How Strata Managers can Leverage Business Efficiency And Reduce Costs
Efficiency Is The Foundation Of Success
As the strata management market continues to grow at an ever-expanding rate, strata businesses are having to find more effective ways to increase their profit margins.
Many strata businesses believe that increasing the number of properties owned would organically increase the amount of profit they receive. However, it appears that this may be an ill-conceived theory. A study conducted by Macquarie Business Banking1, investigating over 200 strata companies across Australia, has revealed that large incomes do not necessarily lead to large profits.
One of their main findings was that the strata businesses with a profit margin of 30% and above generally had smaller overall incomes than their competitors1. The data showed that businesses bringing in median revenues of $1,122,951 were only making profits of $174,161, compared to high profit businesses that were making $332,131 out of median revenues of $605,992, giving nearly double the overall return1.
The overall success of a strata management business boils down to one crucial component – efficiency. The more productive a business is, the more profit it generates. This article examines several ways in which this can be done.
The Right Tools For The Job
Strata managers have a variety of different tasks and professional identities that require constant and meticulous attention. Everyday, strata managers fulfill the roles of advisors, secretaries, mediators, coordinators and chairpersons2.
Although strata managers often have teams of specialists helping them with tasks involving the accounts, insurance and debt recovery, their time and efforts are not being evenly distributed amongst their tasks3 and, it seems, not enough time is being allocated towards ensuring the maintenance, growth and value of investments and properties. Allowing managers to become inundated with everyday tasks has had a negative impact on efficiency. This is not only a waste of time but also of financial resources. Strata businesses generating high profits have successfully separated their strata managers from menial tasks and administrative duties.
Using the right software tools can help strata managers to remain efficient by keeping on top of their differing roles while still staying focused on their core business values. The Urbanise Strata cloud suite gives strata managers access to a cultured accounting system, equipped with innovative secretarial and administrative functions, that can help them easily manage large property portfolios and real-estate populations. For instance, the self-service web portal that’s at the heart of the Urbanise Platform transforms the way properties are managed. Customers now have the ability to efficiently self-service through a portal, which means that a lot of the repairs and maintenance requests can now be streamlined and automated through en electronic process.
This gives visibility to strata managers, customers and the supplier all on one platform and significantly reduces the administrative burden of strata managers and allows them to spend more time on asset management and strengthening client investments and relationships.
Choosing The Right Candidate
A large part of being efficient is having the right people on your team and that starts with having an innovative and reliable strata manager. The role of a strata manager is complex and multifaceted and requires someone with a broad array of skills and talents. With constantly evolving legislature and a shifting technological landscape, ‘experience’ per se is no longer a prerequisite. A poor decision in the hiring process will inevitably lead to a drawn out and expensive drain on your resources. Make sure, when assessing capabilities, you differentiate between someone who has administration and secretarial skills, and those of an adaptable and proficient strata manager.
Properly Incentivise Your Staff
Determining staff salaries is often a contentious issue within companies. Paying overheads is the biggest expense for strata businesses, equating to over half of their total expenditure.
However, it is important to remember that a business is only ever as good as the team that runs it. A 2015 Jobvite Job Seeker Nation survey highlighted that 61% of individuals accept potential jobs based on the salary4. This is suggests that the majority of employees are motivated by financial reward. Good salaries help to retain talent and in a fiercely competitive market5, invaluable strata managers are a commodity you don’t want to lose to a competitor. paying your strata managers what they are worth brings their business back to your company.
A study by the Macquarie Business Banking1 indicated that strata businesses that generate higher profits give their managers large performance bonuses. By using money that could potentially have gone towards hiring additional managers, these companies have instead incentivised existing individuals and consequently spent less money on getting the job done. As a consequence, these businesses spend roughly 55% of their total revenue on wages. That is 7% less than their competitors1.
Financial investments in your staff are not the only factor worth considering. Continuous training and educational development of strata managers is also an important issue. A highly trained strata manager can be a valuable commodity. Studies show that strata managers working for high-profit businesses, on average managed 1,235 lots. Those working for businesses bringing in smaller profits only managed 901. That’s a 37% disparity1. The benefits of having a skilled and highly efficient strata manager speak for itself.
Long Term Vision
In a fluctuating, sometimes-tumultuous business world, it pays to build your business on solid foundations. Putting the time and effort into establishing a strata management business that is equipped with all the characteristics necessary for success will serve you well in the long run. Highly skilled and multi-talented strata managers supported by the right technological tools and a proficient team as well as the ability to maintain levels of excellence through training and education are all good investments. Ensuring these components are in place will help your business maintain profits and productivity far into the future.