Does this sound familiar? As a property manager and entrepreneur, you dream of growing your company. To achieve your goals, you and your team work extremely hard. You provide exceptional property management services to your boards and residents, and have as a result, created word-of-mouth to the point where your portfolio is growing. In some other cases, you've done a magnificent job in 'selling' your services to boards and have thus been growing.
Businesses are meant to grow, so this is all great news right? It certainly is welcomed news, but you need to be mindful that it can also be a double-edged sword. Growth and expansion can be tricky and if not treated with caution, can lead to some disaster scenarios. In fact, it is not uncommon to see property management companies grow TOO fast and eventually, in some cases, even go out of business. Successfully handling scale in property management of condos and HOAs has not traditionally been one of the more talked about topics. With that, we give you three factors to be mindful of as you ramp up on growth.
1) Competing on price
This one is tricky. You've encountered many scenarios where you're forced to compete on price in order to land a contract with a condo corporation. Yes, boards often look for a management company with low fees. But when competition is based primarily on low fees, it has historically been a race to the bottom. While eventually locking up that condo corporation may seem like a win to you initially, it can in some cases, be the beginning of a disaster scenario. Let's break it down.
Going after business growth based on low fees is a hidden problem that can manifest itself months later. And it all starts with low management fees.
Well, you know what they say, it takes years to build a reputation and seconds to destroy it. Lowering management fees to land a property to manage may seem okay at first, but more often than not, it is wiser to stick with your original math.
2) Establishing scalable systems.
Beyond numbers, the first rule of scale is to establish processes so that as many of the tasks as possible become uniform and repeatable processes. This enables staff to quickly and efficiently follow a framework that will optimize quality and also decrease the chances of error. With such a system in place, new folks joining the team will require less on-boarding time. In turn, the management of the company will be able to better monitor performance. For example, if you have a certain work flow in dealing with work orders, you can establish a system which details how the work orders are documented and communicated to vendors, boards and residents.
The key to establishing systems is two-fold: documenting and using tools (software). It's one thing to have processes, but if they are not properly documented and readily accessible to all employees, they will surely be lost.
Secondly, process documentation is great, but you simply cannot improve what you cannot measure. The best way to track, measure and optimize is to use software tools. With the right tools in place, you'll be able to monitor and in many cases, even automate manual tasks. This is a definite must as your business grows. If you're already using Condo Manager, you may want to revisit the automation tools at your disposal. If you're not yet using Condo Manager, a phase of growth may be a good time to see how we can help.
3) Dedicated accounting
When a business is small enough, many property managers start off by attempting to do their own bookkeeping/accounting. The issue here is that accounting is an intricate discipline that requires an entirely other set of skills and knowledge. The stage of growth is a good time to retain the expertise of accountants that specialize in condos. You'll be glad you did as you'll surely avert future disaster.
Some risks you may encounter if you do not choose to go with experts may be: incorrect expense tracking, missed income revenue for the property management business, and god forbid, miscalculation of the corporation's funds.
What would be recommended is to reach out to accountants that specialize in condos, such as Accounting for Condo and get an assessment of how they can help. You'll quickly realize that the benefits definitely outweigh the costs.
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