LIFE OF BUSINESS - Knowledge Bar #Business Investment

Why Invest in Property

Wed, 16 Oct 2024 16:19:38 +1030

Why Invest in Property !

Property Investment Pros & Cons

Pros

Capital growth: Historically, property values have shown an average annual capital growth of around 7% in Australia. The demand vs supply dynamic in the market plays a significant role in driving the growth.
Cash flow through rental income and expense management: Targeting a minimum 5.5% rental yields property to generate positive gearing which can provide a steady stream of income.
Accelerated growth: Manufacture short-term capital growth through minor renovation or improvement or value-adding development or buying below its intrinsic value.
Leverage from borrowing capacity: By leveraging investors' borrowing capacity, investors can amplify the potential returns on their investment. For example, if an investor puts down a 20% deposit and borrows the remaining 80% of the property's value, any increase in the property's value will be magnified on their initial investment. If the property value increases by 10%, the investor's equity will grow by 50% (10% of the property's value divided by the investor's 20% deposit). This leverage can significantly enhance the overall returns on the investment.
Increase the value by Inflation: Property values tend to increase over time due to inflation. Investing in property can serve as a hedge against inflation, as the value of the property typically keeps pace with or exceeds the rate of inflation.
Maximise return by Compound Interest: Compound interest refers to the interest earned on both the initial investment and any accumulated interest over time. Compound interest can work in your favour when the growth of your initial investment generates additional returns over time. The longer you hold the property, the more pronounced the effects of compound interest become.
Unique Value Proposition: Properties with a twist that offer something unique and different or have the potential for future development or improvement can attract higher demand and command a premium in the market.
Tax benefits: Strategic tax deduction such as tax-deductible repairing or renovation, depreciation or negative gearing, loan interest deduction, 50%discount on capital gains etc.
Lower risk ratio in compare with other investment options: Real estate investment is generally considered to have lower volatility and be more predictable compared to other investment options, such as the stock market. Property has a proven track record of delivering average annual growth of around 7% over the long term, providing a relatively stable and consistent return on investment.
Passive income generator: Property investment can serve as a passive income generator, especially when the rental income exceeds the property expenses (positive gearing).
Timing: Property market cycles present opportunities for investors to enter the market at the right time. By understanding market trends and investing during periods of growth or when prices are favourable, investors can maximise their potential returns in the short term.

Cons

Buying a wrong property risk: Making a poor investment decision and purchasing a property that does not generate the expected returns.
Cash flow crunch: If rental income or other sources of cash flow from the property are insufficient to cover ongoing expenses and debt obligations, property owners may experience a cash flow crunch.
High entry costs: Minimum requires $30,000 to cover all Upfront costs involved in acquiring a property
Ongoing and additional costs: including property taxes, insurance, maintenance, repairs, and management fees.
Surprises: Changes in market conditions, zoning regulations, or unexpected repairs.
Tenant problems: Late payments, property damage, or disputes which are time consuming and may require legal action in some cases.
Liquidity risk: It may take time (average 30-60 days) to sell a property and convert it into cash.
Lumpy risk: It may not be easy to sell a portion of the property or divide it into smaller units for sale.
Market risk: Economic conditions, supply and demand dynamics, and other factors can impact the value of the property, potentially resulting in a loss of investment
Interest rate risk: If interest rates rise, the cost of borrowing will increase, affecting the profitability of the investment.
Legislative risks: New tax laws or zoning regulations may affect the profitability or permitted use of a property.
Lack of diversification: The majority of an individual's wealth may be tied up in one property or a few properties
Negative gearing limits the borrowing capacity: While negative gearing can provide tax benefits, it can also limit the borrower's capacity to borrow more funds for further property investment.
Inflation rate: Reduce the purchasing power of property investors, making it more difficult to acquire or maintain properties. Also, inflation increases in the cost of construction materials, labor, and other expenses related to property investment.

The Ultimate Business Model

Wed, 06 Mar 2024 17:02:00 +1030

Unlock the Blueprint to Business Success

The Ultimate Business Model encompasses all aspects of the business on purpose to achieve the ultimate goal throughout the life of a business. Our method is about thriving, scaling, and achieving unparalleled success. This is about transforming your business into a powerhouse that's profitable, reliable, sustainable, and designed for growth.

Are you tired of hearing the same generic advice repeatedly?

Work on the Business, Not in the Business:

Work Smarter, Not Harder

Think Outside the Box

Innovate or Die

Go Agile, Think faster or Fail Fast, Fail Often

Get more customers, cut costs, increase/reduce the price

Go with a Minimum Viable Product

....

Have you encountered any of the top 5 common challenges that small businesses face in today's market?

High competition in acquiring new customers

Limited capital for reinvestment or lack of access to finance for growth or maintenance of operations.

Uncertainty about current or future market conditions, disruptions, customer needs, and evolving consumer behaviours.

Difficulty in attracting and retaining talent due to budget constraints.

Adapting to new technologies and digital transformation into operations vs facing a competitive disadvantage.

The fundamental causes of these challenges and others you may be experiencing today stem from issues with the current business model, inadequate strategic planning and execution, and failure to realise value due to limited resources or lack of capability and capacity to thrive in today's dynamic market landscape.

But How To Achieve a Successful Business Model?

Our strategy involves having 3 Business Models simultaneously, which can be merged or combined to create the ultimate business model with almost the same capital resources, capabilities, and capacity of the business.

