Category Archives: Economic

Who Are My Target Clients?

I was recently speaking with someone in the automotive industry who said something really profound about their business.  He said, “I’m not worried about reaching my existing clients, as they already know where to find us.  I’m worried that my existing clients’ kids won’t know how to find us.”  He went on to explain that for decades (family business handed down by dad and probably even granddad) his customers had what is commonly referred to as “generational loyalty”.  The notion that a service or product is used by all family members because that’s where mum and dad go, and that’s where their mum and dad went and so on.

Simply put he said: “that’s gone.”

Nowadays some offspring in the Gen X, Y and the iGen will not use a product or service just BECAUSE their parents used that product or service.

“I want to tap into the next Gen,” he continued.  “How do we build loyalty with a market we have never before been in touch with?”

Of course this kind of enlightened thinking in business is music to my ears because for the last 12 months I’ve been in the very competitive social media space, and it’s not the first time I’ve heard this exact sentiment from dozens of other businesses from completely different industries.  Accountants, solicitors, banks, real estate agents, hair dressers, mechanics, café owners, publicans…the list goes on.  And the reason it’s music to my ears is because we have just created a platform that allows that very market to be tapped into.  And not in a talking at you kind of way, but a talking to you,  kind of way – through video stories.

Video stories are the way of the future when it comes to promoting a brand to the masses.  Narrative driven videos that can explain not so much why you’re the best at what you do, but what you can do for your customers.

mansion resized

I recently did a presentation in front of the medical profession in the beautiful Mansion Hotel and Spa in Werribee just outside of Melbourne (think Downton Abbey on steroids) all about imagery and video in their practice, and the three steps I highlighted as being the most critical were:

  1. Concept
  2. Production
  3. Distribution

The primary point however was the good old “WIIFM” mentality.  Right at the start of this process, within the concept stage, the question has to be raised, “have we addressed the WIIFM?”  WIIFM stands for “what’s in it for me?”  This is what we ask ourselves as consumers every time we take out our wallet or click play on a video.  What do we get out of it?  How will it improve my life?  Does it solve my problem?

So going back to the gentleman in the automotive industry, his question has become, “what’s in it for the next generation?”

Here’s what the next generation want:

  • Speed of delivery
  • Convenience and accessibility (usually via the internet)
  • Someone they can Trust
  • Value for money
  • Respect (without judgement)

Here’s what you need from the next generation:

  • To be found

If they don’t know where you are or what you do (for them) then you better hope that “generational loyalty” is strong – because guess what…the next gen are one day going to be THE gen who purchase and remain loyal.  “It’s a marathon, not a sprint” as John McGrath once told a room full of people I was in way back in my first year in real estate and that statement remains true for all aspects of business.  Start your video marketing now, in front of the target market of tomorrow and establish relationships of trust for the long term.

Adam Drummond is an actor, presenter, speaker and CEO of waggawagga.tv

15th May 2015 – Launch of waggawagga.tv 

6:30pm gates open at MTC Wagga and general public are FREE with access to bar and food to purchase on the night.  Entertainment all night by Groove Factorie and you will have the chance to meet John Wood from Blue Heelers, Rosso from TV and Radio, Ben from BB12 plus loads more local and national celebrities on the red carpet premiere.

If you would like to know more about what waggawagga.tv is and how it may benefit your business through either advertising or by appearing in the business directory, simply email info@waggawagga.tv or call 02 6971 7771.  One on one demonstrations of the site are still available if you would like to see it with your own eyes.

MFAA Social Media Speech

I just had the great privilege of speaking to 30 plus local brokers at the Regional MFAA seminar held here in Wagga Wagga.

The MFAA (Mortgage and Finance Association of Australia) have accredited brokers who pride themselves on being up to date with industry best practice and legislative compliance as well as providing outstanding service to their clients.

My presentation was on the local real estate market and the majority was about social media changes and the need to be a part of online and social media marketing as consumers change their purchasing habits and online presence becomes more and more important to running a profitable business.

It was a bright and energetic audience with great questions and an open mind to new ideas on consistency and reach of online marketing and social media strategies.

I highly recommend that if you are in the process of screening brokers for your purchasing needs, you check that they are a member of the MFAA first.

