A primary goal for most business owners – regardless of industry – is to build a sustainable and profitable operation where day-to-day processes require minimal executive interference. This creates an environment in which you are free to work on your business rather than in your business – an important step towards the professional freedom that likely drove you to start your own operation in the first place.
When it comes to Property Management, however, extricating yourself from the daily grind can be tricky to say the least. If you’re anything like the typical South African Property Management business owner, you’re wearing far more than just one, professional hat.
Most owners remain intimately involved in their company’s daily operations as either Portfolio Manager, Financial Manager, or any of a variety of other key roles. This ends up putting some serious limitations on your ability to scale up your business to become the efficient, profitable and self-sustaining operation that it could be.
Let’s take a look at how to change that.
What is keeping Property Management Business Owners tied into daily operations?
The South African Property Management Industry is a complicated and demanding environment – particularly since the government doubled-down on the regulations. It takes a lot of specialist knowledge to navigate the ins and outs of daily operations and finding the right talent to handle these responsibilities can be a challenge.
With the tight profit margins of Property Management in general, the cost of hiring a professional accountant, experienced legal advisor or top-notch portfolio manager can also be difficult to swallow. Add to this the strong chance that these talents will move on at some point and leave you hanging, and you’d be forgiven for thinking it’s a better idea to just handle these responsibilities yourself.
Of course, that essentially leaves you in the position of having a full-time job to do as well as a business to run. You won’t need three guesses to work out which one of those roles typically ends up taking a back seat…
What does it mean to scale your business?
The whole point of running your own business, and shouldering the risks that involves, is being free of the day-to-day “grunt work” and able to focus on the bigger picture (preferably with a bigger paycheque). To do this effectively, scalability is key, but what does it actually mean to create a scalable business?
The first thing to understand is that growing a business and scaling a business are not the same thing.
Growing a business is pretty much exactly how it sounds – increasing your client base and revenue, and using this to hire more staff. Scalability, on the other hand, is about increasing operational efficiencies in order to increase your capacity without needing to expand your payroll. It’s this ability to increase revenue without significantly increasing expenses that is the hallmark of a truly scalable operation.
At the end of the day, if every project you take on costs you just as much in time and overheads as the project before it, your business may grow, but isn’t scalable. If you can implement efficiencies to make each project cost less than the previous one, however, you’re well on your way to a scalable operation.
Growth vs Scaling: A Property Management Example
Joe is the owner of a Property Management business. He has just added a sizeable new community to his portfolio – go Joe! Unfortunately, Joe discovers that his team isn’t able to handle the heavier workload, so he hires a new portfolio manager to join his team. Joe’s company has grown, but so have his overheads, putting paid to any dreams of a more profitable year.
Sara, is also a Property Management business owner, and has also just added a new community to her portfolio. However, Sara has put tools and processes in place that enable her Property Management team to serve her new clients without needing any more assistance. That means Sara’s revenue has increased while her overheads stayed the same – her operation has scaled up, and so has her bottom line!
5 Critical Steps to Scaling a Property Management Business
Now that we’ve established what scaling is (i.e. not just growth!) and why it’s important if you and your business are going to reach your full potential, it’s time to take a look at how to achieve scalability in your own operations.
When you get right down to it, scalability is all about driving efficiencies and identifying aspects of your business that can be duplicated in a quick and cost-effective manner. To do that, we’d suggest focussing on these five critical steps.
1. Employ the best people
Property Management is a service business, and service is all about people – you’re never going to be able to cut real, live humans out of your business and still hope to succeed.
Having the right Property Management team behind you can make an unbelievable difference to the efficiency of your operations. The wrong team, on the other hand, could easily sink any chance of scalability that you had. Here’s why.
Poor quality staff cannot scale their capacity
Poor quality staff may be more affordable, but invariably lack the capacity to expand their horizons and handle more responsibility – regardless of how many efficiencies are put in place. That means, every time you sign a substantial new client, you’ll likely need to sign a new employee to handle the workload, and as we’ve already determined, that’s never going to get your business where it needs to go.
Staff with partial knowledge cannot take over all the day-to-days
Property Management is so much more that the simple secretarial and bookkeeping service that it used to be. These days, you need to have someone (or several someones) on the ground with legal, accounting and compliance expertise. If your team doesn’t completely fulfil all the requirements of your mission critical positions (Finances, Portfolio Manager & Legal, Operations & Maintenance, General Administration) you’ll never be able to step back from daily operations to focus on scaling your business.
