Commercial Vision and Strategy The 4 Corners of Your Commercial Vision
Series Overview| Commercial Vision and Strategy 1. The 4 Corners of Your Commercial Vision 2. Business Income and Strategy Template 3. Business Equity and Valuation Principles 4. Personal Income and your Freedom Number 5. Personal Equity and your Net Worth 6. Finalising your Commercial Vision and Strategy
Series Overview| Commercial Vision and Strategy 1. The 4 Corners of Your Commercial Vision 2. Business Income and Strategy Template 3. Business Equity and Valuation Principles 4. Personal Income and your Freedom Number 5. Personal Equity and your Net Worth 6. Finalising your Commercial Vision and Strategy
JACOB ALDRIDGE | businessDEPOT Real Estate business coach #RealReach Co-Founder 18 years industry experience jacob@realreach.com.au @jacobaldridge
INCOME 4 Corners| Commercial Vision PERSONAL Start with Business Income . BUSINESS Build cash flow and profit so you have the funds to convert Business Income into Personal Income and Business Equity . Business Equity creates more Business Income. It also counts towards your Personal Equity (though you may want other investments). Financial Independence is having Personal Equity fund your Personal Income ambitions. What’s your Vision for each of your 4 Corners? EQUITY
INCOME $701,376 pa $200,000 pa Business Class 4 Corners| Commercial Vision Location trip to Paris Independent (every week) PERSONAL Start with Business Income . BUSINESS Build cash flow and profit so you have the funds to convert Business Income into Personal Income and Business Equity . 8 x Multiple $14,480,000 Business Equity creates more Business Income. It Aligned Partners Property, Shares, also counts towards your Personal Equity Portfolio of (though you may want other investments). Businesses Financial Independence is having Personal Equity fund your Personal Income ambitions. What’s your Vision for each of your 4 Corners? EQUITY
INCOME 4 Corners| Commercial Vision PERSONAL Start with Business Income . BUSINESS Build cash flow and profit so you have the funds to convert Business Income into Personal Income and Business Equity . Business Equity creates more Business Income. It also counts towards your Personal Equity (though you may want other investments). Financial Independence is having Personal Equity fund your Personal Income ambitions. What’s your Vision for each of your 4 Corners? EQUITY
Key Takeaways| The 4 Corners of Your Commercial Vision 1. There are 4 Corners to your Commercial Vision: Business Income, Personal Income, Business Equity, and Personal Equity. 2. Growing Wealth through Business means starting with Business Income, and sustainably building that to fund all 4 Corners. 3. Your Personal Vision is more powerful than your Business Vision, so it’s essential they align.
Commercial Vision and Strategy Business Income and Strategy Template
Series Overview| Commercial Vision and Strategy 1. The 4 Corners of Your Commercial Vision 2. Business Income and Strategy Template 3. Business Equity and Valuation Principles 4. Personal Income and your Freedom Number 5. Personal Equity and your Net Worth 6. Finalising your Commercial Vision and Strategy
INCOME 4 Corners| Commercial Vision PERSONAL Start with Business Income . BUSINESS Build cash flow and profit so you have the funds to convert Business Income into Personal Income and Business Equity . Business Equity creates more Business Income. It also counts towards your Personal Equity (though you may want other investments). Financial Independence is having Personal Equity fund your Personal Income ambitions. What’s your Vision for each of your 4 Corners? EQUITY
Business Income| Strategy Template Revenue Gross Profit Net Profit
Key Takeaways| Business Income and Strategy Template 1. Revenue is Vanity, Profit is Sanity (and as you’ll see in our Accounting Course, Cash is King). 2. Know Your Actual Financials at a simple or more detailed level. 3. Map Your Vision across both short term and long term ambitions. 4. Connect Vision to Strategy by reviewing the #RealReach ‘Radar Diagnostic’ or ‘Contextual Business Plan’ templates. Now you have set your Target for next year – what do you need to prioritise and what expert guidance will you seek?
