you didn't do anything, not because you decided it wasn't true, not because you concluded it didn't apply to you.

You just kind of kept going because you're constantly on the go, because time is a precious commodity, because there was a deal that needed your attention, because the moment passed and the urgency faded, and eventually the thing that you'd recognized went back to being background noise.

Here's what I want to call out about that. The holding pattern is not passive. Every week you stay in it is a week that you have, at some level, chosen to keep things the way they are.

Now, that's not meant to be a jab at you. Sometimes maintaining things the way they are is the right call.

But I do think it's worth being honest about what that choice really is. Because most commercial real estate principals in this situation experience it as waiting when it is actually deciding, deciding repeatedly that now is not the right time.

And the question I want to explore today is, what does that decision actually cost?

Because I think for most of the people who are listening right now, the cost is actually higher than it appears in isolation.

Most people, when they think about the cost of not making a change, they think about it in terms of what they're missing out on, the business they could have built, the time they could have had back.

And those things are real and relevant. But I think the more useful frame is even simpler than that.

The cost of staying the same is not about what you're missing. It's about what is continuing to accumulate while you wait.

So let me be specific about what I mean here. The first cost is time, not in the philosophical sense, but in the practical sense.

If your effective hourly rate based on the rule of 2,000 hours is $300 an hour. And if you're a regular listener to the podcast, you know all about the rule of 2,000 hours.

And for most principals I work with, they're at that level at least. Then I think spending 20 hours a week on things that don't really need your time and attention means that you're spending $6,000 a week in misallocated principal time. ($300 x 20 = $6,000)

And that number does not stop accumulating because you haven't addressed it yet. It keeps running every week the holding pattern is in place is another week that it runs

The second cost is enterprise value. Now, most commercial real estate agencies that offer property management have a sellable asset in their rent roll, and that value is real.

But for most principals, that's where the value stops.

The transactional side of the business, the leasing, the sales, the advisory work, that generates strong revenue.

But unless you've built a high-performing team to deliver, it's generating that revenue because of you, because of your relationships, your reputation, your presence on each of those deals.

And that part of the business doesn't transfer to a buyer. Now, that's not necessarily a problem.

You enjoy the deals, you get paid for them when you're doing them, and that's a legitimate way to run a commercial real estate business.

But I think it is worth asking if the rent roll is the one part of the business that actually builds transferable value, that's actually, you know, building up an asset for you in the future, how much of your time and attention is it getting?

Because for most principals, the answer is not much. Deals come first. The rent roll grows when there's capacity left over or when transactions happen as a matter of course.

And that means the asset that could compound is being treated as secondary.

Now, the third cost is on your team, right? The people who work for you are right now developing at the rate that the business allows them to develop.

If the business continues to escalate decisions to you, to center client relationships on you, to depend on your involvement for anything meaningful, your team is developing at a fraction of the rate that they could be.

That is a cost to them, and it's also a cost to the business in, let's say, 12 months when you look at what your team is capable of and you find that it hasn't materially changed.

And there's a fourth cost, and this one's a bit harder to quantify, but probably the most real to you personally, and this is about your energy.

The principals who spend the longest in the holding pattern are almost always the ones who are the most tired by the time they decide to do something about it.

Because the holding pattern does not pause the drain. The unnecessary deals keep accumulating. The decision queue keeps running. The relationship hostages stay hostage.

The exhaustion that was always there gets a little bit more entrenched every week that nothing changes.

So, if the cost is that real and that ongoing, why does the holding pattern persist?

In my experience, it's almost never because the principal has concluded that change is unnecessary.

It's because one of three specific things that are operating underneath the stated reasons.

And I want to call them out here and now because I think identifying them is what makes it possible to move past them.

When I ask commercial real estate principals who have been thinking about making a change why they haven't yet, the answers tend to sound like timing. "I'm too busy right now. I've got a big deal in progress. I'm waiting until after a key hire before I do something. The market's a bit uncertain. It's just not the right time."

And sometimes those things are generally true. Sometimes the timing is actually the reason.

But in my six years of running this business, CRE Success, most of the time, the timing explanation is just a cover for something else.

Sometimes that is harder to say out loud. And there are three things that I hear underneath the timing excuse more than anything else.

The first one is, "I'm not sure it will work. I've heard about business coaching, maybe I've tried a version of it before, and I'm not convinced that what I'd get is different enough from what I've already tried for it to be worth the investment and the risk of trying again."

Now, that's a completely legitimate concern, especially in commercial real estate, where the experience of working with a generic business coach, someone who doesn't really understand commercial deal cycles or the principal as a rainmaker dynamic or the specific way client relationships work in our industry.

You know, that generic business coach has left a lot of principals with reasonably justified skepticism about the whole category of business coaching overall.

Now, if that's you, I'm not here to talk you out of that skepticism.

But what I would say is that the question worth asking is not does coaching work in the abstract.

The question is whether working with someone who has actually run commercial real estate businesses at a senior level, who works with commercial real estate principals exclusively in this industry across the country, is different enough from the generic version to be worth testing.

That's a bit of a different question, and the answer might be a bit different too.

The second real reason is, “I'm not sure if it applies to me specifically. My business is different. My market is unusual. My team situation is complicated in a way that a general framework might not account for.”

So here's what I want to say about that.

In my twenty-five years of working in commercial real estate and in every client engagement I've had since starting CRE Success, I've never worked with a business that was so unique that the core patterns don't apply.

The escalation trap, the ceiling formula, the three energy drains.

These aren't generic frameworks. They're frameworks that have emerged from the specific reality of commercial real estate businesses. They apply because the industry has consistent structural patterns, regardless of market or size or team composition.

