Before we begin, let me say that this series of articles won’t be for everyone (though there are hopefully still some helpful, applicable principles). I know multiple people who decide that they want 1-3 rental properties, and they’re able to handle all the responsibilities on their own. This is a great model! I don’t think it’s better to have 30 properties rather than 3, it’s just a matter of personal preference. For example, there’s a buddy of mine who decided that he just wanted 3 rental units. He even bought a 4th rental property and sold one of the other three to stay within his plan. He understands exactly how much free time he has and how much emotional energy and resources he wants to put into rental property. With 3 units, he can focus on his bigger passions, while also gaining some retirement income from his properties. The benefit of this is that my friend has disciplined himself to run his 3 units extremely well, and he is able to maintain a healthy balance with his other passions and responsibilities. So, once again, it’s not better to have more rental units than someone else. It just comes down to personal business strategy.
With that being said, if you decide to grow and think that it’s best for you and your family to take on more units, you probably need to ask yourself what your strategy is moving forward. You may be a rugged individualist who wants to do everything on your own. I know some people like this, and my question to them would be: “Are you doing things that you could inexpensively hire out in a way that helps maximize your business to generate more profit?” Personally, I think God gifts each of us in unique ways, and I’ve rarely met someone who is an expert in everything. Therefore, I think delegation is a good thing. Still need some convincing? Let’s take a look at some reasons for delegating.
Why Delegate?
- You need help. It may be obvious where you’re lacking as a business owner, and if this is the case, delegation could be a great solution. Whether you lack talent, resources, or expertise, delegation can ease the burden and help your business.
- You need capacity. There may be things that you’re great at, but you don’t have enough time to balance them all. Once our business got up to 12 units, I started to feel a pull on my time. With growing commitments, I realized that delegation was an efficient way to get the capacity our business needed.
- You need competency. As your business grows, you may realize that you don’t have enough licensure, expertise, or knowledge to address certain areas of your business. Perhaps your repair needs are large enough to require the help of a general manager, or maybe your accounting responsibilities need thorough examination from a CPA.
If you view yourself as the CEO of your small business (even if you only have a couple properties), I think you’ll be more open to change and able to address obstacles with flexibility. Delegation is one strategy that can help you in this area. I think the worst thing you can do is think that you have to suck it up and do it all on your own. Next, let’s discuss the delegation process.
The Delegation Process:
As you are deciding when and how to delegate, I think it can be helpful to evaluate and understand the following three things.
- Your Business Strategy. Where does your business currently stand, and where is it headed? Are you looking to grow? Do you have any big projects coming up? How are you wanting to increase profit? Answering these questions can help you gain a better understanding of your business strategy and whether or not you need to bring on someone to make your vision a reality.
- Your Personal Strengths. What are you really good at? Maybe you’re a rockstar with repairs or a genius with numbers. Maybe, like me, you really enjoy getting properties up and running. Whatever they are, defining your strengths can show you what you can handle as a business owner, and what you may need to spend more (or less) time on. This is where delegation comes into play.
- Your Personal Weaknesses. Perhaps more important than defining your strengths is defining your weaknesses. What are the areas you struggle in? How could your business be more effective if you brought someone in to help you? Delegating your weaknesses to people with different strengths than you can increase your business efficiency.
After processing the criteria above, you’ll probably be able to identify some areas of delegation within your company. Sometimes delegation (especially in the beginning) can happen between a husband and wife. Perhaps the husband has strengths in certain areas, while the wife has strengths in different areas. As a team, they may be able to tackle issues together and produce an effective result. When you have a partner helping you, you double your insight, gain some redundancy, and probably complement your own strengths. Sometimes, your business will require additional help, and you can pursue other outlets of delegation.
The next three articles of this series will look at three different areas of delegation: (1) maintenance, (2) accounting, and (3) property management.