How to Tell When the Market Will Change

It sounds impossible doesn’t it.  Everyone always says, “there’s no crystal ball, but when will the market change?”  And they’re right.  There is no crystal ball – but there are signs.

Take the 2009 NSW residential property balloon as an example.  When the inflated first home buyer grant was reduced back to normal levels, buyers were no longer competing for entry level homes.  This had a flow on effect throughout the market as sellers of entry level homes could no longer upgrade.

At the same time the full effects of the Global Financial Crisis were yet to hit Australian shores.

In fact, the “Build a Better Education” scheme and increased first home buyer scheme were deemed by the Government at the time to be our saviours during economic turmoil.  They believed the stimulus created jobs and construction activity, but forgot to have a plan in place for when it all came to an END.

And end it did.  All pretty much at the same time.

Now, crystal balls aside, the writing was on the wall.  Supply had increased and demand had decreased – sharply.  Investors were nervous about foreign debt, shaky job figures and a Reserve Bank that seemed content to wait it out.

But what were the market signs?

  • longer days on market
  • increased competition with supply

Within months, listing prices began to drop.  From there, the number of sales dropped.  And finally, selling prices dropped.  In some cases up to 10% from the purchase price to the sale price.

And here we are with some subtle signs of recovery in – Wagga Wagga at least.

  • Population growth for the last 12 months is higher than forecast
  • $640mil in private and public development and infrastructure is being invested into the local economy
  • Interest rates are still low
  • Employment is steady

and here is the big one;

  • Compared to June/July 2011 when there were 1,180 properties advertised in the local paper, 2012 June/July figures show 885 properties advertised (supply is lower)

Now whilst demand has not increased exponentially, less properties on the market means less to choose from which will increase competition.  This coupled with some local economic confidence will lead to a slight increase in buyer demand as will the increased population growth.

So there is no crystal ball, and absolute predictions are impossible…but you tell me – “is the writing on the wall”?

Company Proactivity will Save the Day

As we hear of various companies facing financial hardship, some going into voluntary administration such as Darrell Lea (an 85 year old company) and Fletcher Jones late last year (a 100 year old company) all businesses should be posing the question; how do we safeguard our future.

Many will say the writing was on the wall for a long time, and those who have experienced recessions (or depressions as the above companies would have) may have mistakenly thought that markets will recover and times would turn around again shortly. This line of thought though is fraught with danger. For starters it fosters a belief that you can continue to travel at the speed and distance you always have, because eventually things will get better and so too will the bottom line. However, nothing happens overnight, and in this case there have been nearly two and a half years of “overnights”.

The only way for business to survive in this day and age is to adapt, and adapt quickly. With historically fantastic years in retail, hospitality and services such as finance, vehicle and real estate sectors, business owners could fly by the seat of their pants as money rolled in and budgets weren’t even considered to be necessary. Fast forward to 2010, and things had to change. The bottom line had to be analysed and net profits had to be saved as opposed to distributed. If you waited until 2012 to do this, you waited too long.

Markets can change and consumer sentiment and confidence can drop, but business must go on. If this means thinking outside the square with regards to dealing with stock on hand or creating customer payment plans to increase cash flow, then you have to adapt quickly or risk NO net profit. When things are good, business owners don’t need to count the money, they just watch it come in. When things turn bad, business owners need to count everything – dollars at the top and dollars at the bottom, number of customers, level of repeat business, volume of stock – that’s right, all the basics and all the things that should have been counted from day one but get neglected in times of boom or even times of consistency.

And of course the other issue that arises when safe guards haven’t been put in place early enough is wages. All of a sudden when the bottom line is thin, the staff wage line in the expenses column looks really, really large. Owners who haven’t cut back in other areas then panic and look at reducing staff numbers. Not only does this have an impact on your business because service levels suffer and clients look elsewhere when you’re trying so hard to get them to stay where they are, it also has a global effect on – you guessed it – consumer sentiment and spending patterns.

So what are seven quick tips to ensure you are ready for any further changes?

1. Look immediately at all non return on investment items that you spend on. Things such as fresh flowers delivered to your foyer or other things you don’t see an immediate return on.