If you genuinely believe your situation is so different in a way that would make this work that I do with clients not apply, I think the fastest way to test that is just to have a single conversation.

Not a commitment, just a conversation. Bring your situation. I'll tell you honestly if I can help, and you'll be able to tell very quickly if I can or cannot too.

The third reason is, I think, one of the hardest to say, but it's also the most important. It's, “I'm not sure I'm willing to do the work.”

Because changing the way a business operates, genuinely changing it and not just adjusting some of the processes, requires the commercial real estate principal to change something about the way they show up in their business.

And that is genuinely hard. It is not hard in a complicated way, by the way. It's hard in a way that makes any meaningful change hard, is that it requires something from you.

You've have got to let go of something that's worked and trust that what is going to replace it will work better than what has been in place.

If that's the hesitation underneath the timing excuse, I want to acknowledge it directly because it's a real thing.

But it is not a reason to stay in the holding pattern indefinitely, in my opinion. Because the cost of a holding pattern is real and it's ongoing, as I've already mentioned.

It is though a legitimate thing to be honest with yourself about. And the principals who get the most out of the work that we do together are the ones who come into it already having acknowledged that something in the way that they operate needs to shift.

Not figured it out, but just acknowledged that something needs to shift.

I want to give you three questions to ponder on the back of what we've just covered.

Not to qualify you for anything, not to test whether you're ready in some predetermined way.

Just three questions that I've found are most useful for a principal to assess where they truly are on this, as opposed to where they think they are or where they'd like to be.

Now, you might not answer these questions right now, but once you're ready to, I encourage you to answer these questions honestly.

Because the gap between your honest answer and the answer that you'd like to give is usually where the real insight lives.

The first question is what I call the replacement test. Could your business generate broadly the same revenue for three weeks if you were not available?

Not slightly reduced, not with you checking in every couple of days. You genuinely unavailable.

Most principals I know that I put this to pause before answering because the honest answer is no, right? And they know it.

They know exactly which deals would stall. They know which clients would call their mobile. They know which decisions would pile up with their team, unable or unwilling to answer them.

So, your answer to this question is not a judgment on the business. It's just a description of the structural condition that is costing the business and you something quite real.

The cost of a no answer to this question is ongoing. It does not pause while you consider it.

The second question is the trajectory test. It’s the gap between where your business is and where you want it to be getting smaller, or is it getting larger?

And I'm not just comparing it to last month. Let's compare it to two or three years ago.

Because if you've been doing broadly the same things for two or three years and the gap is not closing, that's important information.

It means that the current approach has reached the limit of what it can produce to get you to where you want to be.

Not because the approach is necessarily wrong, but because the business has grown to a point and your aspirations are at a level where a different approach is required.

The principals who have the hardest time accepting this are the ones whose approach really worked brilliantly for a very long period of time, and that's most of them. It's hard to let go of something that's been working for a long time.

The third question is about energy. Let's call it the energy test. Are you more or less energized by your business than you were two or three years ago?

Now, this is the one that's most personal, and it's the one that principals are most likely to dismiss or deflect.

So I want to be precise about what I'm asking here. I'm not asking you whether you still love commercial real estate. I know you do.

I'm not asking you whether you're proud of the business that you've built. I know you are.

I'm asking you whether the day-to-day experience of running the business is giving you more or less than it used to.

A declining trend on this question, and it is almost always a trend, not a sudden drop, that's structural information.

It's the business telling you that it has been running on your energy for long enough that it is starting to run out.

And it doesn't resolve itself by pushing through. It resolves by changing the structure.

So, if you've answered those three questions honestly, the replacement test, the trajectory, and the energy test, then the answers might have been a bit uncomfortable.

And if they were, I want to say something to you.

That discomfort is not a sign that something is wrong with you. It's a sign that you've built a real business and you ran it hard for long enough, and it's showing you through the answers that you've given that it needs something different from you now and into the future.

I also want to acknowledge something. You might be listening to this, and you might have known this for a while.

Maybe you're one of the people who've recognized it in the past couple of episodes that we've done, or maybe you've heard something months ago and that you've been in a holding pattern since, right?

I'm not here to make you feel bad about that. The holding pattern is a completely rational response to uncertainty, and certainly there's been some uncertain period over the last two or three months.

But I do want to be honest with you. The cost of staying in it is real, it's ongoing, and it does not resolve by waiting for a better moment.

The moment does not improve on its own. The business does not restructure itself while you are considering it.

The principals that I've worked with who delayed the longest, the ones who listened for a year or more before reaching out or had a conversation with me and then came back a year or more later, almost uniformly say the same thing a few months into working with me.

They say they wish they started sooner. "I wish I'd started earlier."

Not because the change is easy, but because the cost of the holding pattern in retrospect was higher than it appeared while they were stuck in it.

If you're ready to have a conversation, not a pitch, not a process, a real conversation about what is going on in your business, let me just lay out what that looks like.

Find me on LinkedIn, Darren Krakowiak. There's only one of them in the world. Send me a message.

Tell me a bit about where things are right now, what the business looks like, what you're trying to change, what feels stuck, and I will get back to you personally.

If you can't spell my last name, Darren, CRE Success, will get you there.

Once you've contacted me, we'll set up a time for a chat. You'll walk away from that conversation with clarity about your business, whether you decide to take a further step forward with me or not.

So that is the next step. It's a simple one, and if you've been listening for a while and today felt like I was speaking to you directly, specifically, it's because I was.

That is our episode for today. Thank you so much for listening. I will speak to you soon.