When it comes to your property management business, there are good costs and bad costs.
Good costs provide a return on investment (ROI), while bad costs negatively impact your profitability.
Here are some of the most common costs and why they are good or bad expenses.
Training is a good cost and a good investment.
Effective training can increase productivity, improve results and save you spending money on recruitment.
While training is inherently a good cost, you need to make sure it is delivering the best ROI.
To calculate whether your training is generating an ROI, consider the following example:
An employee works 38 hours per week for $25 per hour.
If training increases their productivity 10 hours per week, that is $13,000 in additional productivity per year.
If the training cost $1000 and took 40 hours to complete, the total training cost is $2000, which gives an ROI of $11,000.
This example clearly shows that training can be a good cost and a good investment for your business.
Processes are essential to your property management business’s performance.
As a set of structured tasks carried out to deliver services, they help your business operate at its most effective.
However, processes are often the first cost business owners cut to save money.
Processes are a good cost and therefore a good investment.
Designed correctly, they increase your business’ efficiency and results.
Investing in processes not only helps your business make money but save money too.
A branded vehicle boosts your business’ visibility.
Your branded vehicle should have clear signage with an eye-catching design.
Most importantly, it should always be on the move in your market area.
To achieve maximum visibility, it is a good idea to provide one branded vehicle for every two property managers.
The two managers should structure their day so that one is in the office, while the other is on the road and the vehicle is constantly conspicuous in your market area.
To further boost your ROI, avoid car allowances and do not let your team take the car home, as the latter would incur Fringe Benefits Tax.
With these measures in place, a branded vehicle is not only a good cost but good investment too.
It may be hard to believe, but email can be a bad cost for your business.
Its convenience has resulted in property managers preferring email communication with clients and the property management team.
The back and forth nature of email disrupts task flow and costs your business money.
If you want email to be a good cost, implement systems that are not email-reliant.
While notes must be recorded at all times, your team should be encouraged to pick up the phone or, when appropriate, meet people in-person, which will improve task flow.
Many business owners fall into the trap of implementing technology just because it is the newest shiny gadget.
As a result, they do not do due diligence to determine whether it will truly enhance their operations.
This can lead to technology becoming a bad cost for their business as it can negatively impact processes, communications and client relations.
If you want technology to be a good cost, only invest if it will truly add value to your business.
Regardless of whether you undertake your own talent search or hire a recruitment company, there are unavoidable costs with recruitment.
However, recruitment can become a bad cost to your business if you do not have an induction program in place.
If you hire staff but do not induct them, then you will not get the best ROI.
Recruits must understand their role and your business’ culture and policies to deliver the best results.
To ensure that recruitment is a good cost, invest in good recruits and a solid induction program.