The Four Warning Signs
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Brad: Welcome to another edition of Rent Roll Insights, I’m Brad Miller from Real Estate Dynamics where we help Property Management businesses build, buy and sell through our Rent Roll Coaching, Property Management Training and Business Brokerage right across Australia. In this 8-part series we’re covering off on what you need to do to protect the value of your Rent Roll and how to get your business robot ready. Today we’re going to look at the four warning signs that can act as early warning detectives in your business that something might be amiss. I’m joined again today by Nathan Brett from the Real Estate Dynamics leadership team. Welcome along Nathan.
Nathan: Thanks Brad.
Brad: Wonderful. Nathan in our last episode we did look at those three external pressures; the economic pressures, we looked at the consumer pressures and the technology pressures around the Rent Roll. But let’s talk about the four warning signs and how they stick out in a business. Can you run us through those?
Nathan: Yes absolutely Brad. So, the four major warning signs that something could be amiss in your Rent Roll business is if your business isn’t growing. So, if it’s remaining stagnant or you’ve got negative growth that’s an early indication that something’s not right. The second is profit; if you’re not profitable certainly over the next five or so years that’s going to become more difficult so profit’s really important. The third is what we call “sticky staff”, so if you’ve got a constant turnover of team members in your Property Management business, that’s only going to accelerate with it without some intervention. The last is a lack of sticky clients. So, if your clients are leaving you, if you’ve got a leaky bucket in the Property Management business, you’ve got a real problem.
Brad: Yes, and these actual warning signs are only going to increase as we move towards a more robot ready industry that’s pretty much in a nutshell is that right?
Nathan: Absolutely. So, if they’re existing now our strong recommendation is that you take a serious look at those four signs and something needs to be done otherwise it will only accelerate.
Brad: Okay so let’s start with growth shall we and look at and how that warning sign could be seen in a business.
Nathan: Absolutely. At RED we’re fascinated by Rent Rolls that have a wonderful ability to grow and we often say Rent Roll growth is the easy part, and it is. The planning and execution of growing a Rent Roll is easy the problem is that most businesses can’t absorb it because of the way they’re structured and so that’s one big impact around growth.
Brad: Yes, and how about moving on to profit, what are we looking at there? What are things people need to be aware of?
Nathan: Look, maximum efficiency is the new black in Property Management. So, when we look at businesses we often see people replicating and duplicating tasks and what that’s doing is it’s chewing up profits unnecessarily. So, to have a look at that and you know it’s really interesting just to observe some Property Managers working in a business, it can look like a game of dodging cars at the show where they’re bumping into each other and they’re doing similar tasks at a similar time. It’s just inefficient and it’s costing you a massive amount of profit.
Brad: Yes those internal functions where people are doing the same activities sometimes you get people sending two out to an inspection or something like that. Would those be considered some of the warning signs people need to look at that they might not be as profitable and they need to pay attention to?
Nathan: Without a doubt, absolutely. And the removal of that duplication and replication as we’ve seen in our coaching work makes a massive difference to the business’s profitability.
Brad: Okay now people are considered our greatest asset, so what are some of the things that we should consider as a warning sign when we start to look at our staff?
Nathan: Absolutely. So there are lots of great engagement tools, there’s one designed by Gallup G-A-L-L-U-P to actually test the engagement of the team members. So, they’re either actively engaged, they’re neutral or actively disengaged. If you’ve got people on the team who are neutral or actively disengaged, or “business blockers” as we call them, you have a problem in your business.
Brad: Yes and that might look like…as an actively disengaged person in your business; what are some of the things that they may do in the business that could be a warning sign?
Nathan: Well it they’ll certainly not be delivering a customer service level that probably the business owner wants them to deliver, there’ll be losses in there and they may cause real cultural problems in the business as well.
Brad: Cultural problems. I think we’d all be able to feel that as it’s occurring.
Brad: So, when we look at the last warning sign there, which was around those clients and keeping them sticky, what are some of the things that we need to consider as a warning sign?
Nathan: Absolutely. So, if you’re losing clients, and it’s really interesting, it doesn’t matter why they go so much it’s where they go and from where they go you can figure out why they go. So, if they’ve sold through your agency; all well and good, they’re a future landlord or future prospect to sell their home. If they’ve moved back into their home; of course, they’re a future prospect. They’re the uncontrollables. But the controllables are: they’re managing it themselves, they go to an alternative agency or they take it off the market to renovate, which is also a possibility that they may not come back to you if you’ve got stickiness around that. So, get serious about understanding where they go, that’ll tell you why they go and give you some data intelligence about fixing the leaky bucket.
Brad: So, when we talk about the low growth or no growth, the profit, we talk about the staff and we talk about the clients. How is leadership an important part of those four warning signs and picking them up?
Nathan: Well it’s certainly the leader’s responsibility in the agency to monitor those four big rocks and make sure that those early warning signs are tackled if they tend to pop up. So, we’re all in business to make profit, if you’re not profitable and you’ve got a healthy profit margin, so I’m talking thirty to forty percent in Property Management which a lot of our clients are functioning, we’ve got a few more that are higher than that, things are going to be very tough for you moving forward if you’re not making that tidy margin.
Brad: In a nutshell if you’re not growing, if your profit is low, if you have a turnover of staff or if that there’s clients that are leaving your business in perhaps you don’t know where they’re going, these are the early warning signs in your business that you need to be aware of and do something about especially as we move into this robot ready type industry.
Nathan: Absolutely. Being aware is the first step competent action is the second step.
Brad: Fantastic. Thanks for joining us again today Nathan. I’m Brad Miller from Rent Roll Insights and thank you for tuning in to another episode, we’ll see you soon.