Part II
By Julie Adamen

We continue on from last months’ article in discussing where you can go in the community management industry If you’ll recall, we said you would stay in our business for about four years on average.  If you stay longer, you may start to wonder just where you can go to move up or move on. Those main choices are: Middle and Upper Management within a Management firm, On Site Management, Owning your own Management Company and Working for a Vendor. We outline the first two last month. This month we’ll focus on the other two choices you have: Owning your own management firm and working for a vendor.

Owning your own management firm.
Desirability Quotient: HHhmmm.
Salary Range:  Got a map?
Hours Worked: 24/7/365
Satisfaction: What day is it?

If you think managing a business is like managing a homeowners association (non profit and from crisis to crisis), PLEASE don’t start your own company! There are enough companies like that out there already! That said, one of your options in the community management business is to own your own company. Like anything else there are pros and cons and choices to be made if you choose to embark on ownership.

I. Buying an existing business.

If you have, or have access to, the money to purchase a management firm, you have this very real option. Just remember that, depending on the size of the business, you will acquire an instantaneous set of problems, headaches and challenges, especially if it comes with several employees. If you are ready to deal with the human resource issues, the community management issues, budgeting, overhead, what is most likely more office space than you need, employee and business law, hiring and firing, manage a few accounts yourself and all of those issues that go along with running a business, this can be a very rewarding experience. Now, you have a glimmer of your life as a company owner. If you are still thinking, “How hard can it be?” you haven’t done enough research and are still in an “employee” mindset. Maybe you’re better off to start small.

II. Starting your own firm.

If you are a manager, this is probably the best way to start out if you are able to take the financial hit in the first year or two of the business. Once you get over the shock of that, you should then decide up front what type of management firm you want to own.  With this you will determine the type of services to be provided, which will define the sets of variables you will need to gear your business plan to. Here are the two basic types of management firms:

A. High End, Boutique.  Selective about the accounts you accept, you will most likely charge more for your services than your average competitor and provide a high level of service to your clients. Chances are your company growth will be slower and more manageable, and your biggest challenge will be maintaining the high level of customer service your clients expect from your firm. The beauty of the high end, boutique management firm is that you can make a very good living as a one-person show working from your home. And you can offer the same level of service the big guys in your area can – just at a higher price (and you have a lower overhead).  I know of a very professional manager who has been doing this for years quite successfully and to the great happiness of her clients.

Growing the high-end, boutique management firm can be challenging and rewarding for those who desire to continually offer high-end services to a selective clientele. From my observations, the most successful have structured their firms to focus directly on the management and not become “unfocused” by selling extras.  These firms are charging the communities they manage an appropriate (read: higher) fee for management services.  Their clients know this up front, and so it is a win-win for the client and the management firm. For these types of companies, the term “less is more” is a reality. But this business plan not for everyone, and certainly not for the vast majority of “frugal” minded community associations…

B. Full service management firms. Most of us work or have worked for a “normal” full service management company – everything for one low price with a few extras that cost the association(s) - if we remember to bill them out. Most managers who start management companies go this route because it’s what they know, and it grows the fastest. Can it work? You bet. Can you make money? You bet. Unfortunately, we find that many managers-now-management-company-owners make some fatal mistakes: They are under the impression that 1. The business runs itself and 2. Volume = profit.

What I do know is this: Most small business start-ups fail. After six years, only 39.6% of small businesses will still have open doors[1].  What I also know is that many owners of small and mid-sized management firms find is that they work their tails off for what is, many times, less than what they would have earned in higher end positions within the industry. That said; let me tell you that as the owner of a small business, there is nothing quite like having your own shop. But self-employment is not for everyone. You MUST be able to live with the highs (which are very high) and the lows (which are very low).

Working for a Vendor

Desirability Quotient: High
Salary Range:  35k – 75k +
Hours Worked: 40 hours +
Satisfaction: Depends, again

Without a doubt, the number one statement I get from managers, especially portfolio managers, is: “I would REALLY like to work for a vendor.”  Working for a vendor looks ideal from a manager’s point of view (a view seldom found in reverse). But as usual nothing is as it seems, and there are some realities to think about prior to making the leap.

You are suddenly an FIP (Formerly Important Person).  As a manager you may not feel very “in charge” but in reality you have a lot of control over your daily schedule and activities, and usually have a tremendous amount of autonomy in making various decisions on behalf of your association(s). People return your phone calls and generally answer your letters and emails. You have a certain amount of authority over vendors and homeowners. You are the gatekeeper for thousands or even millions of dollars of spending potential, thus, you/your business is courted by vendors on several fronts, giving you a certain amount of prestige in the industry. You are the “it” person in the industry hierarchy. These are the perks of managing communities and some of the main reasons why those of us who stay do so.

Once you accept a vendor position, all of that evaporates (and you get quite and education and appreciation of what vendors go through). Generally, you won’t have the autonomy you once enjoyed because vendors run their businesses a bit more traditionally. Another couple of shocks are: your calls aren’t returned (well, maybe on the 10^th time) and all of a sudden, you are the one whipping out your credit card when it comes time to pay the tab (you will most likely be reimbursed by your employer). The sudden realization that once you were being courted, and now you are doing the courting, takes some getting used to.

Marketing is more than you think. Everyone wants position marketing for a vendor. Doing tradeshows, dropping off doughnuts, standing around conferences, taking people to lunch… Ah, it sounds like the life, doesn’t it? But make no mistake: it is an exhausting and demanding job because you are always ON. To be successful in marketing, you really have to be able to go up to anyone, anywhere and strike up a conversation. You have to be able to “work the crowd,” remember details of your contacts life, what they like (chocolates with nuts or chocolate crème?). Those who can do it well can make a lot of money as well as have a high level of job satisfaction. Securing clients, doing “the deal,” can be a great rush.  Those who don’t or can’t do it… leave those positions relatively quickly.

Less Job Security. Management companies have a guaranteed base income, as do community associations, thus assuring they will always need managers. Working for a vendor is far more reality based – their staff grows and shrinks with the market and the only guaranteed income they have is what they generate month to month. If you are in marketing – believe me – you are the first one cut from the payroll because you are considered a “soft cost” of doing business.

BUT – You have a life. As everyone who makes the successful transition from management to working for a vendor says, you now have a life. No more night meetings, reasonable working hours per week, comparable pay, and no one complaining about the petunias (unless you work for a landscape company).

If you want to work for a vendor, understand there are risks involved, emotional, financial and professional – but – if you are persistent, creative, and work hard to become a valued member of the team – it can be very, very rewarding.

The choice is yours. No matter what route you take in our industry, you must think about what you want and how to get there. Through education, networking, keeping yourself current professionally and staying in touch with the industry as a whole, you can begin developing a viable career path. You do have choices. But you have to commit to making a career plan.

So, where’s the place YOU want to go?

“So be sure where you step. Step with care and great tact and remember that Life’s a Great Balancing Act. Just never forget to be dexterous and deft. And never mix up your right foot with your left.” [2]