Andy Farbman doesn’t want to fix everyone’s problems.
The president and CEO of Farbman Group knows his business — and any business with designs on growing — can’t try to be all things to all potential customers. It’s a recipe for strained resources, exhausted employees and ultimate failure.
So Farbman has led his real estate management firm with an eye toward smart, selective growth that emphasizes areas in which his firm has traditionally excelled.
“No matter what you’re trying to accomplish, you’re always looking to go downwind or down river,” Farbman says. “You are not trying to fight the current. You are trying to find a path of smooth sailing or places where you can leverage your natural inertia and not have to fight what is going on around you.”
In particular, Farbman focused his company — which generated $200 million in revenue from property rentals in 2011 — on receivership work for banks and real estate in the health care field.
“Those are the areas where we really tried to shift a lot of our focus during the recession,” Farbman says. “We have always been very well skilled in and out of the court system in the state of Michigan, and we are now in 11 states as a receiver.
“The other niche in Michigan has come about through its aging population and really strong hospitals. We have developed our presence in the [health care] industry over the last four years, to the point that we are now working with five of the 10 largest hospitals, focusing on their real estate needs outside of the hospital campus — areas such as office buildings and ambulatory services.”
Planning ahead for effective growth requires you to have an accurate read on the markets you serve and an accurate view of the strengths and weaknesses within your business. It also requires you to motivate your workforce, rallying your people around a common mission and a common set of goals that will allow your company to achieve that mission.
Identify your strengths
Over the course of the past five years, a large number of commercial real estate firms have purchased apartment properties. Due to several factors, residential space made for an easier investment, and easier return on investment, than commercial space.
“The adequacy of capital was more significant, and it was an easier industry to be invested in,” Farbman says. “As a result, a lot of firms have gotten into the apartment business over the past few years.”
But Farbman declined to place a large amount of resources into purchasing and managing residential properties. Despite the lucrative potential in an industry still trying to crawl out of the real estate market crash of 2008 and ’09, Farbman felt it wasn’t the right fit for his company.
“What we have done, really over the last 12 or 13 years, is remove that skill set,” he says. “We did not believe we were the best in the world at managing those types of properties, so we didn’t focus our efforts there.”
If Farbman does not believe a particular business opportunity will play to the strengths of his business, he does not pursue it. Even if you see money practically growing on trees for other businesses in a given space, you won’t achieve the same outcome if you can’t commit the right resources to your own venture into the space.
Farbman says you should readily recognize the strengths of your business. You can always try to find new ways to leverage those strengths, but you should never abandon those areas of strength and abruptly turn in another direction.
“I think your strengths pop out,” Farbman says. “You can study trends and figure out trends and try to adapt the resources you have to follow those trends, but organizations — and particularly organizations that have been around for 35 years, like ours — have a natural skill set. It maybe isn’t as obvious as a left-handed pitcher, where a kid just naturally picks up a ball and starts to throw left handed, but it is still pretty obvious. It shows itself.”
Remaining true to your strengths means remaining disciplined about what business you accept. Apartment properties don’t represent the only area where Farbman’s firm has turned down business. Every week, and sometimes every day, Farbman and his executive team are confronted by tempting, yet difficult, decisions regarding whether to take on a new business opportunity.
“There isn’t a day that goes by where we don’t turn down business,” he says. “We want to do a great job for our clients, but we don’t believe we are one-size-fits-all. We have been asked to expand some of our businesses into other marketplaces, and that might be an area where we have reached out for a bit of help.
“A client might want us to be a street broker or a property manager in a city where we don’t have a lot of history. In those cases, if we take the business, we’ve had to find a partner who knows the market and the lay of the land better than we do.”
But in order to steer clear of areas that might not play to your strengths, you first have to know your organization’s strengths. That requires you to evaluate your organization and develop an extensive understanding of what resources you can employ and what skill sets and areas of expertise your people possess.
“You have to look within your organization and see the assets that you have,” Farbman says. “You have to evaluate what your assets are. In our organization, our two primary assets are capital and brainpower. Whenever you are dealing with a distressed asset or a troubled asset, you are trying to find a kind of special sauce for operating it, something that might lead to more revenue or decreased expenses. Once you figure out that special sauce and are trying to sell it, it’s something that becomes natural and obvious because it is already being implemented.”
Farbman’s philosophy centers on a desire to utilize the resources already in-house before looking outside the firm to add more firepower. It’s an approach aimed at creating efficiency and minimizing waste. Acquiring new resources — be it more people, more capital, more infrastructure or anything else — requires the use of resources in and of itself.
“We spend a lot more time figuring out ways to utilize the resources that we have instead of looking outside to bring in more resources,” Farbman says. “The biggest internal struggle today is probably that the profitability and longevity of organizations often aren’t aligned. I’d say every CEO has to focus on the long term in addition to the short term, and how to keep their P&Ls in order.”
