A growing property management business is an attractive idea to any business owner. However, if your business grows beyond its capacity to serve clients well, you might see cracks start to form. Rapid growth could set you back instead of boosting you forward.
Don't worry! There are worse property management problems to have than too much business! Today we look at when it might be a good time for your business to stop growing (or take a short break from growth efforts).
Four Signs Its Time to Stop Growing
Many small business owners believe that they must keep growing to be successful. However, this is not always the case.
Sometimes, property managers must take a step back and look at where they are and where they plan to go. Does your property management business have the skills and resources to sustain growth? With a bit of reflection on where you are now, you might feel better equipped to take on more doors a little further down the line.
Before a booming business becomes a burden for your organization, here are a few signs that your company does not have the capacity for growth (yet).
1. Declining Employee Morale
As your property management business grows, the workload increases across the board. When company growth begins, employees will be doing more work while receiving the same compensation. This could lead to a dip in their morale and, in turn, reduced productivity and poor customer service.
The Fix
Keeping your employees happy is essential for a successful property management business. The easy answer is for a property manager to increase their employee's pay or hire more help to balance the workload.
However, if the business is not ready for this extra capital outlay, you can consider offering bonuses or increases when the cash flow improves. In the meantime, recognize your employees' contributions publicly, ensure they are not overworked, and provide them with tools to operate more efficiently. If the volume of work exceeds capacity, it might be necessary to pause taking on new business until existing clients and team members function well.
2. Your Business Has Become Unstable
If you see proverbial cracks or instability in the business for your property management company, it may be time to put a halt to growth. For example, if property management problems such as slow response to maintenance repairs and delayed lease renewals start cropping up, it may be a sign that your property management business has outgrown its capabilities.
The Fix
We recommend suspending the growth phase for the time being and focusing on creating stability in your company's systems and processes to retain existing clients, establish better processes, and evaluate your team's capabilities.
3. Gaps in Customer Service
Are you losing owner clients or tenants because of poor service delivery? An escalation in customer service complaints can also signify that property management companies are growing too quickly.
If the number of doors has grown, but your staff contingent hasn't, service suffers to existing (and new) clients. Your employees may find it difficult to continue giving each client the same amount of attention as before. In addition, employees may be experiencing fatigue and burnout. This could lead to more mistakes made and, in turn, dissatisfied customers.
The Fix
To maintain commendable customer service, you can apply one of two property management tips: take on fewer clients or hire more staff.
Hiring more staff signifies growth and is usually the more desirable option. However, if your business doesn't have the cash flow for personnel investment at this stage, we advise scaling back on the number of clients you onboard. For long-term property management success, it is essential to grow from a stable base in a way that supports additional doors. Sometimes this means you have to say "no" to growth for a while.
4. You (and Your Team) are Burning Out
Mayo Clinic defines job burnout as mental, emotional, and physical exhaustion. It may involve feelings of redundancy and a lost sense of self. Burnout in the workplace can occur when you or your team members feel overwhelmed by and unable to meet constant demands.
Unchecked burnout could be costly due to poor service delivery and client loss. In addition, it's challenging to plan for the future when the present feels bleak.
The Fix
Maintaining a good work-life balance is essential to sustaining your business growth. Only take on as much work as you and your team can handle in a reasonable amount of time. Take time to analyze your business systems and assets (financial, intangible, and intellectual) to get a clear picture of whether you have the capacity for growth now.
Tips for Growth (the Right Way)
Generating more profit doesn't necessarily mean taking on more doors when you're not set up to do so successfully. Analyze your current profit per door and examine your goals. Work with a property management consultant to review the profitability and processes of your business so that you can put systems in place to grow sustainably.
Before you take the next step to grow your property management business, check whether you have everything in place to accommodate the expansion without sacrificing what makes your business great.
"Right-sizing" your business helps you grow sustainably without burning out team members or frustrating clients. Consider a few questions:
- Do you have the capacity for more staff or software in your budget? As the saying goes, you have to spend money to make money. How much does your budget need to increase to accommodate the new staff, equipment, and software that you need to accommodate growth?
- Do you need more infrastructure? For example, do you need more computers, phones, or software licenses to serve more clients?
- Do you have the right staffing? Can you shuffle a few employees' responsibilities around for the growth you envision? Or will you need to hire new talent?
Growth is exciting but challenging! The right property management consultants can help you learn the answers to these questions to help your business grow the right way.
Grow When You're Ready for More Property Management Success
It is perfectly acceptable to stop growing for a while. In most cases, taking the time to ensure that you have the personnel, systems, and technology to serve your clients is a smart business decision before taking on new clients.
Remember: adding more doors to your business is not the only road to increased profitability and property management success! Analyze your pricing structure and operational costs to see if you can make improvements in either of these areas to improve your bottom line.
The team at Real Time Consulting has years of real estate industry knowledge and experience to help guide you through this process!
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