Strata Management Proposals – A Case Study in Tedium

In a former strata life, I ran tenders for owners corporations looking to change strata managers. It was a terrible business idea because most owners corporations would prefer to use a free conflicted process for selecting a new manager than pay an expert to do it for them. Nevertheless, representing some of the more sophisticated owners corporations, I learnt a lot about what owners want, compared to what most strata managers dish out, when asked for a quote. 

For a small coastal block of 14 apartments in Sydney, I ran a process where I was paid a flat fee by the OC and received no fee or benefit from the tendering, or successful strata management companies (unlike some). I shortlisted four strata management companies each of which I knew could do the job, and briefed them with an identical information package. One didn’t respond and the field narrowed to three. The proposals came to me for comparison and a recommendation. I prepared a list of 18 criteria that I used to make my recommendation. Here’s what I learnt – 

• Response times were good - between three and eight days
• No one called me or the client to discuss why they wanted to change 
• Operating models were all the same, with a dedicated point person and back-office support
• Everyone had an online owners information portal (which no one used) 
• From three different software providers, the sample accounts presented were similar
• Everyone had a license, SCA standard form agreements, and lots of awards
• Everyone had similar amounts of ‘combined experience’ within the office and a plethora of happy clients 
• Everyone was ‘committed’ to professional service, blah, blah, blah
• Total agreed fees and disbursements for the three fell within a $570 band. 

I could not have been more bored. 

No one showed me anything unique. And I knew these people. I knew they had some fantastic individual attributes, great experiences, and deeply held personal, and professional values. 

Some might argue this was a small block, so no one really cared enough to try. Perhaps, but I’ve seen many similar offerings for larger schemes with much larger fees. Cookie cutter proposals for new strata management business have long been endemic. 

So, when I read social media posts by strata managers getting angry that owners won’t value their services, I despair. Whose fault do you think this might be? 

My early career mentor, the late and great, Howard Stewart (ex BCS and SSKB) remains the best I’ve ever seen at winning new business. Part of his incredible success rate was his attitude. He would have said, in reference to this small block we are discussing, ‘Teasey, this isn’t about a $5,000 fee. It’s about getting an extra $20,000 when I sell my business.’ (In those days, much like now, the going rate for strata management businesses was about three times the base management fee and perhaps a multiple of one on the insurance commission.) 

On these numbers, and let’s leave insurance commissions out of the equation for now for obvious reasons, a block with a $35,000 annual fee is around $100,000 deposited to your future bank account. Viewed this way, maybe it’s worth trying a bit harder to stand out from your competitors.  

This month we completed a series of tutorials for a limited number of strata mangers reviewing their new business proposals, collateral and processes. If you would like to register your interest for our next intake in February 2025 let us know on admin@michaelteys.com.

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