Every property management business owner wants to grow their rent roll and increase their income. But, many do so in a haphazard way, which is not sustainable and cannot achieve their desired results. If you want to effectively grow your property management business, here are the key areas you should consider and address before implementing your growth strategy.
1. Determine your property management division’s current situation
Since many real estate business owners come from sales, they do not fully understand property management. However, they do know that a property management division can create many benefits, such as regular revenue through management fees and potential property sales from the rent roll. As such, it is understandable why so many owners set up a property management division. However, if you only focus on real estate sales, your property management operations are often left to a property manager to oversee. If this sounds like you, your growth strategy may be fraught with danger.
As a real estate business owner, you must determine whether your property management division is bringing in more money than it is costing you to manage. You should also ensure there is accountability for every area. It is only when you gain control of your business and understand property management that your business can strategically grow. So, how do you get a clearer picture of the current state of your property management division?
A SWOT analysis is an effective way to review your property management division’s operations. Doing this activity can determine its strengths, weaknesses, opportunities, and threats. After this analysis takes place, you will know which areas need support in terms of staff, systems, technology, training, coaching, and strategies, so you can set your business up for sustainable growth.
2. Conduct an operational prognosis
An Operational Prognosis estimates and forecasts your property management business’ future based on your current operations. Conducting a property management operational prognosis is similar to performing a SWOT analysis. However, an operational prognosis also investigates the actual and potential value and risk of properties under management, including reviewing your current business management practices. Your business’ operational value and risk also have a direct correlation to your asset value and risk.
During the process, various business reports and documents are audited and cross-referenced to determine your current operational value and risks associated with your managements and clients. ireviloution conducts operational prognoses on behalf of business owners. The ireviloution prognosis process includes an onsite visit to interview you and your property management team to gather insight on business practices, processes, standards, and culture.
The Operational Prognosis report provides a systematic audit and analysis of identified risks and opportunities. It also forecasts the value and potential value from relevant information and data available at the time. In the article ‘How to do a business forecast’, Jackie Lohrey states that, “A full understanding of short- and long-term forecast is essential for setting small business objectives and for measuring growth. Each forecast requires data from yesterday, an eye on the present and a look toward tomorrow to envision and plan for sustainability and growth.”
Based on the findings, analysis, evaluation, and forecasts, an Operational Prognosis report shares recommendations to help you plan your property management business’ future growth.
3. Prepare an operational business plan
Although a financial plan is vital for your property management business, you also need an Operational Business Plan. An operational business plan is the ‘blueprint’ for your business’ vision, goals, and targets. It outlines the strategic direction for every operational area, including annual training schedules, market opportunities and critical factors.
What’s more, operational business plans take into consideration your goals for growth. By understanding your short- and long-term objectives, a plan is formed in line with your immediate market potential. It also incorporates a ‘growth matrix’ which specifies when extra team members should be scheduled and recruited to assist with prospecting and client retention during growth phases.
In addition, the operational business plan features a growth forecast for the year ahead, along with a long-range forecast of up to five years which outlines the potential income your business could generate. Based upon relevant market rental averages within your defined market area, the growth is forecasted over potential revenue, rather than only your management numbers. In contrast, the number of managed doors is only measured to predict your overheads, while potential revenue is measured to manage overheads and increase profitability. This relevant and accurate data lets you strategically plan your business’ future growth.
4. Implement Systems and Monitoring
After carrying out an operational prognosis and operational business plan, you should then implement appropriate systems and monitoring. Systems include all processes and workflows that allow tasks to seamlessly flow amongst your team. Such processes and workflows produce consistency and efficiencies for your business. As a result, they ensure all tasks are completed in an organised and timely manner.
Once you’ve implemented your property management systems, you then need to put in place a method to monitor your processes and workflows. Auditing is one of the most effective ways to monitor what is happening in your business. It can efficiently monitor each task’s progress, timeliness, and completion, and enhance your operational decision making. Without monitoring your team’s performance, there is no way of knowing if your business is growing or doing so in a strategic manner.
Flussos, a property management workflow platform, was developed to help business owners manage and monitor property management tasks. The task flows are engineered to ensure best practices and efficiency for your business. In addition, the platform allows processes to be audited to find out if there are any time delays or task ‘pinch points’.
Growing your property management business can take many pathways. Apart from the traditional technique of using business development managers to obtain more managements, other approaches should be employed. If you want to achieve sustainable and strategic growth, you should first know your current situation, conduct an operational prognosis, prepare an operational business plan, and implement appropriate systems and monitoring. Putting in place these proven tools and strategies can help you achieve your desired growth goals.