So this is where Strategy (planning) merges with Tactics (action) – let’s start with the numbers

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1. Why “Knowing Your Numbers” Isn’t Optional

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Ignorance = Instability. Most letting agency owners are operators, not financiers—focused on solving problems for landlords and tenants, not scrutinising spreadsheets. But if you don’t know your margins, your breakeven, or your client value, you’re flying blind.

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Objective: Shift from being a reactive letting operator to a financially literate business owner who can scale, sell, or survive under pressure.

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2. Build Your Financial Dashboard – The 5 Core Numbers

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A simplified P&L (profit and loss) mindset helps you make better daily decisions.

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• Revenue – Your total income by service category. Break it down:
  e.g. £80,000 from Fully Managed, £25,000 from Let Only, £15,000 from Rent Collection.

• COGS (Cost of Goods Sold) – Direct labour and service delivery costs (e.g. staff time on inspections, maintenance handling, gas safety coordination).

• Gross Profit – Revenue minus COGS. This shows how efficiently you deliver services.
  Aim for 50–60%+ in a lean letting agency.

• Overheads – Fixed and variable costs not tied to service delivery: office rent, software subscriptions, marketing, salaries.

• Net Profit – The bottom line. After all bills, how much do you actually keep?

• Healthy target: 15–25% net profit in a well-run agency.

 

3. Calculate Your Break-Even Point

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This is the number of properties you need to manage to survive.

Use the formula: Break-Even (£) = Total Fixed Costs ÷ Gross Profit Margin (%)

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Example:

• Fixed costs = £60,000/year

• Gross Profit Margin = 60%

• Break-even = £100,000 turnover needed just to stay afloat

 

Then convert that to properties:

If average monthly management income is £100 → £1,200/year → you need ~84 fully managed properties to break even.

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4. Know Your Client Lifetime Value (LTV) – more difficult to assess in the lettings game but look to the past for an estimate.

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LTV is the total value of a client over the time they stay with you.

LTV Formula: Average Monthly Fee × Average Retention (in months) – Acquisition Cost

 

Example:

• £100 monthly fee × 36 months = £3,600 gross

• Minus £400 marketing cost to win them = £3,200 net LTV

 

Focus: Extend retention, increase service fee, or cross-sell additional services (e.g. compliance packs, inventories).

 

5. Measure Your Client Acquisition Cost (CAC)

 

Your CAC tells you how much it costs to get one new landlord.

CAC Formula: Total Sales & Marketing Spend ÷ New Clients Won

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Example:

• You spent £1,500 on Google Ads, local sponsorships, and a leaflet campaign

• You gained 5 new clients → CAC = £300

 

Healthy Benchmark: CAC should be no more than 1/3 of your LTV. If it’s higher, your marketing isn’t converting or your client value is too low.

 

6. Prioritise Recurring Revenue Over One-Off Fees

 

One-off income (like Let Only fees) is nice, but it doesn’t build business value.

• Recurring Income = Saleable Value
  Fully Managed clients are worth 2–3× revenue when selling your agency.

• Let Only = Job, Not Business
  Often valued at 0.5× turnover (if at all) because there's no ongoing income.

 

Strategy: Create value ladders. Offer compliance add-ons. Convert Let Only to Managed by educating landlords on risk and regulation.

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7. Master Your Cash Flow

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Cash flow is about timing, not just totals. Many profitable agencies still run out of cash.

• Do a 13-Week Rolling Forecast:
  Plot expected rent collection vs. payroll, VAT, tax, supplier costs.

• Watch for traps:
  Delayed contractor invoices, seasonal repair spikes, and renewal bulk payments (e.g. insurance) can crush cash flow if unplanned.

 

Tools: Use a spreadsheet, or integrate your property management system with accounting software (e.g. Xero + Arthur/Alto).

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8. How to Value Your Letting Agency - how far do you have to go to reach your end goal

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Buyers and investors look for stable recurring income and clean accounts.

• Valuation = EBITDA × Multiple
  EBITDA = Profit before tax, interest, depreciation,
  Typical agency multiple = 2x–3x for a clean, well-run portfolio

 

To boost your valuation:

• Reduce owner dependency

• Document systems and processes

• Tighten up record-keeping and compliance

 

9. Use a KPI Dashboard to Track Your Numbers

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A monthly dashboard lets you steer the business—not just react.

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KPI.                      TARGET.      ACTUAL.   COMMENT.         

Properties         

managed            150.               138.             On track

Avg. Monthly

Fee.                       £95.              £87.             Room for uplift.   

Acquisition

Cost.                     £300.           £450.         Too high - review.  

Lifetime Value

(LVT).                    £3,500.       £2,800.      Focus on retention.  

Net Profit

Margin.                20%              14%              Watch spending.         

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Tip: Review KPIs monthly and share insights with your team—even if it’s just you and a VA.

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Accountability drives results.

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10. Action Plan: Build Your Financial Rhythm

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1. Weekly Pulse Check

   • Review rent income, arrears, cash on hand

2. Monthly Financial Review

   • Full P&L, CAC, LTV, KPI dashboard

3. Quarterly Strategic Review

   • Update targets, assess marketing ROI, optimise pricing

4. Annual Planning

   • Set profit goals, team structure, growth plan, and sale readiness

 

Discipline is freedom. Know your numbers = make smarter, calmer decisions.

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Then make a plan to reach where you want to be in the future!