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There’s Money In Keeping Property Development Small

Posted on June 9, 2021 Written by Administrator

If you are considering property as a potential investment opportunity, career path, or part-time enterprise, there are a variety options available. Small-scale development is one area that an increasing number of investors and landlords are moving into. It can be lucrative, and a lot less scary than many people imagine.

What do we mean by small scale?

Typically, you would be building somewhere between four and 20 flats and planning to make a minimum 20% margin on what you sell them for. As an example, let us assume you started small and converted a small shop, office, or commercial building into four flats which you then sold for £150,000 each, then you would expect to make a profit of £120,000. If your next project saw you convert 12 flats, based on the same numbers, you would make £360,000. In development terms, that is relatively small beer, but compared to the long game that is buy-to-let or a graft-intensive doer-upper, nice numbers.

Why is it so lucrative?

Converting unloved commercial property into attractive residential units generates a significant premium, particularly in a market where so many owners of commercial properties are financially challenged. And in my 40 years’ experience, relatively few developers know how to convert properties well.

Is there a great deal of work involved?

As there is more money involved compared to a flip (a small project where savvy DIYers and bargain hunters freshen up run-down homes and flip them on for a profit), developers can afford two things that make their lives considerably easier.

The first thing you can do is hire a Project Manager. The Project Manager’s job is to oversee the development for the developer. Worried you might be out of your depth (or get exasperated), turning up on-site to manage architects and contractors? Well, your Project Manager will do this for you. A highly experienced set of eyes and ears managing things on site, looking after your interests, and reporting back to you regularly.

Secondly, developers can also afford to hire a main contractor. Where flippers and doer-uppers make do with a general builder and then employ many of the other trades directly, a small-scale developer uses a contractor who is responsible for all of the trades/subcontractors. This makes life considerably easier since there is only one relationship to manage, and the contractor then coordinates all of the construction team.

Additionally, because you have a main contractor AND a Project Manager, you do not need to oversee everything yourself—you play the role of CEO instead of being a hands-on-newbie-project-manager—leaving you with more time than if you were involved in a smaller project where you frequently need to be on site. In fact, most small-scale developers oversee their projects in their spare time.

What skills do you need?

Your critical job as the developer is to create your own development ‘brand’, pull a team together, get the finance sorted, and then find profitable deals. And, of course, you need to be able to make decisions under advisement from your professional team since you are the ultimate boss. It is very much like the role of the CEO, and as such, you need to have solid organisational and management skills, as well as good interpersonal and communication skills. I would never tell anyone that property development is easy, but many people already have the generic core skills to be able to do it successfully. And to correct another popular misconception, you typically need to invest less of your own money in a development than you might think.

Remember there is risk

There is a reason why property developers take the lion’s share of the profit, while everyone else gets a fee, and primarily it is all about risk. There is no getting away from it – property development has many moving parts and is inherently risky. But, if you get yourself educated, it is possible to de-risk the development process significantly. It is the people who ‘jump in and go for it’ who tend to come a-cropper. I have certainly trained many developers who had learned the hard way that they did not know what they did not know.

The government recently announced a whole range of Permitted Development Rights in England, making it possible to convert many commercial buildings without needing full planning permission. These rights come into effect from August 2021, so the timing could not be better to take a long, considered look at the opportunities offered by small-scale development.

ABOUT THE AUTHOR

Ritchie Clapson CEng MIStructE is co-founder of propertyCEO, a nationwide property development and training company that helps people create a successful property development business in their spare time. It makes use of students’ existing life skills while teaching them the property, business, and mindset knowledge they need to undertake small scale developments successfully, with the emphasis on utilising existing permitted development rights to minimize risk and maximize returns.

https://propertyceo.co.uk/

https://www.facebook.com/propertyceotraining/

https://www.instagram.com/propertyceotraining/

https://www.linkedin.com/company/propertyceo

What does the decline of iconic retailers mean for early-stage investing?

Posted on May 7, 2021 Written by Administrator

We’ve recently seem the demise of several iconic high-street retailers. Something that would once have seemed completely unimaginable.

For example, Debenhams with its two hundred plus years of history, and the younger Top Shop, often described as the jewel of the high street, both found they could no longer compete and fell into administration.

Evidenced by the calls to save the high street, it is well recognised that the way we shop has forever changed. We’re shopping online while in bed, at work and for 20% of us– from the bathroom.[i]

But, what does that mean for early-stage investing?

It’s easy to write this off as consumer behaviour that has nothing to do with investing. However, that would be short sighted.

Purchasing decisions begin online

Whether you’re a B2B buyer or a consumer, the buying process begins with online research. A Google study confirmed that 92% of people begin their buying journey online. That leaves only 8% wholly reliant on other means to investigate purchasing decisions.

