Non-Profit Success and For Profit Strategies

Asked to pick the ten largest home builders in the USA, you might throw out the names of large publicly traded companies (KB Homes, Ryland, etc.) If those names did not come to mind, you might be able to reach back into your memory of public access TV advertisements and recall the name of some regional home builders to add to the list. Rarely would you pick the surprise #8 appearance on Builder Magazine’s recently published Top Ten List: non-profit organization Habitat for Humanity.

Dawn Wotapka of the the Wall Street Journal observes, “Habitat’s ability to out-build some of the nation’s largest corporations partly reflects the insatiable demand for affordable housing in a nation where more than a quarter of the population can’t afford a median-priced home in their area.”

Here is a link to Wotapka’s in depth article from the Wall Street Journal that discusses the unique development further.

This article drew my attention to two things:

1) The importance of continuing to support non-profit organizations which are making a difference in our country despite having their budgets slashed.

2) The degree to which corporations have put the brakes on their productive output. The implicit message in the article is that businesses are increasingly focusing on reducing operating expenses. Everyone has shifted to a cost-savings focus.

As you refine your cost savings plan, one variable that is important to consider is your company’s rent-to-revenue ratio. This is a simple calculation: How much of your revenue do you pay out in rent every year? The standard ratios vary from industry to industry, but it is important to consider the fact that despite dramatically reduced revenues many companies are now paying 4 or 5% annual increases on the premium rents that were signed into place three years ago. The result is an unhealthy percentage of revenue leaving your books. This may be a good topic for discussion with your operations team. If you can reduce your operating expenses faster than your competitors you can grab market share now before everyone else ramps up their marketing budget.

As a corporate real estate advisor and tenant leasing representative, I am committed to helping you design and implement a cost savings plan that meets your company’s specific needs now and in the future. Please contact me anytime to discuss specifics. In the meantime, please continue to support worthwhile non-profit causes.

Author: Liam Murphy

Liam Murphy is a partner at Hayes Commercial Real Estate and supports many national clients in their commercial real estate needs. He holds the distinguished Certified Commercial Investment Member (CCIM) designation as a recognized expert in the disciplines of commercial and investment real estate. Less than 6 percent of the commercial real estate practitioners nationwide have earned the CCIM designation.

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