Bottom Line: Growth Strategies

How to hire advisers who are expansion-minded
Professional advisers who understand corporate growing
pains can help apartment developers and owners expand
their operations with less angst.

By Marcie Geffner

APARTMENT FINANCE TODAY November/December 2005 — Small- and mid-sized multifamily housing companies need accountants, attorneys and other consultants to help them grow into larger and more successful entities.

The fact that some professionals welcome change and believe in growth while others dislike change and prefer the status quo means apartment owners and developers should consider this “orientation” factor when they hire such advisers. But how can savvy developers and operators assess whether a professional adviser has a broad, aggressive, pro-growth outlook or a narrow, conservative fixation on compliance and containment? Here are some tips on how to find advisers who can help take a company to the next level.

Trust is important in business relationships, but it’s only one of the factors that should determine the selection of a professional services provider, according to John Armour, a certified public accountant with Mayer Hoffman McCann in Denver. Rather than relying too heavily on a casual personal recommendation from someone who might not understand a company’s business strategy, developers and operators should focus on a professional’s expertise and experience and the degree to which those qualifications reflect his or her growth orientation as well, Armour advised.

“People pick professionals for the dumbest reasons,” he said. “The [person] least likely [to be the best-qualified candidate] is someone your brother-in-law knows or someone who was in your college fraternity.”

Growth: Past, present and future

An assessment of a professional adviser’s growth orientation might start with a peek at the person’s experience and the experiences of his or her clients.

“Make sure [the advisers] are growing their own organization,” Armour said. “Growth is about change. If the professional isn’t experiencing that and doesn’t know what it feels like to have that happening in his own organization,” he might not understand the needs of a growth-oriented company.

Likewise, a professional who has assisted other fast-growing clients might have a bias toward growth, while a professional whose clients are stable companies might be inclined to quash aggressive expansion plans, said Michael Fritsch, CEO of business consultancy Prometheus Performance Systems in Austin, Texas.

Real-world experience counts. “Someone who only has [small] clients could have a growth orientation and want to grow with you, but someone who has actually grown with clients could really make a difference,” he said.

Growth-oriented professionals should be able to share information about the typical concerns that arise for businesses similar to yours that have experienced growth and explain how they assisted those businesses with those concerns, Fritsch added.

More clues as to a professional’s growth orientation might be found in reports prepared for other clients, according to Kenneth E. Lehrer, managing director of Lehrer Financial and Economic Advisory Services in Houston. He provides copies of his own feasibility, economic and market studies to prospective clients. Documentary evidence of past projects is “the key” to choosing the right provider for such services and is “the only way to see whether a person is forward-looking and has their act together,” he said. Without work samples, professionals can “tell you anything they want to, but it may not be the truth,” he cautioned.

Breadth of knowledge is telling

Other qualifications naturally should be considered as well. For instance, Lehrer believes hands-on real estate experience and breadth of economic knowledge are important qualifications for professionals who prepare reports or other analyses.

“Certain reports are better than others. If the maker of the report has had actual hands-on real estate and banking experience and can blend economics, finance, banking [and] demographics, you’re okay. If not, I wouldn’t say you’re wasting your money, but let’s just say it’s not exactly what you really need,” he declared.

Others argue that real estate-specific experience isn’t necessary for general business consultants, although it may be crucial in technical areas such as law and finance.

“For the non-attorney, non-CPA, looking beyond real estate could have tremendous value. I know this sounds a little self-serving, but there is a wealth of information that has the potential to be really valuable even though it’s not real estate-centric,” Fritsch said.

A professional’s special skills within his or her profession are important too, according to Nan Andrews Amish, a marketing and management consultant with Big Picture Perspectives in El Granada, Calif.

“I really want to know: What’s the forte of this attorney or marketing consultant or accountant? They can have similar background and credentials, but that doesn’t mean they have the same skills. When you want to grow, you want someone who can look at the whole mix and ask: What are you good at?” she said.

A professional’s access to a network of other people of similar caliber, orientation and skills who provide such services as insurance brokerage, human resources and the like is also important, according to Armour. Informal or formal professional networks – whether they are within other divisions of the same firm or include outside advisers as well – are “an important piece of finding professionals who have proved their worth,” he said.

Are references valuable?

Experts disagree on whether professional references provide a good indication of a professional’s orientation or other qualifications. Fritsch said asking for and checking professional references is “pretty basic” and useful; Armour concurred, but Lehrer dismissed the practice as uninformative.

“Everybody can find someone who will say something good about them,” he said.

Finally, Armour and Amish both recommended a small initial assignment as a good way to assess any professional’s performance and suitability for a larger project or broader business relationship.

“You don’t have to spend $10,000 to get to know someone,” Amish said. “You could spend $400 or $500, and if it doesn’t work out, you walk away from it and try the next person. … Even with the best credentials and the best references on the entire planet, you may find out that person’s not for you.”