Do angel investors fall into the missing 8%?

A PWC study found that 98% of them use the internet daily^[ii] and for up to three hours. Beyond this, a second study by Accenture Consulting^[iii] confirmed 83% use digital for financial services. Both of these studies are several years old, and it is reasonable to assume that the use rates of digital have increased since then.

So, if you’re a network promoting investment opportunities and you’re not using the online channel, you are missing out on a key phase of the investors’ journey.

Forget customer loyalty

Networks which don’t offer the convenience of an online channel to their investors may believe that it doesn’t matter; your investors have been with you for years and are loyal.

Another look at retail proves that there is no such thing as customer loyalty.

The loyal customer base that Debenhams and Top Shop built up, slowly trickled away as new digital-first players came in and offered a better, more tailored experience.

It’s easy to blame the pandemic. But the truth is that Covid-19 was but the last nail in the coffin for these iconic retailers. Both were struggling before Jan 2020. The reason: they weren’t giving their customers what they wanted.

Generations grew up, times changed, new savvier players like Asos, came into the market – and their once-loyal customers left.

Customers are only loyal for as long as it suits them. If something better comes along, they will move on.

What we’re seeing in the early-stage investment market is a number of new digital-first investment clubs like the Envestors Private Investment Club, Angels Den, or Chorus. These next-generation investment networks are the Asos of the investment space. They understand that investors want always-on, self-service access to deals and they are ready to deliver.

Building relationships on shared interests, experiences and data

The retail giant Amazon, for example, knows more about its customers than they’d probably be comfortable with. They collect data from every interaction, and use it alongside trend data from other customers, in order to help users make buying decisions.

Can angel networks say the same thing?

Do you really know what your investors are interested in without taking advantage of all the options digital has to offer?

Investment networks are reliant on face-to-face interaction and personal relationships. Now, relationships are crucial to early-stage investing. But data can be used to empower your existing relationships.

With online platforms you can collect data on investor interests – both those they state explicitly and those you can infer based on their online behaviour. This data, at both the individual and macro level, can be invaluable to you in catering to their needs.

Another application is in deal selection. With data on which deals are getting the most engagement you can start to look for similar deals to bring to your investors.

A changing market

The early-stage investment space is a traditional one – for now. But as we saw in the retail example, traditions can be supplanted as quickly as a Prime delivery.

Many factors drive an industry to change. In the case of early-stage investing it will be the core players in the market. That is the investors and the companies raising finance. They are getting more and more used to a digital first experience and the investment clubs that serve them need to stay one step ahead of their needs. When this doesn’t happen, heritage organisations fall, and new giants emerge.

Needs have undoubtedly changed. We are at a point where people expect an always-on, personalised service. They like to be empowered to do their own research and to drive their own agenda and without a digital offering they have to wait. Today, no one expects to wait.

Traditional networks need to take action or find themselves falling behind their newer rivals who have digital offering catering to the needs of today’s investors.

ABOUT THE AUTHOR

Chantelle Arneaud is from Envestors. Envestors’ digital investment platform brings together entrepreneurs and investors across geographies, communities and sectors – creating the single marketplace for early stage investment in the UK.

Envestors partners with accelerators, incubators and angel networks to provide a white-label platform empowering them to promote deals, engage investors and connect to other networks.

Founded in 2004, Envestors has helped more than 200 high growth businesses raise more than £100m through its own private investment club.

Envestors is authorised and regulated by the Financial Conduct Authority.

Web: https://www.envestors.co.uk/

LinkedIn: https://www.linkedin.com/company/envestors-llp/

Twitter: @EnvestorsLondon

[i] https://kinsta.com/blog/ecommerce-statistics/

[ii] https://www.pwc.com/sg/en/publications/assets/wealth-20-sink-or-swim-gx.pdf

[iii] https://www.accenture.com/t20150703T033306__w__/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_17/Accenture-High-Net-Worth-Investors-Gen-D-Europe.pdf

How to fall back in love with your business

Posted on May 6, 2021 Written by Administrator

Your business determines the person that you are and the life that you live. Yet, for so many of us, the organisation in which we work is our enemy, not our friend.

Every day, I work with business owners who are frustrated, resentful and overworked – I have been that business owner myself. These executives are never the most profitable, the most effective or the most fulfilled in their business.

I can trace a clear pattern in my business journey; the times when I have been at conflict with my business have, without a doubt, been the hardest. The treadmill of productivity and output becomes draining and makes it easy to lose sight of why you started in the first place. During these periods, I have inevitably found myself less effective, lacking in motivation and surrounded by negativity. I have also been making less money!

