A 2013 study on the success rate of newly established businesses revealed the causes of business failure, along with leading mistakes made by business owners. Many of these same problems plague the running of homeowner associations. ‘Forewarned is forearmed’, so read on for insights!
Nearly half of all failures were due to incompetence in basic financial knowledge, poor record-keeping, or not planning ahead. A third of failures were due to lack of managerial experience often leading to overextended financial obligations.
The leading management mistakes:
- Going into business for the wrong reasons
- Advice from family and friends
- Being in the wrong place at the wrong time
- Getting worn-out or underestimating time commitment required
- Family pressure on time and money commitments
- Lack of market awareness
- Falling in love with product/business
- Lack of financial responsibility and awareness
- Lack of a clear focus
Why did you choose to run for the Board? This is a question virtually every Board member has been asked or asked him or herself. Answers can range from “I want to give back to my community” all the way to “I must have lost my mind.” Anyone that has served on a Board, committee or as a Manager is most likely aware that it is not always those who step forward - but those who do not step back when it - comes to being elected to the Board.
Whatever your reason for deciding to serve, please remember that a Board position is very a critical part of Association governance. Without quality individuals on the Board, an Association can become irrelevant and ineffective. Just as every successful business has informed and dedicated individuals at the helm, an Association needs Board members who put forth the effort to educate themselves in the basic fundamentals of running an organization. By no means does it require an MBA or advanced degree to run the Association. It does mean however, that one cannot expect to just show up to a monthly or quarterly meeting, vote on a few matters and go home to wait for the next meeting.
The Board can ensure monies are spent wisely, quality vendors are hired and homeowners are encouraged to follow the Association rules. But realize you cannot solve every issue affecting community members. An easy trap in which you can fall is to feel that every homeowner complaint needs an Association response. The Governing documents control and if the area of concern is not addressed in those documents it is most likely not something the Board and/or Association should formally address. If barking dogs are not referenced in the documents, homeowners should be encouraged to call Animal Control. If on street parking is not mentioned in the Declaration, then inform a concerned homeowner to call the Police.
By familiarizing yourself with your Association’s governing documents and knowing what you can and cannot do, you will lower stress and improve effectiveness. Your contributions will not always be acknowledged but are appreciated, for it is the few who help the many to flourish.