2. Negotiate terms for stock on hand with your suppliers. Put at least some of the pressure back onto them by changing the way you purchase stock. Ask for 50% on delivery and 50% on sale. They can only say “no” but if you get a few that say “yes” your cash flow will improve.

3. Give customers payment options for large goods to increase attractiveness to purchase from you over your competitors. 3 – 6 month payment plans or similar terms to the ones you have arranged with your supplier will make you look flexible and easier to deal with.

4. Turn to email. How much physical mail do you send? Invoices, receipts, newsletters, reminders – spend the next six months building an effective client email database and start saving on print and mailing costs.

5. Review staff KPIs. Better than losing jobs and better than reducing hours, staff Key Performance Indicator bonuses should be reviewed. If things are tough for company targets then staff targets need to be tougher too. By increasing target numbers you will only reward staff when it is rewarding to the business.

6. Review sponsorship and community benefit budget. How much did you spend on the community last year. All businesses are generous to the community but often at the detriment of staff. Again it comes down to not knowing how much you spend each year. Ad hoc decisions have to stop. Allocate a percentage of net profit to the community and stick to it. You have to learn to say “no”.

7. Contact your existing clients by way of survey or invitation into the shop. Anything that will allow you to reconnect and keep your name top of mind without spending huge amounts of money.

And finally in conclusion, work out how much your target is for expense reduction and make it happen. If it works out you need to save $2,000 a month or $50,000 a month, go for it. In 12 months time when gross profit is the same or even down a little bit, your bottom line will have improved and hopefully your staff and service levels remain the same if not better!

Adam Drummond is one of the Directors of Fitzpatricks Real Estate, a public speaker, co-founder of Wagga Business NetworX and Ignite Mentor as well as an avid blogger. All opinions are his own and not necessarily those of his co-Directors, affiliated organisations or his family. For any financial or business related advice always rely on your own situation and financial needs and refer to your accountant or business coach before taking action.

Renovation boom as market slows

A GROWING number of Wagga home owners are choosing to renovate rather than sell their property in a move which is forcing builders to change their business model.
While first home buyers traditionally sold their property after a few years and upgraded, Fitzpatricks Real Estate director Adam Drummond said because of a slow housing market more people were choosing to invest in their existing property.

[button url="http://www.dailyadvertiser.com.au/news/local/news/general/renovation-boom-as-market-slows/2552347.aspx" target="_blank" size="medium" style="tealgrey" ]Read the Whole Article[/button]

Balancing Christmas and Business

You know it’s here, don’t you? The days are longer, the temperature is warmer and malls are decked with Santa. We’ve already had our family Santa portrait and it was only half way through November. Yes, the Christmas season is upon us. And whilst the anticipation of what the jolly man in the red and white may bring down your chimney is giving you a feeling of joy, in the back of your mind is the thought, “how is my business looking right now?” You’re tempted to have the odd lunch out with a beer or wine, and you know there will be corporate Christmas Parties to attend from 5pm til late on week nights, but you still need to take stock and remember – you’re running a business. Even if you’re not the boss, you should be thinking of yourself as YOUR boss – you are the business within the business. Here are some tips to balance your work with your festive pleasure;

1. Look at where you are now compared with where you were 12 months ago. If you don’t have records to refer to, you should expect potatoes under your tree and not presents (a threat my four-year old gets occasionally when acting up) because you need to know the past to meet targets in the present and plan for the future. Even if you don’t have last year’s figures (what you earned, how many sales, what was your volume etc) take stock now of what you have achieved. Then set targets for the next 12 months. You should do this every six months. Once for the calendar year and then again for the financial year. It keeps you accountable and on track. We make ourselves really accountable in our office, because we put our comparative stats up on a slide show in front of our entire staff!

2. Write down your top 20 leads for January. You really should be using November and December as lead generating months for January and February. You will be left behind in the tracks of Santa’s sleigh if you don’t. There is nothing worse than trying to start from scratch on the 15th of January when business has returned to normal.

3. Reward the biggest contributors to your business. Honestly it’s all about the quality not the quantity. Set yourself a budget and buy each of your valued stakeholders, referrers, clients and friends who contribute in some way to your success, a Christmas card and small gift. Even a scratchie is better than nothing. Google some gift ideas for what may be appropriate to your circle of influence.

