THE ESSENTIAL ELEMENTS TO CREATE A SUCCESSFUL BUSINESS

THE ESSENTIAL ELEMENTS TO CREATE A SUCCESSFUL BUSINESS

For a small (or even a large) business to be successful requires 5 essential elements.

1.      Good management.

2.      Systems.

3.      The right staff.

4.      Top class state of the art training.

5.      “A Name”.

Looking at these in reverse order;

            “A Name”? This is the reputation of the business not necessarily the fact that it is part of a well known group or franchise. Noble has been part of enough groups to know that the while the name of the front door may be the same, the “Name” varies widely depending on the individual branches attitude to all the other elements.

            Training. There has been a variety of phases in training in our industry and I am sure this has applied in others. The governments have tried to compel training in business with varying success.

            A few home truths about training;

A.     You can’t teach anyone anything they are not ready to learn. If you force an individual to train they will actively fight the acquisition of knowledge.

B.     An employee’s attitude to training reflects directly in their attitude at work. I have never yet seen someone unwilling to train who went to the top in his career.

C.     There is a huge difference between “knowing” and “doing”. Most training is wasted because it never hits the road, but just remains notes on paper.

D.     The implementation of knowledge is more important than the acquiring.

The right staff. The best thing in the book “Good to Great” is the requirement to

“Get the right people on the bus, the wrong people off the bus, then get the right people in the right seats on the bus”. In order for a business to grow and prosper in the long term, management has to follow Michael Gerber’s plan in “The E Myth” and make themselves dispensible. This can only be achieved through management delegating and that will only occur where management has faith in the staff.

Systems The more systematic the approach to the daily functions of the business, the smoother the operation and the less stuff ups are likely to occur. Systems will also influence how quickly the stuff ups are corrected. They also overcome problems associated with key staff being on leave as their replacement will be able to operate efficiently.

Management This is the most important of the key factors as management decisions control all the other elements. The key here is for management to work towards making their people capable of running the organisation without them so the business will survive independent of any one person.

If you are an individual operator such as a real estate salesperson, think of yourself as a business and apply the same approach. The Americans love “buzz” words and they have a term for someone working as a small business inside someone else’s business. They refer to them as “intrapreneurs” rather than entrepreneurs. It still works.

In today’s world with many businesses unable to survive, it may seem too late to start down this road. Naturally the best time to have begun was when times were good but if this plan is not in place now then when will you begin?

Ross Cutten

Owner / Director

Noble Real Estate

WILL THE SECOND .25% INTEREST DEDUCTION REVIVE THE SALES MARKET?

WILL THE SECOND .25% INTEREST DEDUCTION REVIVE THE SALES MARKET?

7.12.11

The simple answer is no.

The current low demand from homebuyers compared to sellers is attributable more to a lack of confidence than the rate of interest.

Buyers fall for the trap of trying to pick the bottom of the market and they will fail, but it will not stop them trying.

The one area where the drop in interest rates may affect buyers is with investors.

We have only 2 properties vacant in our rent roll of over 500 managements which makes the vacancy factor less than .4%.

REIWA’s vacancy factor is 2.4% (average is 3-3.5%).

According to the forecasters that should lead to higher rents being charged next year, increasing returns.

We already have property with gross rentals above 5%, which is the level at which investors have bought in previous years.

So watch this space.

Ross Cutten

Owner / Director

Noble Real Estate

THE TWO TYPES OF PROPERTY MANAGEMENT

THE TWO TYPES OF PROPERTY MANAGEMENT

One of the most important questions someone looking at having their property managed should ask is; “Do you have a Tiered or Portfolio system of operation?”

What is the difference?

In a tiered system the various duties are the responsibilities are handled by a number of different people in the Property Management Department.

The viewings may be handled by one staff member, while someone else chases rent arrears and a further person is responsible for quarterly inspections.

In a portfolio system, one Property Manager looks after all the duties with the possible exception of the administrative tasks such as end of month payout.

It has been our experience that business owners prefer the tiered system while Owners and Property Managers prefer the portfolio style.

We operate the portfolio style as we are more interested in what our owners want than what we might prefer.

To find out the relative advantages and disadvantages please phone Ross Cutten on 041 9944 029 or Rebecca Cutten on 0404047205.

Ross Cutten

Owner / Director

Noble Real Estate

PROPERTY MANAGEMENT MYTHS

PROPERTY MANAGEMENT MYTHS

There are some strange ideas in the world of property management which owners pick up from various uninformed sources. I will try to address some of the most common misconceptions I have come across in over 2 decade’s involvement in this business.

“There is no need to have rental protection insurance if I use a professional property manager.”

 I cannot think of a single investment that does not involve some element of risk, whether stocks, bonds, futures or even bank accounts.

Residential real estate has a history of offering sound investment, however the unforeseen can happen and this can impact the flow of rental income. The trick is to be prepared.

Take the following for example:

Good tenant, excellent references, been employed by the same company for a number of years. For three years he is the ideal tenant and, always pays rent on time. The tenant loses his job or his wife leaves him for the next-door neighbour and he is left with children to support and no income. Now he would not be considered such an ideal tenant.

A professional property manger puts all applicant tenants through a rigorous screening process at the start of a tenancy to select the best tenants.

However, just like a job applicant, we see them at their best.

In addition, we cannot predict the future of their employer or their marriage.

Regardless of how good the property manager is or how many reference checks are done; there is no way of predicting potential complications to rental income flow.

So just like it is prudent to carry insurance against fire, we recommend owner’s insurance against these sorts of problems.

The best part is the insurance is cheap and the cost is a tax deduction.

