Critical Steps to Operate your HOA like a Business

A homeowner’s association serves a community in many ways. Depending on the nature of your HOA, it might maintain common buildings, handle major repairs, deal with rules violations, and plan social functions.

These are multi-faceted organizations, run by volunteers who are also members of the community they serve. Too many HOAs get stuck in the weeds of disputes between neighbors and endless meetings that inevitably become complaint sessions.

The best cure for an inefficient HOA is a new mindset. It’s time to treat your homeowner’s association as a business. This new way of thinking helps avoid common pain points for both the board and the members of the community.

An HOA that is run like a business will operate more efficiently, communicate more effectively, and better serve the community as a whole. Let’s take a look at some ways to make this transformation.

Job Descriptions

In a business, everyone knows their job. The same should be true in your HOA. Board members should have designated roles and responsibilities. They should be well-documented and thorough, so every board member understands their duties.

Use your governing documents to guide these job descriptions. Every association will have different needs. Some common roles will include heading the budget planning committee, planning and running regular meetings, and being the contact for vendors.

Job descriptions are not only for the board. Community members are your greatest asset. They serve on committees and step up for special projects.

It’s a mistake to leave those roles undefined. For example, the members of your community who take part in budget planning need to know what is involved and expected before they accept the job.

And it is a job. Yes, everyone is a volunteer, but they still need to understand and accept the responsibilities of any position they fill. By establishing well-defined roles for both board and community members, you create a culture of competence.

Every board and community member who serves in one of these roles will feel engaged and included. Communities are more efficient and cohesive when everyone understands the job they are expected to perform.

The Budget Process

Creating an annual budget is a core responsibility of a homeowner’s association. It’s often the largest and most complicated process undertaken by the board and members. Running your HOA like a business means taking extra steps to ensure the budget is prepared properly and professionally.

Regardless of the size and scope of your HOA, you need to establish the procedures that will be followed each year. That includes designating responsibilities to individuals, small groups, and the entire budget committee. For many HOAs, it makes sense to work closely with a management company to help aid in the budget planning process.

It is also wise to review your HOAs governing documents as these documents probably contain a set of procedures the HOA must follow for the budget process. Depending on your organization they may be very general or extremely specific. Working within that framework, draw up a process that can be followed every year.

Continuity is key in budget preparation, especially for HOAs. Turnover of board and community members is common. The budget committee is unlikely to contain the same individuals year to year. This is why it is smart to work consistently with a management company and utilize HOA software that keeps track of historical budgeting information.

Having a set of predetermined procedures keeps budgets comparable year-over-year and decreases mistakes. This is a place to leverage the strengths of your members. Look for board and community members with budgeting experience to help the process run smoothly.

Use the Best Tools

As you set up a budget process, examine the financial tools your HOA is using. Every business should be using the best, most reliable tools available for financial planning and budget creation.

To create a realistic, functional budget, your HOA needs accurate financial forecasting and maintenance predictions. Don’t be afraid to use software to streamline these processes.

In some HOAs the use of software and other technology becomes a bone of contention. Some members want to keep things old-school or don’t understand the technology available.

When your HOA operates like a business you use up-to-date tools that provide the best outcomes. Keeping that business mindset makes it easier to advocate for positive change. You can’t run a business with outdated methods.

Since an HOA is not like a traditional business, keep in mind that sensitivity is always important. Volunteers may be more resistant to taking the time necessary to learn new skills.

Make arrangements for individuals and groups to learn how to use new technology. It’s not any different than introducing new software in the workplace. You wouldn’t expect an employee to use new technology without training. Don’t expect board or community members to learn without help.

Look for user-friendly financial planning tools. This decreases learning time and resistance. Homey’s financial planning platform makes it easier to read and visualize the historical data for your HOA. You can do long-term financial planning, assign tasks and deadlines to community members, and monitor monthly operating expenses all in one platform.

Your community members can use Homey to learn more about projects, assessments, and financial fundamentals. Use your tools to communicate regularly with community members so they feel informed and represented.

Any software you choose should benefit the board, the community, and any outside professionals you employ.

Outside Professionals

Running a business means trusting the experts. A well-run HOA relies on outside professionals. Just as your brother-in-law shouldn’t be your doctor, your next-door neighbor shouldn’t be the HOA’s lawyer.

Conflicts of interest aside, it’s important that your HOAs accountants, reserve analysts, and lawyers be impartial. Having qualified professionals look at your HOA with outside eyes helps identify areas of concern and keep the association healthy and in compliance with laws and regulations.

An HOA is not a DIY organization. You’re running it like a business because it is a business. Some homeowner’s associations are large, complex networks of property managers, vendors, employees, and volunteers.

Hiring professionals is essential to making the best decisions for the community. Your board’s fiduciary responsibility requires informed decision-making. For many HOAs those decisions depend on the input of professionals.

Business Meetings

Some of you dread HOA meetings. They can run off the rails quickly. Use your new mindset to run them like business meetings.

Set your agenda and expect everyone participating to prepare as they would for a meeting at the office. Communicate clearly what is expected, the timeline of the meeting, and the topics being covered.

That shift in approach can change the tone of the meetings from combative to professional. You don’t have to eliminate snacks and socializing, but when it’s time for the meeting, proceed according to a set of predetermined rules.

Every part of running your HOA like a business makes community members feel engaged and informed. An efficient meeting with set protocols reduces diversions and interruptions.

Make sure community members know how to voice concerns outside the meeting and that those concerns are addressed.

Company Culture

It seems weird to apply that term to your HOA, but it fits. When your HOA runs like a business, every community member becomes essential. The structure and professionalism you bring to budgeting and meetings make the HOA more efficient and effective in its core duties.

A community with a functional, professional HOA has greater trust in the board and the association as a whole. Being transparent about the inner workings of the organization makes everyone feel included and engaged.

Your community is stronger when your HOA works better. Treat it like a business and reap the benefits of better relationships with your neighbors.