Top Tips for scaling your business

When I ask property managers why they want to scale up their business I can get 3 responses:

1. Because I can delegate the whole operation and go live in the Maldives
2. Because I want to see my brand everywhere
3. Because I want to sell my company

Do not continue reading if those are the top 3 answers you´d give me too! 

After about 20 years in this industry, I am still here, working!

If, on the other hand, you have a concrete vision, well, let’s start from the base and work up… 

First of all, we have to know that banks, equity and financiers establish the value of a company by taking easily measurable parameters:

• number of properties
• average owner contract duration ( owner retention!)
• average rent per area (in case you have several areas)

 The first thing that comes to mind when you see the above is that you have to start by acquiring a good product/owner and to do this properly you need the help of a purely commercial team behind you.

 In fact most property managers when they want to expand start with the organisation of the operation, from the top instead of first establishing a solid base by having a good sellable product . 

So, building from the bottom up, we  need to start by understanding the skills of the existing team members we have. For example, are they good organisers but not real commercial pushers? Then we need to look for people who operate in a way more similar to real estate agents than to hoteliers and train them in short-term rentals. There are existing portals set up to search for agents: these are people who work on your business and are paid mainly in commissions. They are very important as they will be the face of your company, and typically they are the ones who will help you to grow and keep  your owners’ portfolio! 

 At the beginning of your expansion, you need a solid sales network and someone who can remotely coordinate several teams for arrivals and departures. As you grow you can think about a partnership or franchise model for your customer service points.

Always try to outsource operations as it represents a red line in your economic statement (there are ways to balance the cost, but we will talk about this later).

If you want to expand nationally or internationally opening new areas or countries, you must find out about the regulations including whether there are closures or limitations on licences. Also check who is the biggest competitor in that area and try to differentiate yourself from them.

If your competition are sending the gross price to the owners and setting a commission, well, you will have a competitive advantage and offer a much better owner experience by simply sending only the net earning. And trust me, owners like it better too!

Set an attainable target based on the staff you have as well as the software you use! Be aware of consultants who advise you to buy a whole myriad of different software, they normally have their own reasons for recommending them!

Understand what you want/need from the property management software (PMS) you plan to take and understand its limitations. For example, if you plan to scale to 1000 properties, can your PMS support this? Always ask for a trial demo! 

And finally…

Growth means increasing earnings but don´t overlook the fact that it also increases costs, so it is critical for you to understand your numbers. Check your margins and fees, remember the difference between commission and mark up! In the commercial race, make sure that you always have the control of the product that comes in, and have a department (when you reach 300-350 homes) that will deal with quality and owner retention!