BIR Finance

1300 989 878
  • From February’s E-Newsletter: Rental Market Turns Even More In Investors’ Favour

refinance

This is a great time to be a property investor, with the national vacancy rate falling to a 16-year low.

SQM Research has reported that the vacancy rate (the share of untenanted rental properties) in January was a very low 1.3%, down from a moderate 2.0% the year before.

Melbourne, Sydney, and Brisbane, which have the highest vacancy rates in the country, have seen their rental markets significantly tighten over the past year.

In the other capitals, vacancy rates have remained under 1%, which is incredibly low. That makes it very hard for tenants in those cities to find properties; conversely, it’s easy for landlords to find tenants and to justify rent rises.

If you want to build long-term wealth, I can help you buy an investment property. One big piece of advice is to get a pre-approval before you start your search: competition is fierce right now, so if you don’t have your finance in place you’ll probably lose out to buyers who do.

Get your own copy delivered direct to your Inbox – no waiting! Click here: https://www.bir.net.au/contact-us/

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

Getting a loan for your next property purchase or refinance is already a big enough issue, without the hassle of a poor credit report. Whilst there are lenders who will lend without referencing a credit report, and there are lenders who will lend to you even if you have a low credit score, the reality is you might end up paying a higher interest rate. It’s all about risk and returns for lenders.

Here are some tips from a recent webinar from a credit repair company. They specialize in ‘fixing the fixable’ on your credit file. Whilst there are some things you (and they) can’t fix, and there are some things you can ‘do yourself’, the reality is that most of us don’t have the time or inclination to deal with parties who we don’t know and don’t know how they will react to our request.

The credit repair businesses do this for a living and it is fair to say that because they do it for a living, they know who will do what and by when. And, many of them effectively have an ‘express service’ relationship with many creditors so they can do things knowing what is possible and what is not. As with most things, you get what you pay for….

Personal

1. Regularly check your credit report. You can get a subscription with Equifax and/or Illion for around $10 per month. This can be money well spent when you are going for a loan.

2. Be aware when enquiring online. Certain low-grade inquiries can affect your credit score – currently, buy now pay later inquiries to reduce your credit score by around 50 points per inquiry. The good news is there may be able to be removal.

3. Missing repayments on home loans, credit cards, etc. can negatively impact your credit score.

4. Like going commando, going without any credit facility or record can be risky. Two years without any inquiries (including no phone plans, utilities, etc) can reduce your score. Solution? Apply for a low fee plan for a phone so you are ‘checked’.

5. Protect your data online. Currently, there are scams on the internet and fake emails pretending to be from the Post Office and other agencies.

6. Income verification is coming.

7. Check your direct debit due dates and make sure you have the funds to meet them.

8. You have 3 personal credit reports issued (Equifax, Experian, and Illion) – whilst 2 out of 3 ain’t bad, when it comes to credit reports the gold standard is 3 out of 3.

 

 

 

 

 

Credit Band

 Equifax Experian Illion

Excellent

 833-1200 800-1000 800-1000

Very good

 726-832 700-799

700-799

Good

 622-725 625-699

500-699

Fair / Average

 510-621 550-624

300-499
Weak / Below Average 0-509 0-549

1-129

 

 

Business Owners

9. Make sure everything is in order with the business. Your company’s credit score can be affected by late supplier payments.

10. Anything you do personally and commercially affects both your personal and company credit files.

11. There is a Creditor Watch company report you can access via Infotrack.

 

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

Less than 1 percent of investors ever succeed in building a substantial property portfolio. Here are 17 truths to help you avoid becoming a statistic.

Today, I’m not holding back. I’m going to tell you some brutal truths about property investing.

You’ll learn some of the things that can go wrong, you’ll learn about the frustrations of being a property investor, and you’ll learn some of the ways in which slick marketing can lead you astray.

But stick with me – it’s not all negative.

Understanding what could go wrong is one way of making sure things don’t go wrong and you can have the success a small group of property investors enjoys.

The problem is most people who get involved in property investment don’t develop the financial freedom they’re after.

Statistics show 50 percent of new investors sell up in the first five years.

Most investors never get past their first or second property and only around 21,000 Australians own six properties or more.

In other words, less than 1 percent of investors ever succeed in building a substantial property portfolio.

Now, this is not the type of information most people tell you about the property when you first get started, is it?

That’s probably because many of the people you speak with – such as real estate agents or buyers’ agents – are trying to sell you something. Sometimes it’s a property, in other cases, it’s their services.

So, this is my attempt to redress that balance a little bit and share 17 brutal truths about the property that you don’t often come across.

Despite what some people will tell you, property investment isn’t easy. But it is simple. Now, that isn’t a play on words.

What I’m trying to say is that if you do what most property investors do, you’ll get the same results as most property investors get — and that’s not pretty.

However, you’ll be heading in the right direction if you understand the following truths about real estate investing.

 

1. Property markets go through cycles

Over the long term, the value of well-located residential real estate increases but there are times every property cycle when values stagnate — sometimes for several years.