Commercial Vision and Strategy Business Equity and Valuation Principles
Series Overview| Commercial Vision and Strategy 1. The 4 Corners of Your Commercial Vision 2. Business Income and Strategy Template 3. Business Equity and Valuation Principles 4. Personal Income and your Freedom Number 5. Personal Equity and your Net Worth 6. Finalising your Commercial Vision and Strategy
INCOME 4 Corners| Commercial Vision PERSONAL Start with Business Income . BUSINESS Build cash flow and profit so you have the funds to convert Business Income into Personal Income and Business Equity . Business Equity creates more Business Income. It also counts towards your Personal Equity (though you may want other investments). Financial Independence is having Personal Equity fund your Personal Income ambitions. What’s your Vision for each of your 4 Corners? EQUITY
Valuation = REVENUE x MULTIPLE AAMI $ x $x.xx
AAMI = AVERAGE ANNUAL MANAGEMENT INCOME # Properties x $ Avg Weekly Rent x % Avg Commission x 52
MULTIPLE = DETERMINED BY THE MARKET (Outside of your Control) (Not True!)
Valuation Multiple| You Can Control Your Multiple FACTORS THAT DECREASE YOUR MULTIPLE FACTORS THAT INCREASE YOUR MULTIPLE High tenant turnover Long term tenants • • Low quality properties Above average quality properties • • Low demand – eg, regional agencies Higher average commission • • A portfolio that is geographically dispersed High demand – eg, suburban agencies • • High staff turnover Quality implemented systems – well trained • • Poor compliance team, tenants, landlords and suppliers • Poor rent roll condition – high arrears, periodic Other inclusions – Brand, team, office • • tenancies etc Recent, high comparable sales • Concentrated Landlord base • Motivated or desperate vendor • Global Financial Crises • But there are always exceptions
Business Equity| Strategy Template Valuation
Key Takeaways| Business Equity and Valuation Principles 1. There are established Valuation Principals for real estate businesses. 2. It pays to build a relationship with a Valuer and/or Rent Roll Broker, even if you’re not looking to leverage or sell your business yet. 3. You Can Control Your Multiple so don’t focus just on Income. 4. Keep connecting Vision and Strategy You now have Sales Targets, Property Management aspirations, and some simple financial KPIs. What are you going to change or do differently to achieve those?
Commercial Vision and Strategy Personal Income and Your Freedom Number
Series Overview| Commercial Vision and Strategy 1. The 4 Corners of Your Commercial Vision 2. Business Income and Strategy Template 3. Business Equity and Valuation Principles 4. Personal Income and your Freedom Number 5. Personal Equity and your Net Worth 6. Finalising your Commercial Vision and Strategy
INCOME 4 Corners| Commercial Vision PERSONAL Start with Business Income . BUSINESS Build cash flow and profit so you have the funds to convert Business Income into Personal Income and Business Equity . Business Equity creates more Business Income. It also counts towards your Personal Equity (though you may want other investments). Financial Independence is having Personal Equity fund your Personal Income ambitions. What’s your Vision for each of your 4 Corners? EQUITY
INCOME 4 Corners| Commercial Vision PERSONAL Start with Business Income . BUSINESS Build cash flow and profit so you have the funds to convert Business Income into Personal Income and Business Equity . Business Equity creates more Business Income. It also counts towards your Personal Equity (though you may want other investments). Financial Independence is having Personal Equity fund your Personal Income ambitions. What’s your Vision for each of your 4 Corners? EQUITY
Personal Income| Sources and Breakdown (ROLE/S) (SHAREHOLDER) MANAGEMENT SALES PTY MGT DIVIDENDS $100,000 - - - $100,000 $100,000 - $80,000 - $20,000 $250,000 $100,000 $100,000 $50,000 - $250,000 - - - $250,000 $1 MILLION - $900,000 - $100,000 $1 MILLION $500,000 - - $500,000
Key Takeaways| Personal Income and Your Freedom Number 1. Do You Know Your Number? What annual income do you ‘Need’ and what annual income do you ‘Want’? 2. How Might this be Sourced? What split across various functional roles and dividend income from your equity investments? 3. How Does this Impact Your ‘Freedom Number’? Watch the next lesson to better understand how your Personal Equity goals are calculated by multiplying ‘Your Number’ by ‘Your Risk Profile’
Commercial Vision and Strategy Personal Equity and Your Net Worth
Series Overview| Commercial Vision and Strategy 1. The 4 Corners of Your Commercial Vision 2. Business Income and Strategy Template 3. Business Equity and Valuation Principles 4. Personal Income and your Freedom Number 5. Personal Equity and your Net Worth 6. Finalising your Commercial Vision and Strategy
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