6 Most Common Mistakes of Poor Management

The number one reason for property problems is ineffective management. Use this checklist to determine if your property is experiencing any of these mistakes. Fixing any of these mistakes can immediately make a positive impact on your property.

1.  No Superstar Business Leader

Most on-site business managers are, like most things, AVERAGE. Most apartment owners and managers seem to settle for average, always thinking things will get better, not being aware of the importance of having a superstar business leader.

Average business managers do average things, get average results and without any kind of motivation or supervision can drive your apartment building straight into the ground.

2.  No Marketing Plan

One of the most over looked steps by most owners and property managers is not spending the time to do the research and put together a marketing game plan. Instead, most marketing is done by “gut feel” and what they “think” is going on in the market.

Once business managers determine their opinion of the market, they put into action the standard “spray and pray” marketing. This type of marketing includes putting out as much advertising as possible in hopes of generating rental traffic and leases.

A thoroughly prepared plan includes the identification of a Target Market. This target market is a defined segment of the mass market that is the strategic focus of a marketing plan.

Members from a target market possess common characteristics and a relatively high propensity to purchase your product. Through extensive research and analysis, the likes, dislikes and expectations of the target market are identified.

Then, a marketing strategy is developed to reach the target market. The newly developed strategy becomes the basis of your marketing plan.

With a well-planned and developed marketing plan, marketing an apartment building can be organized and predictable without wasting advertising dollars on the masses.

3.  Lack of Market Knowledge

Most ineffective business managers generally think the only thing they need to do is put their “open-for-business” sign out and new customers will flood into the leasing office with new business.

I know this sounds a bit crazy, but by the very actions of most average business managers, they have little knowledge and understanding of how their business competes in its marketplace.

As we learned earlier, running an apartment building is similar to running any other business where knowing your competition and your customer is paramount to success.

Ineffectively competing in your marketplace is primarily due to not accurately matching your product to the needs and wants of potential customers in your trade area at the right price.

The logical questions we need to ask ourselves are the following: What are the needs and wants of our potential customers? How can we position our product to attract our most likely customers and solve their need and want problems?

When we identify our most likely customer, what maximum price can we charge while remaining competitive and still creating value for our customer?

4.  Lack of Property Knowledge

Understanding the product you are selling and to whom you are selling it is a pervasive weakness among many apartment business managers. Many business managers fail to make an assessment of the strengths and weaknesses of their apartment building and how it competes in the marketplace.

For example, there are two similar competing apartment buildings with a high concentration of two and three bedroom units in a growing area of town. Property ‘A’ has a large playground on the property while competing property ‘B’ does not have a playground.

In a growing area with larger floor plans, there is a high probability that families will reside in these units populated with many kids that need a place to play. It is a weakness for property ‘B’ because the parents of the kids will have to find other ways to keep their kids busy. But it is strength for property ‘A’ because living at this property makes life easier on the parents and more fun for the kids.

Understanding the strengths and weaknesses of your property will help you understand your property better so that you can be more effective at operating your business.

5.  Poor Financial Controls

For some reason, many business managers are scared of numbers so they “put their heads in the sand” and fail to look at the story the numbers are portraying. One of the biggest accumulations of numbers is the property operating budget.

It seems the only time many business managers actually look at the budget is every October when they begin to prepare their budget for the following year.

Understanding the monthly financial reports that include such things as a general ledger, income statement, and aged payables and such, is very important to the financial success of a property.

Accountants count all the beans that were collected in the accounting month and tally the numbers into various reports so that the business managers can analyze these accounting reports.

From the analysis, business managers can make forward conclusions and decisions on the direction of the business so as to remain competitive and profitable.

6.  Lack of Marketing Skills

Standard marketing practice for many business managers is “spray and pray” advertising. Get out as much advertising and see what sticks. Little attention is given to the readers of the marketing message.

The practice of “spray and pray” advertising is a roll-of-the-dice approach to leasing an apartment building.

Instead, you need to identify the most likely people who will live at the apartment building and create a marketing message to that target market. Then repeatedly put your marketing message in front of your target market. Using this approach to marketing is less costly and more effective.

Use these six mistakes as a guideline to assess the management on your property. Make adjustments where needed to ensure your management is improved and not making any of these six mistakes.