4. Network rather than socialise. It’s easy to fall into that mindset of being all about the festivities and look around for that naughty mistletoe. Keep on track and remember you are a business person and you have a certain reputation to uphold in your community and business world. Sometimes the stories around water coolers are about what so-and-so did at such-and-such a function. Don’t be that “so-and-so”.

5. Arrive at work half an hour to an hour earlier for November and December to make up for the early finishes and plan better for a more productive day. You’re in wind down mode aren’t you? Make sure you are wound up at the start of the day to make up for this fact.

6. Don’t forget about your “do list”. For some reason at the end of the year, daily tasks drop off and planning goes out the window. Keep focused on what you need to do so that business keeps rolling in. You will notice patchy weeks of activity and now is the perfect time to think outside the box and look for new ways to do business or promote yourself and your brand. Start a blog. Get on youtube. Create a “marketing-you” calendar for 2012.

When you get your business back into a more focused mode during this potentially “silly season”, you will be able to relax and enjoy festivities, knowing you have planned for what’s to come. And finally – don’t eat too much or you’ll come back in 2012 feeling bloated, lethargic and regretful. There’s no better feeling than being healthy when you know all the temptations were sitting there right in front of you. You come back feeling energetic, proud and full of positive ideas.

Why First Home Buyers Should Buy Now!

When I first heard about the First Home Owner Grant increasing from $7,000 to $14,000 for existing homes and from $7,000 to $21,000 for new or off the plan properties in 2008 with a further $3,000 supplement for any purchase bringing the grand total of the grant to either $17,000 or $24,000, my initial reaction was not as you’d expect. I’m a real estate agent and I was NOT excited. I was worried. The reason I was worried? Massive incentives bring with them, massive interest that turns into massive panic (as the end date looms) and finally massive competition which doesn’t just stimulate the real estate activity, it also inflates it. “Inflate” is a good word too, as it means “blow up” – and what happens when things are blown up too much – things burst. So, yeah I was concerned. The difficult thing with Governments attempting to stimulate the market, is that different markets have different levels of activity. Wagga Wagga at the time was performing pretty consistently on its own without the need of help. However Metro markets were stagnant and needed some propping up…all the way up! So we went through the phase of First Home Buyers competing against one another, prices rising and sales being made. Then the grant ended at the end of 2009 and we have been in the slow lane ever since. However, small incentives are sweet and do not carry the same level of hysteria that goes on with the massive ones we just mentioned. One of the key elements of NSW first home ownership that often gets swept under the carpet, is the free stamp duty for any purchase up to $500,000. To put into perspective that is a saving of up to $18,000. On a Wagga Wagga property sitting in the median house price range of $330,000, it’s a saving of a little over $10,000. Now come January 1st 2012, this stamp duty saving will be gone. The $7,000 will remain (Federal Grant), but the State grant of free stamp duty will be no more. Without sounding like a Real Estate Agent (although I am and I will) buyers looking for their first home should buy now! It’s a great step into the property market for the following reasons:

a) No stamp duty if exchanged by 31st December 2011

b) The market has already come back in some cases up to 10% so you have better prices out there than 12-18 months ago

c) Interest rates are still at record lows

d) The number of properties to choose from right now in your price range is ridiculous – take your pick

In short, do research on prices, visit as many properties as possible, get finance approved verbally from a lender, and make an offer. Good Luck.

Rent vs buy…who do you think will win?

As the cost of living continues to rise and housing becomes less affordable, more and more people are wondering whether it will work out better to rent for the rest of their lives, or live the Aussie dream and own their own home. I’ve decided to create an example to illustrate who is best off after 30 years of either renting or paying off a mortgage.

Bert lives in a house worth $850,000. But, he’s renting it. Now if we apply a conservative estimate that rental properties yield 5.2% gross, Bert’s rent per week would be $850 or $44,200 per annum.

Next door to Bert lives Ernie. Ernie’s house is identical in every way and worth exactly the same amount of $850,000. We know this because that is what Ernie paid for it.

