Advice and Opinion

Should a body corporate be run like a business?

Although a body corporate is a not for profit organisation and its aim is not to “make” money, it is still important for the trustees to see it as a cooperative business and run it as such, says Johann le Roux, executive director of Propell.

The object of the “business” in this sense, he said, is to preserve, protect and enhance the investment in the property by managing it well.

This is where the trustees of the body corporate have an important job, as “directors” of the company. They are holding a tremendous responsibility in what could be a multi-million rand investment. They are responsible for the day to day management of the scheme, which, if done well, affects its financial standing and, in turn, its value.

Businesses buy and sell stock and in order to do this, said le Roux, they need to have working capital. In the same way, a body corporate needs working capital to ensure that the running of the sectional title scheme is done properly – to maintain the “stock’s” value.

There are sometimes projects that businesses tackle, such as overhauling equipment or premises, and the same processes are usually followed in estates where the buildings are in need of repair or maintenance, he said. There will be planning involved, budgeting and then, finally, project management.

The value of an investment in a sectional title scheme is affected by many internal and external factors and these, too, can be either managed or influenced by the trustees by being proactive in sorting things out when they need to be, just as you would address problems in the day to day running of a business.

Good management skills are necessary and in the case of a sectional title development, it is usually physical management needed. This is why trustees should have a “hands-on” approach to all administrative duties that need to be done and protect the scheme against bad decisions possibly being made.

“Being a trustee of a body corporate, while it is hard work and can be time consuming, can also be a rewarding experience,” he said. “There are not only opportunities to improve the quality of life within your scheme, but also to protect and, possibly even increase, the value of the investment.”

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