One Active Business Model - Representing the current operational business

One Passive Investment Business Model - Safeguarding the current business model through a strategic passive investment with minimal capital and risk, offering maximum ROI ratio.

One Passive Innovative Business Model - Developing a passive innovative business model through a strategic data-driven research to validate high-value business potentials.

In our business development solution, SMBs (Small to Medium Businesses) must target and work toward the Ultimate Business Model that covers all aspects of the business in a strategic and systematic way to survive, revive and thrive and achieve the ultimate goal in their life of business.

Your First Step to Transformation: Book a Call , where practical, innovative strategies come to life. This isn't about temporary fixes. It's about laying the foundation for a business model that will carry you into the future with confidence.

Get Started Now

Strategic and Systematic Growth

Wed, 06 Mar 2024 17:02:00 +1030

Strategic & Systematic Growth

LIFE OF BUSINESS delivers specialised consulting and executive services devoted to business growth and development for Micro (<$2m) to Small Businesses ($2m-$10m). We've built all Business Development Capabilities You need to Grow Your Business On Purpose.

We view ourselves as a partner to our clients, working hand in hand from start to finish, with a firm belief that our success is directly tied to their gain in their business growth journey.

Harness our business development capabilities & capacities in order to augment your business growth via our distinct solid realistic Parent-Child Oriented Business Development strategy, which incorporates the latest validated methods and technologies, as well as empirical industry & research-driven market insights to fulfill your goals.

Recognising the cashflow challenges and investment hurdles of SMBs, we provide fix custom-priced services ranging from $15K to $55K with no upfront cost and a timeline of 3 months to 1 year to enable your business to succeed in a systematic way not by chance.

Our mission is to innovate a business model alongside of your existing one by creating innovative products, services or systems that fulfil the pinpoint market needs identified through in-depth market research.

Many micro to small businesses are survival enterprises, operating out of necessity rather than with intent to grow. The survival rate of businesses over a 4-year period FY15-19 indicates that larger businesses generally survive for longer period compared to micro businesses (inc sole traders). In fact, sole traders have the lowest survivable rate at 60% which is less than the average survival rate of 65% and hasn't changed from the last period FY 14-18 (ABS 8165.0, Table 15, Feb20).

Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. Only 2% businesses start because of a gap in the market.

However, there was a large net movement of surviving businesses into the upper turnover size ranges, with businesses having a turnover at or above $200,000 increasing by 61,627 collectively (ABS, Jun 22).

This demonstrates the inevitability of micro businesses growing into small businesses in order to establish a reliable, sustainable, profitable, and scalable business that can thrive for years to come and leave a lasting legacy.

On other hand, Micro and Small Businesses are losing their market share in excessive competition in any segment. More competitors – less market share. Competitors bite off your clients. One of the tactics is the businesses scarify the price for competitive advantage. Businesses are pushed to the point when they are lowering the prices because the competitors are doing so, even if the product/service value is higher. In addition, the businesses think the marketing equals advertising, but most often they face with low return on marketing advertisement investment. On top of it, clients are exposed to similar products/services from different competitors and are curious to try.

Most of the current businesses growth is similar to the rectangular pulse-shaping (getting one project or work order after another one) which is not sustainable & scalable over the long run.

In overall, the fundamental question is "How a Micro or Small business supposed to achieve a strategic goal in their market and then how to maintain the achievement and grow from there with a sustainable & scalable business model that is both profitable and defendable to retain in the market for over 15 years?"

The short answer is Strategic Innovation that fulfil a market unmet need that should be aligned with a Strategic Positioning in the market over a time to have a Sustainable & Scalable business growth that is both profitable and defendable. LIFE OF BUSINESS is built as a factory model to execute the strategy for SMBs growth.

However, we believe a Business is NOT solely about financial profit, running a profitable & purpose-driven business in scale is our pathway to fulfil our potentials, pushing our boundaries and contribute to others' cause with a life purpose. The foundation of LIFE OF BUSINESS is based on Co-create right values that support life of businesses & its entrepreneurs who create & support a meaningful life for others.

The Outcomes of Busienss Development

From Business Perspective

Achieve 3x Profit within 1 year of the business development.
Built a business with >20% ROI as your wealth creation driver.
Thrive with a reliable, sustainable and scalable business model from Micro (<$2m) to Small Business ($2m-$10m) that can grow and adapt to the ever-changing market conditions.
Achieve strategic positioning for competitive advantage by repositioning the business model, and enhancing the brand's strength and reputation.
Long-term value generation and increase the business capital valuation.
Manage the risk of market disruptions and stay ahead of the competition by fostering innovation and adaptability with a proactive approach.

From Personal Perspective

Achieve freedom and flexibility that enable you to make independent decisions, control your schedule, work-life balance, innovate & adapt.
Reach your full potential, and professional growth and make the significant impact that you desire.
The sense of accomplishment and professional satisfaction of achieving meaningful goals that make a difference that align with your vision.
The sense of fulfilment and personal satisfaction that comes from creating job opportunities and contributing to financial stability for others.
The sense of personal reputation and recognition that comes from creating a successful business.
Increase wealth and achieve financial freedom & stability that come from higher income, increased valuation & higher ROI of your own business.
Leave a reliable and profitable legacy for your family or successors.

Book A Call