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Thinking of Starting a Second Business? Introducing Jerry

Case Study: Costs for starting up a second, related business

microsoft excel starting a second business
Contemplating starting a second business, related in some way to your first? Excel can help you forecast start up costs.

A LOT OF BUSINESS OWNERS branch out into related fields when their flagship business becomes successful enough (just look at Jim’s Mowing). However, this can be a bit dicey if the business owner doesn’t properly forecast all the start up costs. Not doing so can not only have an adverse impact on the new venture, but also on the existing business.

In this case study, we’re going to look at the start up costs associated with starting a real estate sales business.

Meet Jerry, our budding entrepreneur

Jerry is a male in his 40’s, currently working as an agent for a local asbestos removal company, earning a commission for helping the company make sales. In this role, he works as an independent contractor, invoicing the asbestos removal company at the end of the month. Because of the work he does, Jerry meets with lots of homeowners (and business owners too) who are renovating their home in preparation to put it on the market for sale or rent out.

Because of the client contact base Jerry is always developing, and knowing that there is no conflict of interest, Jerry decides he’d like to branch and become a real estate salesperson.

Budgeting for a new business from home

Jerry decides to operate his real estate sales business from home, as he plans to operate it as a side business, at least initially. Jerry won’t need to lease office space, but there are the following costs he will need to budget for. The costs he foresees are approximate:

  • Real estate license training course: $2,250
  • Website setup costs: $300 + training (if required)
  • G Suite account: $5/month upwards + training (if required)
  • Mobile phone: $55/month upwards
  • Business cards, flyers, other marketing materials: $99 upwards

Jerry’s ad-hoc operational costs

Although the majority of Jerry’s operational expenses will be reimbursed by the vendor once the property is sold — property marketing, auctioneer costs, etc. — Jerry will need to ensure he has enough capital to cover these operational costs. Property marketing costs are determined based on a percentage of the property’s value, usually 1 percent but sometimes lower. The median price of property in Jerry’s area is $440,000.

Because Jerry is already working as an independent contractor, he doesn’t have to incur any other operational costs (office furniture, internet, information technology, etc.), however his bookkeeper may apportion these costs differently now that Jerry is operating an additional business.

Determining upfront capital required

Jerry already has two homeowners who are thinking of selling their home in the next 12 months. He estimates that based on the value of each property, he will need to spend $5,000 each on property marketing. Therefore, he’ll need at least $13,370 in startup capital to fund his new venture for the next 12 months — although he knows that the initial $20,000 in property marketing will be reimbursed to the business within 6 months.

How Jerry will measure his success

Jerry is located in Newcastle in the Hunter region of New South Wales. Clearance rates in this region hover around 70 percent and properties spend an average of 50 to 70 days on the market, as property is typically sold by private treaty rather than auction. These two metrics will be used to determine Jerry’s success. Price is not a good indicator, as the nature of property sales means Jerry should be valuing property accurately with only a 10 to 15 percent difference in the final sale price.

Jerry should also research other real estate agents selling similar property in his local area to determine how many sales they are writing each calendar year. This can become another benchmark for Jerry’s success, although only a peripheral one, as Jerry is still only operating his real estate business on the side.

***

You can use Excel to work out a budget for the start up costs for your second business, and use accounting software like Xero, MYOB or QuickBooks to forecast whether your existing business will have the capital to fund your new venture.

Our Excel training courses will teach you how to create budgets and forecasts and our cloud accounting training courses will show you how to determine the financial health of your business.


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Successfully promoting your business products and services to clients these days requires a sound knowledge of how to spread the word via social media. Whatever your field, we can teach you the online marketing techniques to stand out from the crowd and build your customer base! Check out what’s included in our comprehensive Social Media and Digital Marketing online training courses.


 

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Wishing all our Valued Students a Safe and Restful Easter

Happy Easter2017

Wishing all our EzyLearn students — past and present — a safe and restful Easter break and thank you for choosing EzyLearn for your online studies.

