Acquisition can be extremely effective growth strategy or your worst nightmare. To address it effectively, you must have quality partners and technology to prepare you, consistency through the process, the ability to manage scale, and the power to meet expectations for all parties involved. In a recent Propertyware webcast, HomeRiver Group President Andy Propst and Propertyware Product Marketing Director Cassandra Rollins shared insights into the single family acquisition process and common pitfalls to avoid.
According to Propst, here are the top five deal killers for a single family acquisition:
1. Lack of preparedness
Many property managers look at their business as a revenue source, but according to Propst, it’s so much more. He recommends viewing your business as an asset that can increase in value and considering how you want it to evolve down the road. By beginning with the end in mind and setting up goals to grow your business, you can make it more marketable when it’s time to sell.
2. Poor financial management
In an acquisition, financials can be difficult to get your arms around and verify. Are the earnings you post on your financials what you are actually earning? Propst says it’s important to ensure the customer's, tenant's and business owner's books are all reconciled. Both the buyer and seller need to understand that the numbers put into the system are accurate. If you reconcile your books on a monthly basis, life is much easier when it comes time to sell your business and investing in a certified audit may be a good idea.
3. Lack of documented processes
When you acquire a company, you also acquire its processes. Propst recommends analyzing these processes so you can best leverage strengths and tweak areas that need improvement. From there, integrate the processes into your business as a whole. Use technology to document all processes, such as business procedures and communications with owners and tenants.
Key performance indicators (KPIs) are important for anyone who is building their business and eventually wants to sell. Consider what is driving dollars and bottom line and focus on these areas. Instead of trying to do it all, set a few KPIs that help you reach your goal and place your efforts there.
What does Andy recommend to document processes? Tools like Traxion or even simply Microsoft Word.
4. Poor data management
Do you have streamlined property management data? According to Propst, businesses should establish clear policies and procedures for how data is entered so it can be easily accessed and interpreted across the board. When managing multiple platforms (such as a tenant portal and owner portal), you need to establish data standards so you and your team can consistently enter data in the same way and tavoid confusion (e.g.- "TX" instead of "Texas.")
5. Not knowing your worth
Do you know the value of your business? Property managers who begin with the end in mind by setting clear goals, along with mission and vision statements, are better equipped for long-term success. Be proactive in planning and focus primarily on initiatives that drive revenue for your business. Propst says that "Stepping away from the day-to-day of your business to create a game plan is an investment that will pay tenfold." Making time to establish, review and adjust your goals is essential to understanding the true value of your business.
For full insights from Propst, watch the On-Demand webcast now!