Reducing Costs in Your Management Rights Business

All businesses face the necessity and reality of expenses. However, when was the last time you reviewed the expenses in your Management Letting Rights business?

Given that your income can often remain unchanged for long periods of time (unless you are subject to rapid fluctuations in your letting pool), reducing your expenses is a quick and relatively easy way to increase your bottom line and put more money in your back-pocket.

Ways to Reduce Costs of your Management Letting Rights

Expenses are always tricky as you must ensure that the reduction in expenditure does not compromise services or quality. However, savings can often be made.

Start by looking at your regular and fixed outgoings:

  • Can trade agreements be negotiated to secure better deals?
  • Can you buy in bulk and benefit from cost saving?
  • Are you buying the best and cheapest products ensuring you get the best value for your money?
  • Will your suppliers provide you with special rates for exclusivity and regular work?
  • Can you benefit from off-peak rates?

It is necessary to conduct regular review of your outgoings while upholding your standards and reputation. This practice enables you to pinpoint potential opportunities for cost reductions or optimisations without compromising the quality of your services. 

When looking at the administrative side of the business when providing letting pool support, you will need to look at:

  • Utilising cloud based software for more efficient management of letting pool
  • Redesigning processes to eliminate duplication of time and effort;
  • Identifying any manual processes which can potentially transitioned to computerised systems;
  • Considering agreeing to long-term supplier contract in return for lowed pricing or negotiated longer payment terms;
  • Conducting a “tech audit” – look at your existing software platforms, are you getting value-for-money through these providers? Are there alternative systems you can consider for greater return-on-investment?

Likewise, when undertaking various caretaking tasks and engaging in other business-related activities, it is essential to consider:

  • Screening contractors diligently, selecting those who can efficiently resolve issues and perform routine maintenance;
  • Outsourcing specific tasks if it allows you to allocate your time more effectively in areas where it can generate greater value.

Generating Tax Efficiencies for your MLR

Another area to look at when reviewing your expenses and cashflow is your current tax situation.

The questions of "am I paying too much tax?" is often common and certainly valid, where running your MLR business. In understanding this, it is important to analyse a number of factors - both personally and for the business:

  • Assess your tax rate and opportunities to reduce it;
  • Evaluate your spouse's tax situation, especially if they are not involved in the business;
  • Review the family income structure for potential tax advantages;
  • Ensure that gearing is applied to the right assets and maximising tax benefits;
  • Optimise superannuation strategies, including salary sacrificing and spouse-splitting;
  • Evaluate insurance premiums and their payment structure in relation to your family situation;
  • Assess the efficiency of FBT, GST, and dividend payments

To assess individual circumstances, it is important to speak with a specialised business adviser (such as Archer Gowland Redshaw), who can build an individual profile of your tax position and assist in identifying greater opportunities for tax efficiencies.

For More Information

For more information, please contact the team at Archer Gowland Redshaw on (07) 3002 2699 |

Alternatively, access our free eBook Increasing the Profitability of Your Management Rights Business - which holds a number of tips, a list of key success factors, and ways to generate greater income for your Management Rights business.

Smiljan Jankovic

Written by Smiljan Jankovic

As Managing Director, I provide extensive experience in the provision of taxation planning and management advice, and specialise in buying and selling of management rights businesses and audits of trust accounts. My main responsibility is to build deeply engaging relationship with clients and mentoring and assisting their growth.