In 2015, I made a very specific decision. I was going to build and sustain an environment of total motivation in my business. I was adamant that I would develop a relationship with my business that was functional, happy, mutually beneficial and filled with love. I wanted to run an organisation that I always spoke about kindly and provided an environment of support for everyone within. I aspired to create a business that people were drawn to because of its deeply attractive culture. It would allow me to attract the best staff, win the best clients, align with the best partners, and ensure that I worked with purpose and passion every day. My business was going to be the kid that EVERYONE wanted to hang out with.

Thankfully, I had worked in and with over 400 businesses, and I had a lot of insights to support my approach. Elation Experts – the organisation I have today – is my happy place. I have built this relationship through 3-key principles.

When taking control of your professional destiny, you need to focus on these three areas. Doing exactly the right amount of the following will ensure that you fall back in love with your business and you create somewhere that everyone else can love too.

What do you put in?

One of the key drivers of the human condition is our desire to add value. We want, perhaps even need, to know that the impact we have is positive. We want to be recognised. We want to know that our talent is influential. We grow when we contribute, so focus on this every day. If your business is a place where everyone has a chance to shine and contribute in a meaningful way, you create a powerfully positive environment.

Ask yourself and encourage your team to ask questions like:

What areas of the business can I improve on today?
Where do I have a really positive impact, and how do I ensure I use that influence regularly?
How can I harness and encourage the strength of others?

A wonderful business plays to the strengths of every team member. The great communicators lead the meetings, and the fantastic innovators contribute to new ideas. Have you identified the strengths of yourself and your team? Are you making the most of those strengths?

Make sure that you speak with everyone in your team regularly to give them the boost they need. This allows you to have a real impact and witness the tangible results in daily business operations.

Consider each team member, including yourself, and think about their strengths. Now look at whether that person is doing work that plays to that strength. Are they in a position that allows them to contribute that strength to the business? If they aren’t, then look at how you can change this and help to give them work they will feel is making a positive impact.

Look for ways to feedback to team members how their contribution is making a difference to the business. Everyone likes to understand how they fit in and how what they are doing means something in the bigger picture.

Purpose is a great motivator. By helping people see the value they add when they are at work, and understand the benefit they are bringing with their skillset, you will automatically motivate them. As a business owner you must not only ensure that you personally are adding tangible value but also that every person in the team has a chance to shine.

If you can give and create a sense of purpose in your business, you will thrive.

What do you get out?

Growth and development are key measures of human success. For some, this might be hitting a target, or learning a new skill. For someone else, it might be repairing a broken item or creating a new recipe. We measure development in very different ways, but without it, we stagnate. A business in which all members can realise their potential is one that attracts the best.

The questions for your business and your team are:

What personal development will make me more powerful? (Training/Coaching/Mentoring)
How can I stretch my team to ensure that they grow every day?
How can we create a culture of feedback that means everyone’s potential is realised?

A business that has a culture of personal development, layers learning on even the smallest of tasks. It embeds personal development planning, individual training budgets and plenty of extracurricular opportunities.

Every week, ask your team to report on the three biggest barriers to success, and find a way to develop the team in order to overcome those barriers.

Consistent improvement is highly motivating – for you and your team. If something motivates you, it’s difficult not to fall in love with it. So, make sure your business is motivating everyone involved in it.

Where do you get your energy?

Running on empty is the quickest way to failure. Often professionals who are not seeing the results they want continue to push harder: a recipe for burnout. Resting is not seen as a productive way of achieving more. But being full of energy creates an environment of success. If you get a sense of joy and balance from your work, you perform far better.

These are the specific questions you need to focus on to ensure you and your team are efficient and enthused:

What is the best way for you to relax and de-stress?
How can you make sure your team are recharged daily?
What signs will tell you that a team member is overworking and underachieving?
How comfortable do people feel about asking for support?

Keeping your business full of energy guarantees sustainable output from your team. This requires agile working – allowing your team to work on key tasks when their energy is high, and permitting them to step back and recharge when required.

For my team, taking 15 minutes to meditate at lunchtime or running/walking meetings make a huge impact. If deadlines are heavy, we will stop for a full hour and have a team lunch before addressing the task with full commitment.

Resting makes us strong, and I recognised that when I started permitting myself to stop, I became much more effective. The same applies to everyone on the team – they need rest, and they perform better for it.

I love my business. I wake up every day knowing that I am going to spend my day doing things I love, that add value, with a team of people who feel the same. I have a purpose, I feel successful, and I know the future is bright.

ABOUT THE AUTHOR

Karen Dunne-Squire is founder of Elation Experts, which is on a mission to empower SME’s by giving them the knowledge and skills to increase revenue, build powerful sales opportunities and create committed, loyal teams that are motivated to drive change. Karen is a sought-after keynote speaker and creator of The Growth Framework, an award-winning methodology, applying ‘Big Business Corporate Insights’ to SMEs in a way that makes practical sense for them.