Like any business, association management companies are not immune to challenging times. Global pandemics, natural disasters, economic depressions, and other challenges can impact an association management business. Sometimes, despite your best efforts, your business can still be hit hard by external circumstances. During challenging times, it is important to do what you can to maintain profitability.
When challenging times begin to affect your bottom line, don’t panic. Keep a cool head and look at the things you can change. You may not be able to control the economy, but you can always control the way your association management company conducts business. With this in mind, there are several critical factors in maintaining profitability during challenging times.
Whether you’re in the middle of a crisis or simply reviewing your internal best practices for managing challenging times, consider these five critical factors. Each of these factors can help you maintain profitability when facing outside challenges. By preparing your association management business to weather any storm, you can help your business be as successful as possible during economic downturns.
Here are five critical factors in maintaining profitability during challenging times:
1. Define Essential Expenses
Reducing your operating costs will help you earn profits even when business is slow. So when challenging times impact your business, focus on defining the essential expenses that enable you to continue serving clients while maintaining service quality.
Make a complete list of your business expenses, including rent, utilities, payroll, office supplies, and incidental expenses. Be as detailed as possible — even seemingly small expenses, like office snacks, can add up and make a huge difference.
Once you have differentiated essential from non-essential business expenses, start trimming the fat. This is an opportunity to get creative. Maybe you can switch to a less expensive internet service provider, renegotiate vendor contracts, ask for concessions from landlords, or temporarily eliminate cleaning services and clean the office yourself. Pruning non-essential expenses will ensure your business stays afloat during difficult days.
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2. Maintain Service Quality
When you’re trying to keep your business going in hard times, it may be tempting to lower your standards to stay afloat; however, maintaining high-quality service is vital to profitability. This is important for several reasons.
First, you can’t afford to lose clients. If the quality of your service begins to decline, your clients may start to look elsewhere or fail to renew their contracts. In certain crises like global pandemics that affect an entire community, you may have clients who need to cut back on services due to budget shortcomings.
Remind your team to be patient and to offer help where they can because your clients are also experiencing tough times. Advise your staff that this is critical for their jobs and for company success because you want these clients to resume normal working hours once the challenging times end.
Second, sustaining stellar service during challenging times helps you preserve profitability because it boosts your reputation. Consider increasing communication to remain connected to your customers. Take advantage of tools your association management software may offer including broadcast texting and emails. Use this time to personally call all of your clients for the simple purpose of checking in on them.
Maintaining quality and delivering personalized service during economic downturns deepens customer loyalty which in turn helps your company bounce back and even encourages business growth later on.
3. Access to Cash Flow
Next, make sure your company has easy access to cash flow. Access to cash and conserving cash is critical to small business profitability during challenging times. If your company is struggling, be sure you have the cash flow available if you need it. While this should be reserved as a last resort, access to cash can help you cover the gaps in payroll and other expenses, enabling you to make ends-meet until business picks up again. Take an inventory of your business assets and investments, as well as your own personal finances.
Do you have a property you can mortgage or other assets you could liquidate if needed? Consider an SBA Paycheck Protection Program loan and investigate other small business financial relief options. Determine how much cash flow you can free up for your company. Hopefully, you won’t need it, but knowing this information can help you plan for the future.
4. Build Trust With Transparency
Another factor in maintaining profitability during challenging times is transparency. Be open and honest with everyone involved in your business, from your investors and vendors to employees and clients. Communicating with transparency, even if you’re sharing bad news, shows that your business has integrity.
During challenging times where everyone may be affected by economic circumstances, transparency builds trust and creates understanding. This will encourage clients to continue working with you and help expand your reputation. Transparency also helps when approaching vendors and suppliers regarding credit terms or other areas they may be able to assist during tough times.
However, remember to practice discernment. For example, your investors and business partners may need different information about your company’s finances than your employees or vendors would need to know. Don’t provide misinformation, but don’t overload anyone with negative projections, either. Try to remain positive and confident.
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5. Adapt Your Business Plan
Finally, adapt your business plan. How can your association management company change to accommodate the new reality of these challenging times? Can you add new services to attract new clients? Can you close your physical office and work remotely?
Look at your current short-term and long-term business plan to see how you can make changes. Flexibility is key to maintaining profitability during challenging times.
To help your association management business remain profitable during challenging times, try CINC Systems. Our customizable, cloud-based association management platform adapts to fit the needs of any HOA/COA management company. Click here for a free demo.