Now, here are the assumptions. Both Bert and Ernie will reside in their respective “pads” for 30 years. They both started paying either rent or mortgage on the same day. To compare apples with apples as much as humanly possible, I am being really conservative with increases in rental amounts per annum, the variable interest rate as an average, capital gains per year and finally the interest earned for cash deposits of savings. I’ll also explain what could happen at the end if all things were done a little smarter by each resident.

Okay, let’s get down to it. First to Bert. Bert’s rent will increase ever so slightly per annum. In fact to be ultra conservative let’s say only 1.2%p.a. He will also decide to invest any difference made from savings, into short-term cash investment accounts which yield on average over 30 years about 5%. In his 30 years, Bert will have paid approximately $1,584,795.64 in rent.

Now Ernie on the other hand will be paying on average over 30 years 7.81% in interest on a $850,000 purchase. If he pays consistently for 30 years he will have spent $1,354,890 on interest alone and when you add to that his principal repayments he would have spent a total of $2,204,890 over 30 years.

So who’s in front so far? Based on savings, Bert would have been able to invest about $620,094 into an interest bearing account, that if yielding 5% p.a. would equate to total savings of $651,861.

However, we have to remember that at the end of the 30 years, Ernie has an asset that has increased in market value over time, and he decides to sell on his last day of repayments. If his property increases (and again this is conservative compared to historical data) in value by an average of just 4.23% p.a. his property is worth $2,933,977.60 upon sale.

This means that Ernie has spent $2,204,890 but when you minus his principal of $850,000, he has a net result of $120,912 in the red over 30 years. In other words it has cost him $121,000 approximately to live in his primary place of residence for most of his life.

On the other hand, Bert has spent $1,584,795.64 and saved $651,861, so he has a net position of $932,934.63 in the red. It has cost him nearly a million dollars to end up with nothing after all that time, other than arguably, more cash to live a “nicer” lifestyle.

So where could each resident have been smarter, and therefore finish up in a better position? If I introduced any variables at all to the above calculations the results would have been like comparing apples with oranges. However Bert may have decided to put his extra savings into the stock market and increased his savings to around 12.2% as an average. If he had been really smart, and bought an investment property on a smaller scale, he would have made even more money, and had an asset at the end, however that would really have made some variables in our calculations (as Ernie could have used equity and done the same thing.) The same could have been said for Ernie though, who with some smarter moves, such as, deciding to pour more into his home loan and paying it off earlier, saving him a substantial amount in interest being paid, thus improving his net position. And let’s face it – most of us would try to pay off more than just the minimum amount per annum. We could also have had the capital gain be more in line with historical data of around 11.6% over a few decades, however most people will agree the next 30 years should be more conservative than the last 30 years, particularly with house values being arguably above long-term average values based on comparative household income vs household debt.

So which is better? To rent or to buy? At the end of the day it comes down to what is important to you. Would you prefer to live in the “now” and have surplus cash to live a “nicer” lifestyle? Or would you rather have an asset at the end of a long life of forced savings, pay nothing in capital gains tax, and live a “nicer” lifestyle leading up to retirement? The other thing is, of course, the ability to do to your house what you want and when you want. Of course the savings there, can also be passed onto Bert, as most renters will have the majority of repairs and maintenance costs paid for by their landlord. The owner occupier will have to spend every cent themselves if they want to improve their property or even at a minimum maintain it.

Have a play with the figures to relate more to the scenario, and see where you will be in 30 years depending on which path you choose. I still feel that owning your own little piece of Australia, will always be better than living in someone else’s property forever.

(All calculations are based on my own workings and I apologise if there are any errors or variables. All persons reading this blog rely on their own calculations and financial advice as I am a licensed Real Estate Agent and not registered or licensed to offer any financial advice.)