Effective teams grow profits, not payroll
Placing properly qualified employees in critical positions does more than just free your time for bigger things. The more experienced and talented your team, the more capable they are of leveraging efficiencies to provide top-quality service to more clients using same number of people. That means expanding capacity without expanding payroll, thereby enabling you to grow your client list (and revenue) without increasing expenses. Welcome to Scaling Your Business 101!
Don’t forget collaboration!
No matter how qualified and highly-paid your employees are, if they can’t collaborate, they’ll never be truly effective. Property Management isn’t a one-man job, and if your departments don’t have visibility into one another’s workflows, things are guaranteed to fall through the gaps.
2. Invest in the right technology
As vital as people are to Property Management, they still need the right technological support to perform to the best of their abilities. This is even more important when you take into account the “human factor” (stress, illness, maternity leave, staff turnover etc.) that means you can’t rely on your team to be 100% reliable and 100% available 100% of the time.
By investing in the right technology, however, you can smooth over staff absences or transitions while enabling the rest of your team to do more work with fewer people and less effort. The time and cost-savings this can achieve almost always outweigh the upfront costs of the solution in question – as long as you’ve chosen that solution wisely, that is!
Facilitate a full range of operational efficiencies
It’s no good spending money on a solution that only handles half of your Property Management business’s needs. Your technology needs to support the full range of your staff’s responsibilities, preferably in a cohesive, collaborative and transparent way.
We’d suggest asking the following questions of any Community Management Solution that you’re considering, and if it doesn’t tick all the boxes, come talk to us at WeconnectU (because we certainly do!).
Questions to ask about potential Community Management Solutions
Can my solution facilitate:
- Financial processing?
- Issuing of warnings and penalties?
- Issuing of clearance certificates or letters of consent?
- Managing maintenance tasks?
- Managing recurring tasks within a community?
- Managing community arrears?
- Managing community compliance?
- Recording all communications with a clear audit trail?
- Easy collaboration between key stakeholders, including
- Debt Collectors?
- Complex Managers?
Enable effortless communication of value
Having an incredible service offering is one thing – being able to communicate that to existing and prospective clients is something else. There’s not much use in adding value if the people paying for your services can’t see it. (It’s certainly not going to help you secure new clients and scale up your business.)
Building a persuasive value proposition that communicates your competitive edge to trustees is not an easy thing to do if you’re still running your Property Management business using analogue tools. With the help of technology like WeconnectU’s Community Management Solution, however, you can literally generate a comprehensive and persuasive business report at the click of a button.
That makes it dramatically easier to secure new clients, as well as justify your rates with existing communities, helping you scale up your revenue without incurring additional costs.
3. Define A Growth Strategy
Being able to put together a persuasive service offering is very important, but so is finding a way to use that service offering to grow your customer base. If potential clients don’t know you, can’t find you, and have no idea what makes you stand out from your competition, they’re unlikely to be knocking down your door any time soon.
Marketing is the most obvious way to increase your exposure to the right people. Leveraging digital media like websites, Google AdWords, SEO optimisation and social platforms can be very successful at generating new leads.
Acquiring another Property Manager’s portfolio can be a great way to get a foot in the door with key communities or expand your brand into new circles. However, buying a portfolio as a going concern tends to come with a steep price tag, so this may only be viable once you’ve scaled your business enough to improve your cash flow.
Strategic Partnerships with Developers
In terms of bang for your buck, building relationships with respected and prolific developers is almost certainly going to be your best bet for generating a consistent stream of new projects.
If you can prove your value, reliability and competitiveness to a developer, you can position yourself as their go-to Property Manager for newly completed communities. This can increase your portfolio by one or more communities a year – a particularly sustainable method of scaling your business.
4. Maximise Cash Flow
Scaling a Property Management business isn’t just about securing more work. It’s about securing more work while increasing your profit margins. Of course, nothing in life is free, and expecting to scale a business without investing any capital is like expecting to get that beach body without going to the gym.
Thankfully, the same processes that are used to scale Property Management business – innovative operational efficiencies – also tend to minimise your overheads and improve your cash-flow. Just be prepared to reinvest some of your new revenue into putting the right tools and the right people in place to keep your business at maximum efficiency and your profit margins high.
Take the first step on the path to scalability
Many businesses have attempted to scale up their operations only to find their weaknesses exaggerated as they ramp up productivity. Without the right tools and processes in place to support the roll out of new efficiencies, it’s very difficult to achieve the kind of positive momentum that scaling a business needs.
At WeconnectU, we’ve spent years refining our Community Management Solution to support and enhance the capabilities of Property Management teams and business owners. With the help of our platform and the efficiencies it creates, we’ve seen many businesses successfully scale up their operations to become industry powerhouses.