Commercial Vision and Strategy The 4 Corners of Your Commercial - - PowerPoint PPT Presentation

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Commercial Vision and Strategy The 4 Corners of Your Commercial - - PowerPoint PPT Presentation

Jan 09, 2024 297 likes •831 views

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

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Commercial Vision and Strategy

The 4 Corners of Your Commercial Vision

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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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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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JACOB ALDRIDGE | businessDEPOT

Real Estate business coach #RealReach Co-Founder 18 years industry experience jacob@realreach.com.au @jacobaldridge

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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

$701,376 pa Business Class trip to Paris (every week) $200,000 pa Location Independent 8 x Multiple Aligned Partners $14,480,000 Property, Shares, Portfolio of Businesses

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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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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.

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Commercial Vision and Strategy

Business Income and Strategy Template

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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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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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Business Income| Strategy Template

Revenue Gross Profit Net Profit

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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?

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Commercial Vision and Strategy

Business Equity and Valuation Principles

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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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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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Valuation =

REVENUE x MULTIPLE AAMI $ x $x.xx

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AAMI =

AVERAGE ANNUAL MANAGEMENT INCOME # Properties x $ Avg Weekly Rent x % Avg Commission x 52

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MULTIPLE =

DETERMINED BY THE MARKET (Outside of your Control) (Not True!)

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FACTORS THAT DECREASE YOUR MULTIPLE FACTORS THAT INCREASE YOUR MULTIPLE

  • High tenant turnover
  • Low quality properties
  • Low demand – eg, regional agencies
  • A portfolio that is geographically dispersed
  • High staff turnover
  • Poor compliance
  • Poor rent roll condition – high arrears, periodic

tenancies etc

  • Concentrated Landlord base
  • Motivated or desperate vendor
  • Global Financial Crises
  • Long term tenants
  • Above average quality properties
  • Higher average commission
  • High demand – eg, suburban agencies
  • Quality implemented systems – well trained

team, tenants, landlords and suppliers

  • Other inclusions – Brand, team, office
  • Recent, high comparable sales

Valuation Multiple| You Can Control Your Multiple But there are always exceptions

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Business Equity| Strategy Template

Valuation

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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?

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Commercial Vision and Strategy

Personal Income and Your Freedom Number

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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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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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MANAGEMENT (ROLE/S) SALES PTY MGT (SHAREHOLDER) 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

Personal Income| Sources and Breakdown

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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’

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Commercial Vision and Strategy

Personal Equity and Your Net Worth

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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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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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Save Save Spend Spend

Income v Equity Mindset

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Save Spend

Your Business Your Real Business

The Aldridge Family Trust

Income v Equity Mindset

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@business_DEPOT businessdepot businessdepot.com.au

Income v Equity Mindset

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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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YES NO WILL WE AVOID NUCLEAR WAR? ARE YOUR ASSETS INDEPENDENT OF YOU? ARE THEY STABLE, LONG-TERM INVESTMENTS? ARE YOU CALM IN THE FACE OF VOLATILITY? CAN YOU BE 30%+ FLEXIBLE WITH YOUR SPENDING? WILL YOU BE OVER 50 YEARS OF AGE? TOTAL

Personal Equity| ‘Safe’ Withdrawal Rate Considerations

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4 Corners| Commercial Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

$200,000 pa 4% Safe Withdrawal Rate $5,000,000 in what??

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Key Takeaways| Personal Equity and Your Net Worth

  • 1. Do You Know Your Numbers? Your Freedom Number (annual stable income)

divided by your Safe Withdrawal Rate estimate, giving you your Net Work Personal Equity vision

  • 2. How Do You Achieve your Personal Equity Vision? In particular, how is it

spread between your current primary real estate business and your other investments?

  • 3. Is your Partner on board? Either life of business partner, but mostly the former

– do they understand the whole commercial vision you are building, both business and personal? Will that help them support the sacrifices you make as a Principal?

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Commercial Vision and Strategy

Finalising your Commercial Vision and Strategy

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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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Commercial Vision| Actual

What’s your ACTUAL information for each of your 4 Corners today?

INCOME EQUITY BUSINESS PERSONAL

$100,000 pa Selling Principal, paying myself Commission $20,000 pa $0 No Rent Roll $50,000 Some Cash and Super

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Commercial Vision| Target

What’s your TARGET information for each of your 4 Corners by this time next year? Now – have you got a strategy to move from today to this target?

INCOME EQUITY BUSINESS PERSONAL

$100,000 pa Selling Principal, paying myself Commission $100,000 pa Reinvesting Profits $192,000 50 Properties x $1,600 AAMI x $2.40 Multiple $250,000 Rent Roll, plus Cash and Super

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Commercial Vision| Vision

What’s your VISION for each of your 4 Corners? Have you got a strategy to move from today to your Vision?

INCOME EQUITY BUSINESS PERSONAL

$200,000 pa $50,000 Sales $50,000 Mgt $100,000 Dividends $100,000 pa $2,240,000 400 Properties x $2,000 AAMI x $2.80 Multiple $5,000,000 Rent Roll Commercial Pty 50% Share in

  • ther office

Cash and Super

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4 Corners| YOUR Vision

Start with Business Income. 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?

INCOME EQUITY BUSINESS PERSONAL

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Key Takeaways| Finalising your Commercial Vision and Strategy

  • 1. Get Strategic Advice Your own research and general formulas are no substitute

for personal advice on financial planning and business strategy from experts

  • 2. Know Your Numbers For today, for the future, and for your long-term vision.
  • 3. Share Your Numbers Not with everybody, but with those closest to you – this

ensures your Vision and Strategy are aligned, and you can work with others to achieve your Commercial Vision sooner

  • 4. Where to Next? Consider the #RealReach ‘Creating a Contextual Business Plan’

course to help you connect your Commercial Vision with your Culture, and then your business Strategy and Resource mix

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