Business Numbers that Talk:
This content delves into the various metrics and measures used to evaluate profitability, company health, and success in property management companies. It explores key indicators such as Gross Income per Door (GIPD), Net Income per Door (NIPD), and more, providing insights into effective evaluation strategies. Additionally, it discusses examples and scenarios to aid in understanding these crucial measures.
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Presentation Transcript
Business Numbers that Talk: Metrics and Measures Steve Urie Jake Beeson 1
How do we measure? Profitability? Company Health? Success? 2
How do you measure performance in a property management company? 3
What measures work? What measures don t work? 4
EXAMPLE: GIPD: Gross Income per Door Total Income (Mgt Fees, Late Fees, App Fees, Understandification fees) Number of Doors = GIPD 5
Example: 2002 GIPD $40. Example: 2003 (downsized) GIPD $54 This is your baseline! NEVER Manage below GIPD $54 Cuz: That s workin harder not smarter! 7
Steves Ah-ha Moment 1 Door at $108 GIPD = 2 Doors at $54 GIPD Which would you choose?? Today 60% fewer doors & 225% increase in GIPD 8
Big company with LOW GIPD You are the market Small company with HIGH GIPD Pick & Choose Steve s 2nd Ah-ha $21,000 Loss And The Decision to Downsize 9
NIPD Net Income per Door Net Income Number of Doors Number of Doors 10
NIPD: Net Income per Door Net Income $6,000 Number of Doors: 100 NIPD = $60 11
Net Income per Door: How low can you go? What will it cost you to bring on properties? Examples: Steve: Patio Homes NIPD/GIPD ($60/$108)= 5.6% Jake: Small Commercial You are MORE competitive because you know what your bottom line is! *Don t give it away* 13
2 More Measures for PM companies Net Income Ratio Acid Test Ratio (sometimes called quick ratio or liquid ratio) 14
Net Income Ratio Net Income (Money after paying all the bills) Gross Income (All the money) 15
Net Income Ratio Example Net Income $6,000 Gross Income $10,000 60% Profit 16
Sample Net Income Ratios Profit Margins by Head Count (Number of Employee) 1-2 Employees (small) 55 -70% 3-5 Employees (medium) 15-35% 6-9 (Medium-Large) 8 -15% 10-Up (Large) 4 - 7% 17
Questions answered by your Income Ratios: Can I hire an additional employee? SALARY / NIPD/12mos = NEW UNITS $40,000 / 60/12 = 55-56 units Can I open another office? TOTAL OFFICE EXPENSES / GIPD = NEW UNITS 168,000/108/12 = 129-130 units Should I get bigger? smaller? PERSONAL CHOICE: BOUTIQUE VS ASSEMBLY LINE 18
Acid Test Ratio Cash on Hand 19
Monthly Expenses 20
With the money you have now, Can you Survive & for How Long? $54,000 COH / $14,000 = 3.86 months or 115 Days 22
Break Even Analysis per Door How many doors do How many doors do you need to cover you need to cover monthly expenses? monthly expenses? 14,000/108= 129 14,000/108= 129 130 Doors Doors 130 Monthly Expenses ARE YOU THERE? CAN YOU GET THERE? 23
Break Even in Days Expense Percentage (1- .60) = .40 x 30= 12 days (1-.07)= .93 x 30 = 27.9 days How many days you work for expenses! (Expense Freedom Day!) 24
Questions? 25
