Using Key Performance Indicators, or KPIs, will help you measure, monitor and manage your team and business. They help you identify where you’re meeting your goals and where you need some work, effectively telling you whether or not you’re on track for success. Here’s a list of some of the KPIs you should be paying attention to in your business.
#1: Management Fee Annualised Income
This is the total annualised income a portfolio is earning, or for those who have more than one portfolio, it’s the sum of all of them. This number will change as portfolios grow because of the increased number of properties or the bump in rental rates.
After establishing your annual income goals, make sure to set up Management Fee Monthly income targets so that you can measure progress over shorter periods of time. If these targets aren’t being met, it’s your job to figure out why and to implement initiatives to help your team meet their numbers.
#2: Average Weekly Rent
Once you have prepared your annual business plan, the next thing to do is figure out your average weekly rent goals. When coming up with this number, make sure to keep aspects of the local market in mind, such as the average weekly rent and the make-up of each portfolio. However, you should always try to exceed average market rental rates, as this means you’re outperforming your competitors.
Furthermore, by doing this, you give yourself some extra breathing room. When you meet your target, it means you’re doing better than average, and when you’re not, you’ve still got a chance to figure out why before things become too serious.
#3: Average Management Fee
This KPI will help you determine both your monthly and annualised income targets. The goal here is to set your average management fee target as close as possible to your current management fee rate. This way, when you don’t meet your targets, you know it’s because members of your team are discounting rates, which is something you must avoid as it devalues your business.
#4 Average Arrears Percentage and Income
This helps monitor how well team members are managing their portfolio, and it also gives you the chance to assess the impact arrears are having on your monthly income. Most principals focus only on their arrears percentage, failing to consider the monthly income lost in management fees. To keep your bottom line intact, this percentage should really be zero. Setting this target will bring arrears to your attention immediately so that you can address them and remove them as fast as possible.
#5 Average Percentage of Fixed Term Tenancies
Your target for this KPI should be as close to 100 percent as possible. It’s important to constantly measure this metric so that you can prevent your team from allowing tenants to lapse into periodic arrangements.
Overall, setting KPIs is essential for keeping your business running smoothly. Every metric depends on and sometimes determines at least one other metric, so accuracy is key for you to use this data to help keep your business stay on track for success.