Lead your people
Farbman’s focus on his firm’s areas of strength would never yield results if the approximately 200 employees at the Farbman Group weren’t aligned on a common set of goals aimed at leveraging those strengths. Farbman routinely engages his team and reinforces the goals and mission of the organization so that when they interact with customers or think of new ideas, it’s all with the end goal of enhancing the Farbman Group’s position in the marketplace as much as possible.
“I would definitely say that is part of our special sauce as a firm,” Farbman says. “We have an internal committee that meets once a month.
“It is a place for anyone in the organization to step up and propose new ideas for how we can either run the business better, because we might have a skill set that we might not be utilizing, or it might be as simple as the way we are recycling paper. There might be a better solution, no matter what the question is.”
Farbman and his executive team reward employees who create ideas that are ultimately implemented by the firm. It is a simple step that has been taken by many CEOs over the years but a necessary one if you are to reinforce your messages to your employees.
“It’s a monthly competition, and we give rewards to people who create opportunities for the organization or just make us a better place to work. In some cases, we might reward financially based on the savings that take place.
“But it’s important for us to take these ideas that start on the ground level and hold them up for the rest of the organization to see. When you manage 28 million square feet of property, you have all of these employees doing these different things day to day, and there are amazing things that are found at smaller properties, which you can end up implementing at bigger properties.”
Farbman says you can never underestimate the impact of giving employees a voice within your company. You can set goals and fashion a mission statement, but if you give your people the means to discover new and better ways to realize those goals and achieve the mission, they’ll develop a sense of ownership in what you’re trying to accomplish.
“It’s an approach that empowers your people,” Farbman says. “One of the ideas that came out of our committee forums was a flexible work schedule. We have a lot of single parents who work in our accounting division, and our accounting division isn’t necessarily an area where our people need to interface with a bunch of other employees. They don’t need to keep consistent hours. A 10-hour, four-day-a-week workweek is quite advantageous to some people.
“So there are intangibles that might not pop out the same way that a money-based reward or a promotion might, but it is more focused on lifestyle. In all cases, it helps keep people engaged in what you’re doing, and it can help reduce turnover in certain areas.”
If you engage your workforce in helping to construct the policies and procedures that will help you achieve your goals and mission, it also paves the way for effective delegation of responsibilities. Engaged employees are more willing and able to take on new responsibilities and own them.
“My executive team does a really good job of empowering people throughout the organization,” Farbman says. “We want to give our people every opportunity to make their own decisions. It’s something that really has to happen by example. You can’t Monday-morning quarterback your folks in the decisions they make. You might evaluate the decisions and why they made them, but you don’t cut off their knees. If they made a commitment, we live up to that commitment as well.”
Ultimately, if you are empowering people to take on new tasks and entrusting them with an increased level of responsibility, you want them to make decisions. It might be a right decision or a wrong decision, but regardless, making no decision is worse than making a wrong decision.
“You can’t be afraid to make mistakes, because if you don’t make decisions, you’ll stagnate as an organization,” Farbman says. “With my little kids, I play a game called ‘this or that.’ It’s a game where you are forced to make a decision and not push it off until tomorrow.
“I used to be an athlete, and most of the great leaders in my life have been some kind of coach. So I strongly subscribe to the idea that if you’re running the football, you better hit the hole as hard and as fast as you can. Even if you take the wrong route or hit the wrong hole, it still gives you the best chance to succeed. You have your moral compass and your gut to follow, and I believe that your gut, for the most part, leads you in the right direction.” <<
How to reach: Farbman Group, (248) 353-0500 or
The Farbman file
Born: Royal Oak, Mich.
Education: I have two degrees from the University of Michigan, in social science and economics. I’m halfway through my MBA at U of M, and probably will be for the rest of my life.
First job: I had a bagel and newspaper route when I was 12 years old and my brother was 15. We sold warm bagels with cream cheese and The New York Times door-to-door on Sunday mornings. Even though it was a starch-oriented business, it was very fruitful for us.
What is the best business lesson you’ve learned?
If you buy it, you own it. Properties have many little intricacies that go into running them, whether it is utilities, cleaning or tenants that might be disgruntled. When you buy a property, you commit to managing all of that. It goes back to the fact that we turn down business every day. Because it’s not enough to just get a good deal. You have to be committed to everything that comes with it.
What traits or skills are essential for a leader?
You have to be confident in yourself. When you go to sleep at night, you have to be confident in the decisions you made during the day, because people have to know that you believe in the decisions you have made. But along with that, you can’t take yourself too seriously. Here, we have pingpong tables next to the offices, and there is always a football being thrown around somewhere in the building. So we try to remain playful and have a good time. It keeps the juices flowing.
What is your definition of success?
The ability to balance business and life. One of my biggest commitments I have made is that I will be home to tuck my kids into bed, and I can miss their bedtime for a maximum of 10 days a year.