The very first thing you need to ask yourself when wanting to purchase a new commercial property is what is its value not it’s selling price? You need to know what you’re going to be able to sell it for in order to make a profit before buying it. Also ask yourself if the asking price is relative to the income the property is generating.Vendors usually take chances and try to price a commercial property based on its future value. Unfortunately most vendors don’t get their properties sold as banks don’t look at the future value but the current market value of that property. So how do you value commercial property? Below are three tips I use to help me make the right decision when buying a property.Commercial Property ComparisonOne of the best ways to value a property is to compare its selling price with other properties which are in the same location and are more or less the same size. By seeing what kind of income other properties generate will also give you good idea on what you can charge for the one you want to buy.Replacement CostThe second thing you need to look at is what it would cost to replace the building. If you would have to spend one million rand to build a new building and it only costs 500 thousand rand to buy it in its current state it might be well worth the investment.Income Generating ValueThis is the most popular way to determine the value of a commercial property and it is called the capitalization rate also known as the Cap Rate. This is calculated by dividing the purchase price of your property by the net operating income or NOI. The NOI is the amount the property is taking in from rent, parking, storage, vending etc minus your vacancy rates, repairs, maintenance, taxes and all of the other expenses you might have associated with the property.In other words if you have a property that generated R150,000 per year but it has expenses of R50,000 per year that would leave you with a NOI of R100,000 per year. If you purchased a property worth one million rand and it generates a income of R100,000 per year that would be called a 10 cap property. The 10 cap means you would get a 10% return on your investment each and every year for your one million rand invested assuming you bought the property cash.
Managing Your Managers
Despite the importance of pay, the overwhelming number one reason an employee will quit is because of his manager.
There has always been a strong belief that the main reason an employee quits a job is because he was offered more pay elsewhere. Survey data from sources such as the U.S. Chamber of Commerce, the American Management Association and the Society for Human Resource Management suggest that employees will leave for more pay, but the amount must be at least 10% more than they are making to even consider quitting.
When we have conversations with employees, their satisfaction with the company is based directly on their satisfaction with their manager.
As companies grow and owners get further away from running day-to-day operations, opportunities increase for a manager who does not adhere to the company culture or method for taking care of your employees.
Layers of management create a greater risk that the culture will be compromised and that an employee could have an unfavorable experience with a subpar or even horrible manager.
Well over 50% of all people in management roles have received little to no supervisor training. Many times they were the best ___________ (e.g., technician, programmer, nurse, accountant, cashier, etc.) when the management position needed to be filled.
Managers often become managers because of what we call a “battlefield” promotion. A manager quits and the job needs to be filled as soon as possible. So the best “blank” is promoted without any training. Many times that promotion works out just fine but sometimes we unwittingly create the manager from hell.
How do you spot a situation in which the manager is not managing the way you want him to manage?
Don’t look only at results, as it is often the case that the some of the best performing groups or locations will have an Attila the Hun running the show. Your good employees will still perform in that situation because they are good employees.
Sometimes employee turnover will tell the tale, although many times good employees will hang on for awhile, hoping that things will change or that the manager will just go away.
Possible signs of problems can be picked up if your company conducts performance appraisals. Look at the wording used to describe employees’ performance or the ratings they receive. Also pay attention to increased used of write ups or unfavorable comments about individual employees.
What do you do if you determine you have a bad manager?
First, you need to decide if he is worth saving. That process is a difficult one but assuming you decide to keep him, you need to go back to the drawing board and get him the fundamental training that every supervisor needs.
The manager needs to understand that managing is achieving success through the work of others and doing it in a way that leaves the employees satisfied with both the direction they receive and the results they accomplish.
If you are going to leave that manager with the group or at the location in which he struggled to manage before training (usually not a good idea), you would need to create a reintroduction plan.
The real lesson to be learned is to prepare for the growth and development of your management team before you actually have the need to promote someone to that team.