I woke up one morning in the early nineties to find an $86,000 hole in my trust account. It was a painful time at many levels. But the truth was the hole didn’t suddenly appear. As I looked back on the events that lead to the discovery I found that I’d suffered death from a thousand cuts.
Although theft was almost certainly involved, much of the mess was the result of mistakes being covered up by the unauthorised use of trust funds. And each of these transactions were covered up so that the defalcation could remain undetected.
But whatever the explanation, I was to blame. As a director, I had failed to adequately manage and supervise the activities of my staff. And I paid a heavy price for that lack of supervision.
Without a management system I had no way of assessing the health of my business. The answer was to develop a system of KPIs that would help me to understand how my business was travelling.
There are heaps of KPIs you can measure but if I was only allowed five these are the ones I’d chose.
- Customer satisfaction – The goal of every business should be to make customers happy. This is a canary-in-the-coal-mine KPI. If things are going well everyone will be singing a happy tune but if things turn toxic your customers will be the first to tell you.
- Number of properties with arrears over 3 days – Nothing will kill a rent roll faster than unmanaged arrears. Nothing! Manage them well and everyone will smile. Tenants will respect you for your doing your job and your property owners will thank you for your diligence. And so will your bank balance because you can’t collect a rental commission on outstanding rent.
- Total rent collected – If you’re doing a good job this number should show a steady increase. If it doesn’t, something is wrong. This number factors in the number of properties under management, average rent per property and average rent collection commission. There are lots of ways you can have a positive influence on those last two numbers. And if you’re losing properties you need to know why.
- Listing presentations – call this market appraisals if you like but this number is directly influenced by the activities of your marketing department and your sales team. If you’re in the front door you’re in with a chance. Melbourne agent Tim Heavyside is reported to be doing 800 per year.
- Exclusive listings taken – In real estate listings rule. They bring buyers and they bring sales. Associated to listings are days on market and listings/sales conversion ratio but it all starts with getting a listing in the first place.
If you need help setting up your KPIs give me a call on 0419 538 838.
Image by Michelle Roy via Flickr.