Tips on Saving $$ in New Times

Here’s a secret…cost of living is rising…for everyone. Okay, it’s no secret, but why are we still using credit to pay for our cost of living? When I was a boy, my father told me that above all else you should aim to own outright your own home. That way if things turn bad, no one can take your roof away from you. As housing becomes less affordable and incomes remain relatively static over a period of time, the dream of owning the roof over your own head is becoming harder and harder. But it is possible with smart saving techniques and forced deposits into the mortgage. Here are my top tips for saving whilst spending:

1. Record your cash purchases.

These are purchases you do directly out of your pocket. I have an i-phone so every time I spend a dollar I write it down in “notes”. That way I can email it to myself and see where I spent too much and what on. Most recently the glaringly obvious expense with cash was – coffees. No surprises there for a real estate agent, but the shock was what I was spending per week. Around $43.00. That’s $2,236p.a.!

2. Have a spreadsheet designed for monthly analysis.

Sounds boring, but honestly, it’s the game I like. Can I beat last month’s result? You simply have the top half of your spreadsheet dedicated to expenses. That’s your mortgage payment, your car repayments, insurances, rates, water, groceries, entertainment, personal or business loans, investment property expenses, credit card – the lot. Then the second half of the page is the income. Wage, commissions, rent for rental properties, bonuses, stall at Sunday Markets etc. At the bottom will be a clear minus or positive sign when you take the expenses from the income. It can be scary, especially for people on commission only (like me).

3. Understand the credit purchases.

Okay – I like spreadsheets. Get another spreadsheet and pop all of your expenses from the credit card or debit card into it. You can do the same for domestic products, household perishables and furniture/durable goods. Eventually you will get a really good handle on values from your past records. You will be able to compare the cost of shampoo two months ago with your next shopping trip for shampoo. And that leads us to…

4. Shop around for everything. – Read Junkmail.

I used to hate junk mail. Now I love it. I’m determined to beat the big guys at their own game. Whilst I’ve only just started this process it is absolutely fascinating to compare the different shops with each other through their catalogues. A kilo of apples from one store for instance was $4.89. At the local fruit shop the very same apples were selling for $1.99/kg. What’s the deal? The local fruiter wanted to get people in to show them their other stock also on special. You can find bargains at the big guys too, but only buy their bargains. What they are counting on is your appetite for convenience. You will see the specials in the catalogue, go to the store and then unknowingly buy everything else that will fit into your trolley because you can’t be bothered shopping elsewhere. Big mistake. Those other items are either full price or marked up all in the name of convenience. Use them for their specials then leave! Grab the apples down the road, the meat from the butcher and the deodorant from somewhere else. “But I don’t have to time to fly around like that”! Trust me. After doing this exercise for a couple of months you become an expert in where to go and how to create your new shopping list. remember it’s a game. Us vs Them.

5. Extra mortgage payments.

There’s no doubt about it, most of us love to splurge when things are going well. I call them my “making hay days”. Force yourself to put more into your mortgage and reduce that debt as quickly as possible. Don’t deviate from the plan. An easy way to do this is to ask the bank for options on extra loan repayments. If you’re confident, you can increase from the minimum payment to a little more and the bank will automatically make the payments from your account on your behalf. It also helps to increase your redraw facility for those “rainy days” when there is no hay.

6. Cut back on luxuries but keep some each week/month/year.

We are still here to live not just exist. However, so many of us enjoy the finer things in life a little too often. Sometimes a DVD rental and chinese with the missus, is better than a restaurant meal with grog, and exorbitant prices at the cinema – and don’t tell me you won’t get popcorn or a choc-top! Instead of having those nights as a regular basis, keep them for “date-nights” like Steve Carrell and Tina Fey.

7. Compete with the better half on savings.

Okay this is weird. But why not try it? Give each other a budget for the month and see who spends the least. The winner gets…whatever you agree on. (insert prize here.) This will take the stress out of the saving game.

8. Give up on the unnecessary items.

I’ve started doing all the things I used to do with my dad that I hated at the time but my son for some reason enjoys, like washing the car (which I used to use a car wash to do). It’s not even once a week, but I’ve started doing it. We still use the car wash every now and then but my 4-year-old and I enjoy the wash on the drive-way too. Cut back on coffees, snacks, naughty things. Believe me when I say budgeting can help you lose weight too!

I think in closing the most important thing about having a saving and spending plan (yes you will still spend) is to have a happy medium. Don’t become a Scrooge but just be aware of where the savings are. Shop around, live a little, but don’t rely on credit to get you through life, or that roof over your head will always be someone else’s.