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CIA Provides Secrets about Linkedin

LinkedIn: The Living CV

I’VE WRITTEN A NUMBER of posts about the power of LinkedIn to replace the traditional resume, but after speaking with an expert from CIA (Sydney-based company, Computer Information Agency or CIAOPs) I learnt some new secrets about Linkedin. Robert Crane, CIA’s Director, shared some tips as to how and why LinkedIn is a fantastic tool to help you get a job AND find more customers.

Robert-Crane-Digitar-web-linkedin-secrets
Robert Crane is the Director of Computer Information Agency

Here’s what Robert had to say…

One of the greatest advantages that Internet based technologies can provide is leverage. Nothing could be more the case than with social media. Unfortunately, too many businesses and professionals fail to see the potential that it can provide themselves and their businesses. Probably the most effective social network for business is LinkedIn.

You may be surprised to know that LinkedIn in has been around for over a decade. It was around long before Facebook and Twitter as a source of connecting business people together. LinkedIn allows you to create a personal or business profile to which you can add all kinds of information.

[quote]Many professionals use LinkedIn as a “living CV” where they can post their career and achievement records for others to view.[/quote]

Sharing that information with others help them grow their potential network and makes it easier for others to locate people with the right skills.

The True Power of LinkedIn

This is where the key technology of search begins to reveal the true power of LinkedIn, for not only can you share your information with others, independent parties can search LinkedIn and locate individuals with the skills they need. This is reason why so many HR people use LinkedIn to locate and target individuals with the skills they require.

[quote]Posting resumes and trawling employment website is now ‘old school’. Indeed, the highest quality applicants are signed up via Linkedin even before a job is offered.[/quote]

Is It Too Late for You?

This means that if you are not using Linkedin your competition probably already is. So what can you do to catch up?

  1. Firstly, you’ll need to create a LinkedIn account and then fill in the information about yourself. The more professional information you provide the better. It is also important to include a professional headshot as part of the profile so if you don’t have one of these go out and get one.
  2. Once you have all your information entered start looking for people and associates you know who are already on LinkedIn. When you find them send them an invite to ‘connect’ with you on LinkedIn.
  3. Once you network starts to grow make sure that Linkedin becomes an ongoing part of your business strategy. Don’t let the information you have entered get stale. Revisit your account regularly and ensure it is always as current as possible. As you meet new contacts look them up on LinkedIn and ask them to ‘connect’ with you. Always be looking to grow your network and don’t be afraid to ask people in your network for introductions to others on Linkedin.
  4. When you start to feel comfortable with Linkedin use the testimonial feature to ask business contacts and clients for referrals. These referrals can be directly posted on your profile for all to see.
  5. Nothing lends credibility like endorsement so always continue to seek them out and grow the number that you have. Once the endorsements start to flow make sure you direct other information about your business to your LinkedIn information. Use it on your website, business cards, etc.

Other Powerful LinkedIn Uses

The more you work with LinkedIn, the more powerful you will find it. When you need something you can ask your network of contacts, you can search their skills for what you need, and you can join any number of special interest Linkedin groups on the very topic that you are seeking assistance on. Because Linkedin has become such a worldwide tool for business, chances are you’ll find the person or business you’re looking for, if you know how to use it.

Jump On the Social Media Bandwagon

I went to a seminar recently and heard Nick Bowditch from Facebook speak. He said that the businesses engaging with, and using, social media will be the ones still around in 5 years. Perhaps it’s arrogant to think that social media is so mighty, but given the speed with which technology is moving these days, and the ferocity of competition, it’s better to build a profile, reputation and brand that people know, like and trust — and social media is the opportune way to do this.


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Are you in business as a bookkeeper, tradesperson, retailer, trainer or real estate agent and want to stand out from the crowd? We can teach you the online marketing techniques to help you do just this! Check out what’s included in our comprehensive Social Media and Digital Marketing online training courses.