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Benchmarks!
We have 'Bean' thinking a lot lately about the benefits of benchmarking to drive the
success of Real Estate businesses.The beauty of the Real Estate Industry is that there is a lot of publicly available
information on top line sales and market share. There is however, very little
information about benchmark profits. We focus on profits - not sales!What is the profit that you should expect to generate from your Real Estate
business? The answer is, it depends! Do you have a rent roll? How do you
remunerate the owners of the business? What other expenses are reported within
your business profits that are not necessarily business related? Do you rely on
principal sales? All these things can distort a simple comparison of financial results.In June we presented some very basic benchmarking results to the attendees
of a principals workshop. The purpose of the exercise was to calculate some very
basic ratios which may help identify potential areas of concern within the businesses
of each attendee. We chose these particular ratios so the group would focus on the
elimination of 'waste' in their businesses and identify under-utilised resources.The results of the exercise were as follows:
Average number of sales per salesperson = 13.4 sales per annum
(Thats right, only 1.1 sales per person per month on average)Average value of sales per salesperson = $6.2m per annum
(That means the average sale price for this sample was $463k)Office square metres per person = 13.2 sqm
(That is, of all the space available including reception, training rooms, etc)Number of sales per admin staff = 42.2 sales per annum
(This indicates the efficiency of the admin staff)Number of properties per property manager = 83.2 properties
(I would suggest that this figure is much lower than the industry average and should
more around the 100 to 120 properties per property manager)Please note, the sample size used for these calculations was very small - it only
included the results of 17 Queensland offices - so you may choose to take these
results with a grain of salt! But, by comparing your business to these results you
may identify something that you didn't already know about your business that
should be investigated further.If you would like to add your data to this sample, and receive a comparison of your
results to the expanded sample, please complete the attached questionnaire and
forward to j.knight@uhyhn.com.au.Click here to access the questionaire.
Benchmarking is obviously very topical at the moment. Macquarie Bank are currently
collating information for their 2009 Real Estate Benchmarking Survey. Although it is
too late to be a part of this survey, if you would like to request a copy of the results
you can contact Jenny Samios or Shaun Basset at the Macquarie Bank on (07) 3233 5357
or (07) 3233 5239.
Of course the benchmarking exercise itself is only an indicator of the areas for
potential profit improvement. The key is, what you actually do with the data! Please
do not hesitate to contact us if you would like to discuss strategies to improve the
profitability of your business.Regards
JOHN KNIGHT
Please note that this is only intended to be general advice and may not apply in
all circumstances. You should seek advice relevant to your specific
circumstances. If you have any questions, please do not hesitate to contact us.
Bean Thinking About Something Else?
Past Newsletters
Bean Thinking... Tips for businesses affected by the floods Bean Thinking... Budget 2010/11 Bean Thinking... Henry Review Bean Thinking... Sustainable Competitive Advantage Bean Thinking... 7 Deadly Wastes Bean Thinking... What-ifs Bean Thinking Tax... ATO Crackdown on Tax Debts! Bean Thinking Tax... R & D Tax Concessions Bean Thinking Tax... Recovery of Land Tax Bean Thinking Tax... Last Minute Tax Planning Tips Bean Thinking Super... Avoid Excess Super Contributions Bean Thinking Real Estate... Changes to Comission Structures Bean Thinking Real Estate... Benchmarks! Bean Thinking Real Estate... Purple Cows
Past Presentations
Bean Thinking Real Estate... Good, Bad & Ugly: Real Estate Business Bean Thinking Super... Super + Borrowing = ? Bean Thinking Super... Borrowing inside Super "How does it work?" Bean Thinking... Goals & Strategies for 2010/11 Bean Thinking... Tax Time for Unit Owners
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