Ross Cutten

Owner / Director

Noble Real Estate

HOUSING AFFORDABILITY FOR FIRST HOMEBUYERS

HOUSING AFFORDABILITY FOR FIRST HOMEBUYERS

Lately there has been much said about the supposed high price of homes making buying unaffordable for first homebuyers.

At the risk of sounding like a spoilt baby boomer who had it so easy, I beg to differ.

When my wife and i got married we were fortunate enough to be able to move into our own home straight from our honeymoon.

We built our first home on a modest block in Gosnells.

In order to buy it I had to have a 10% deposit and the cost of the house and land was 5 times my annual income.

Here is where the difference arises.

It consisted of a 120 square metre 3 bed 1 bath house with lounge, dining, kitchen, meals area and a built in robe to the main bedroom.

Now for what it didn’t have.

It lacked floor coverings, window treatments, light fittings, driveway, carport or garage, fencing, landscaping, patios, pergolas, air conditioning, fencing, or anything else.

We endured 2 winters on the concrete raft while we saved for the floor coverings and window treatments.

In the Rockingham district there are plenty of homes including extras available for 5 times a first home buyers income, but they aren’t prepared to accept such a modest start.

There is one other difference.

We had no credit cards.

Ross Cutten

Owner / Director

Noble Real Estate

THE HAPPINESS INDEX AND THE IDEA OF CHOICE

THE HAPPINESS INDEX AND THE IDEA OF CHOICE

I saw a new item on TED yesterday in which researchers had scored countries in terms of their level of happiness.

It was fascinating to watch and Australia surprisingly seems to rank only in the middle of the countries studied.

I also saw a programme on the ABC called Big Ideas featuring a discussion which also touched on the development of cities and people’s sense of attachment to the place where they live. The programme also mentioned people’s happiness and their sense of belonging to a community or place.

They mentioned something which has dawned on me as I have grown older and that was how people’s sense of happiness and their sense of having choices are related.

Quite some years ago I was trying to discover a simple key to what all human beings have in common and what it is that everyone is pursuing.

My conclusion; Everyone wants to be happy.

It seems simple enough except that everyone’s idea of happiness is different.

So, the conclusion I came to is that most people complicate this too much- simply find what makes you happy and do more of that- discover what makes you unhappy and do less of that.

When I have talked to people about this in the past they react in predictable ways.

Most often they provide me with a list of HAVE TOs.

You know the sort of thing, “I have to go to work, I have to take care of my kids”.

Lou Tice of The Pacific Institute pointed out years ago that you don’t actually have to do anything- life is a choice. The only thing you truly have to do is take up space. ( I am always happy to discuss these ideas directly).

The older I have become the more I am convinced that the happiest people are those who FEEL they have a sense of control over their lives and are able to choose they way they live.

If you are going to measure the success of your life by what other people are buying, doing, or pursuing then you will have no sense of control because the source of your motivation lies outside your choices. You will be a slave to others choices.

I am currently staggered by the sense of lack that exists where I live in the most prosperous times in the most prosperous State in the best country in the world, both economically, politically and socially.

How does all this relate to property?

When you are renting a home rather than bought, you cannot develop a sense of belonging to a place because, if the owner wants his property back, you are obliged to move on.

In my opinion one of the best places to start developing a sense of control is to put down roots in a place that feels like home.

Ross Cutten

Owner / Director

Noble Real Estate

LETS GET REAL ABOUT BUYING OVER THE WEB

LETS GET REAL ABOUT BUYING OVER THE WEB

I heard a discussion recently on a community radio station about how people could and were buying products increasingly over the web and the conversation concluded with the announcer declaring that retailers would “...just have to get their act together”.

I recently made myself fairly unpopular with some friends who were discussing how much cheaper they could buy motor vehicle parts from the USA and were grumping about how they were being ripped off, when I pointed out some of the realities of being an employer in Australia.

In our modern, fast paced world it seems few people have time to look behind the quick sound bite or headlines to explore what is actually going on.

First some reality about competition if you are in the business of retailing...the only means you have of competing is on price.

So let’s look at how uneven the playing field for our retailers compared to the USA.

The minimum wage in the USA Federal $7.25/hour Highest state Washington $8.67 for a 40 hour week.

Australia’s is $15.51 for a 38 hour week.

With close to parity in the dollar that means we get paid twice what workers in the USA get.

Annual leave USA under Federal law reqirements........none Usual 10 days annual leave.

Australia 20 days plus 10 public holidays plus annual leave loading 17.5% (non-existant in the USA).

Sick leave.....USA no entitlement.

Australia 10 days including compassionate leave extending from grandparent to grandchild.

Not many people can explain long service leave here in Australia even though all workers have the entitlement so I will explain.

When Australia was being settled there was no local people qualified to run things such as public works or water supply so they had to be recruited from The dear old mother country, the UK.

As an inducement these employed were guaranteed 6 months Long Service Leave every 6 months.

Why 6 months?

So they could take a trip by boat taking 6 weeks to get “home”, have 3 months at “home” and take 6 weeks to sail back.

This leave entitlement still exists even though almost no-one calls England “home” and you can be there in 18 hours by jet.

We have not yet considered maternity leave nor some of the myriad other occupational health and safety laws, unfair dismissals or other laws imposed on Australian employers that many other countries are not subject to.

Please don’t misunderstand, I am not suggesting we reverse the benefits we have.

I am simply saying that before you criticise local retailers you had best take another look at how difficult it is for these traders to compete and recognise that the playing field is far from level.

We also need to understand that the way a modern economy works each of us needs to have our customers employed to sustain our own standard of living.

If you are buying from overseas under $1,000 GST free that is 100.00 not going to your tax office.

Ross Cutten

Owner / Director

Noble Real Estate