Harvesting Wealth from Your Business: A Farmer’s Guide for Community Association Management Companies

In the world of community association management, the journey to financial success can be likened to the age-old practice of farming. Just as a farmer carefully tends to their crops to ensure a bountiful harvest, management company owners must nurture their company to reap the rewards of their hard work. Let’s explore this analogy and uncover the steps to harvesting wealth from your business, including the potential to sell your company as part of the harvest. 

1. Identifying the Value of Your Soil: Understanding Your Business and Yourself

Before a farmer plants seeds, they must understand the quality and potential of the soil. This involves assessing its fertility, composition, and suitability for the crops the farmer intends to grow. Similarly, in business, it’s crucial to identify the value of what you have and what you desire:

• Assess Your Assets: Evaluate the strengths and resources of your company, including your team, technology, and client base and its existing value (independently determined)
• Know What You Want Now for the Future: Determine what YOU want to be able to do, experience, feel in the future because of the value you are building in your company.
• Determine your Wealth Goal: Determine, to the best of your ability, how much money you will need in the future to achieve your desired future.
• Understanding Market Position: Analyze your position in the market and how your services compare to competitors.
• Identifying Unique Selling Points: Determine what sets your business apart and how you can leverage these advantages.

2. Protecting the Harvest: Risk Management

Farmers must consider how to protect their crops from pests, diseases, and adverse weather before those risks present themselves. Similarly, business owners need to manage the risks of owning a business BEFORE that risk happens:

• 5Ds: How will you minimize the risk to your company, your income, your future if you experience Disability, Divorce, Death, Distress or Disagreement.
• Financial: How will you insulate your company from liabilities, market fluctuations and competition, partner disagreements, personal financial responsibilities.
• Business Environment: How will outside factors like legislation, the economy, technology, data security, talent development and retention, customer demands, business interruptions impact your company and can you mitigate any of those factors.

3. Planting the Seeds: Building in Your Business

Once the soil is ready, it’s time to plant the seeds. For business owners, this step involves making strategic investments to build value in your company and not just increase revenue:

• Human Capital: Recruit, motivate, retain and evolve your team.
• Customer Capital: Develop and grow deep, integrated and long-term customer and business partner relationships with shared goals and benefits.
• Structural Capital: Develop strategies, systems, processes that support your customer and human capital needs.
• Social Capital: This is the glue that connects the first three – your company’s culture. Investment in your social capital will create the heart of your company that is self-perpetuating and drives and elevates your company to be the best it can be.

4. Preparing to Harvest the Crop: Harvesting the Value of Your Business

Farmers know that it’s not a successful growing season unless they are able to harvest their crops.  Preparation for that means addressing how the crop will be gathered, stored, and taken to market.  For business owners, this is the stage where you need to plan for the time when you are ready to or must harvest the fruits of your labor by getting the value out of your business and available for you to use in other ways:

• Know and consider all your options: Will you sell to family, an internal leader, your employees, a competitor, third party, private equity or some combination.
• Grow and Step Away: If you need time versus money, do you have the leadership team to run the company without you.

5. Sowing the Seeds for the Next Season: Managing Your Business

The cycle of farming is continuous and so is the journey of business growth.  There must be continuous improvement through each season and each phase w.  This translates to:

• Cultivating the Value Levers: Cultivating and strengthening the 4Cs listed in #3 above will help your management company be ready when it is time to harvest.
• Quality Control: Ensure your services meet high standards and address any issues promptly.
• Financial Management: Monitor your finances closely, manage expenses, and reinvest profits wisely.

By following these steps and nurturing your company with the same care and dedication as a farmer tends to their crops, you can harvest wealth and achieve long-term success in the community association management industry. Whether you choose to continue growing your business or sell it for a profitable return, the key to a bountiful harvest lies in identifying, protecting, building, harvesting and managing your company continuously.

I hope this analogy resonates with you and helps you see things a little differently.  If you have any specific questions or need further assistance, feel free to reach out.