Is your management company living on the financial edge? Are you tired of never quite making enough to do the things you want to do for your employees, for your clients, for your business?
You could grow your portfolio, but unless you overload your managers, new clients mean you'll need to hire new people, which puts you right into the same state again.
Management fees alone are rarely enough when you account for competitive undercutting and penny-pinching boards trying to keep assessments low.
No Silver Bullet
Growing revenue is a challenge that every business owner faces. There's no magic spell that will take away all of your money woes. But there are things you can do to alleviate the pain. One way is to reduce costs, another is to introduce new revenue streams.
Here are 17 ways you can reduce costs and increase profits with additional revenue sources:
Ways to Reduce Costs
There are many ways to lower costs to get more bang for your revenue buck:
- Automate Your Systems. Automating processes in accounting and management can allow you to increase the number of communities you can manage per employee.
- Outsource Expensive Services. Outsourcing for services like printing and mailing can be a good way to reduce costs that would typically be higher in house due to the costs of equipment and labor.
- Go Paperless. Switching to a paperless environment is a cost-saving measure that also affects perception of your business. Not only can your organization save on printing costs, but file storage costs are also greatly reduced.
- Offer Online Payments. Implementing an online payment gateway to homeowners through your website or portal can reduce efforts on both sides of the accounting process, from generating invoices and statements, to processing checks.
- Consolidate your Silos. The time and labor you spend in maintaining multiple silos of data for your clients can be extensive, even in our modern age. Not only is it time consuming to enter the same piece of information twice, it can also lead to dropped balls and lost data. Try bringing all of your silos under a single platform where data can be entered once and shared across multiple products.
- Take Advantage of your Banker. Considering the amount of money your organization will be flowing through their bank, your community association banker is often very willing to help out in unexpected and unusual ways, such as assisting your management organization with loans for large software and equipment purchases, and providing additional services such as bank lockbox for your clients.
- Switch to the Cloud. In addition to making your data accessible from anywhere, the cloud can save you a ton of money on equipment and IT labor from server maintenance.
- Implement a BYOD Policy. Instead of providing phones and tablets for your management staff, consider allowing them to use their own devices for work.
- Implement a Utility Expense Management Service. (Condo associations) For buildings with shared utilities, a utility expense management service can take on the task of charging owners for utilities while also saving the management company (or association) utility costs from vacant units.
But even with these reductions in cost, you may find yourself in need of a boost. Here are some examples of alternate revenue sources your management company can leverage:
Alternative Revenue Streams
When considering any alternative revenue option, it's important to check into any legal restrictions that may affect you. Your state may have restrictions or caps on what you can charge for various services.
- Charge for Resale Disclosures. Most state laws governing community associations make allowances for administrative burden when providing copies of governing documents, resale disclosure forms and other tedious document provisioning tasks.
- Charge Back for Reimbursable Expenses. Your management contract is very specific on what your services cover. If you are providing services above and beyond the terms of your contract, charge for them!
- Start a Maintenance Division. Even if it's just a single handyman, a maintenance division can be a real revenue generator for your management company. Not only can you charge maintenance fees for small jobs around the community, you can also offer maintenance services directly to homeowners.*
- Start a Landscaping Division. Some management companies offer landscaping services to the associations they manage for an additional fee.*
- Diversify your Offerings. You don't have to expand into rental or commercial management in order to turn a profit in this industry. Consider offering financial services for self managed communities, or professional management consulting services on retainer.
- Work the Keynote Circuit. If you aren't afraid of a little public speaking, you can add public speaking as a revenue stream. Many professional community association organization hold annual events that need keynote speakers.
- Offer Cross-Promotional Opportunities. Another option is to offer to send the occasional promotional email or mailer for local vendors, restaurants or local businesses. Be clear that it is a sponsored communication, and not an endorsement by you or the community.
- Host training events. Many management companies offer board member training event. You can charge a reasonable course fee for such services.
* When you offer services that would typically require the Board to review multiple bids, be sure that this does not become a conflict of interest (or an ethical breach) by requiring sealed bids for services.
The smart move is to diversify your strategy by implementing a variety of cost-saving measures and additional revenues. Collectively, these measures can add up to a comfortable revenue cushion for your management company.
*Image credit: Austin Kirk via flickr