And there are short periods when the value of your properties will fall a little.

A-grade homes and investment-grade properties are less volatile. But at times even the value of these properties fall, occasionally for several years in a row.

 

2. You need a significant amount of money to invest

The truth is you do need money to invest in property, probably more than you think.

If you don’t have the financial discipline to save a deposit, then you shouldn’t be borrowing money to get involved in property.

 

3. It takes the average investor 30 years to become financially independent through property

While you can get rich through property investment over the long term, it is not a get-rich-quick scheme.

It takes most investors 30 years to develop financial freedom through property.

Interestingly, many investors waste the first 10 years making mistakes and learning what not to do.

The next few years are taken up selling underperforming assets and getting their financial house in order.

Then it takes two or three good property cycles to become wealthy through the property.

Many of us think we are smarter than the experts and look for shortcuts but the only consistently certain shortcut I know is getting the right mentors early in your journey.

 

4. Saying ‘I’ll be fearful when others are greedy, and I’ll be greedy when others are fearful’ is much easier than doing it

Most investors are overly optimistic during booms when they should be cautious, and most pessimistic during downturns when they are surrounded by opportunities.

 

5. No one really knows what the property market will do in the short term

While in the long term our markets are driven by fundamentals, in the short-term human emotion and crowd psychology play havoc with the best-laid forecasts.

 

6. Real estate investment is a game of finance with some properties thrown in the middle

Strategic property investors buy themselves time in the market by having financial buffers in place to see them through the ups and downs of the property cycle.

 

7. Property investment is meant to be boring

Make your investing boring so the rest of your life can be exciting.

If you’re looking for excitement, go bungee jumping or trail bike riding – don’t look for excitement in your property investing.

 

8. There is more free property information available today than ever before, but much of it is useless

Most market news is not only useless but harmful to your financial health.

The most expensive advice you will get is free advice that‘s wrong.

 

9. Be careful who you listen to

Rather than listen to the get-rich-quick stories, it’s worth listening to those who talk about their mistakes and avoid the property spruikers who don’t — their mistakes are usually much bigger.

 

10. There is virtually no accountability for the many property gurus and their hot-spot predictions

I find it interesting that people who have been wrong about everything for years still draw large crowds of followers to their podcasts, videos, and webinars looking for the next get-rich-quick scheme.

 

11. The more ‘comfortable’ an investment feels, the more likely you are to be taken by marketers or salespeople

I understand many beginning investors look for what they perceive as a security, but in general avoid rental guarantees or promises of certain returns. These usually come at quite some cost.

 

12. Despite what most would like to think, the biggest difference between ultra-successful property investors and the rest is not their property strategy or their investment ‘secrets’

Both groups only have access to the same investment vehicles – property, shares, and businesses.

What makes the rich people more successful is the way they think – their “mindset” and their rich habits.

 

13. If you have credit card debt and are thinking about investing — stop

I suggest you become financially fluent before you start investing, otherwise, the significant debt you’ll take on buying property will most likely overwhelm you.

 

14. Residential real estate is a high-growth, relatively low-yield investment

So, don’t buy real estate for cash flow.

Of course, cash flow is important to keep you in the game, but it’s capital growth that will get you out of the rat race.

 

15. Just because a property goes up in price doesn’t mean it’s a great investment

In 2021, we experienced a once-in-a-generation property boom that increased the value of almost all properties.

This was driven by historically low-interest rates and pent-up demand, which eventually led to FOMO (fear of missing out), causing many investors to take shortcuts and buy secondary properties.

In my mind, just 5 percent of properties on the market are investment grade.

The truth about investing, which investors must face, is that just because a property goes up in price does not make it a great investment.

The problem is when the market booms, as long as the prices go up, we hardly ever question the rationale behind it.

We never ask ourselves: “Is the price rise justified by underlying fundamentals?”

As Warren Buffett wisely said: “A rising tide lifts all ships. But when the tide goes out you’ll see who’s swimming naked.”

 

16. There are 3 stages of your property investment journey

All successful investors go through the following three phases.

Firstly, there is the asset-accumulation stage, which requires leverage and owning high-growth properties.

Then, you slowly reduce your loan-to-value ratio.

That’s when you can eventually live off your “cash machine” of properties.

Of course, there is also the learning stage, which should come first, but many investors skip this.

 

17. However many properties you think you’ll need to provide cash flow for your retirement, double it

Now you’re closer to reality.

So, my advice for successful investing is to develop a strategic property plan for your investment journey.

Then plan for your plan not to go to plan, knowing that there will always be unexpected X factors coming out of the blue to test your resilience.

 

 

 

Source: https://au.finance.yahoo.com/news/17-brutal-truths-property-investment-025433076.html

 

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

Before we start….

For further content, please visit https://www.bir.net.au/blog/

And, if you would like a Free Property Report, you can order yours here: https://www.bir.net.au/report-request. You can obtain a report for a particular property, suburb or region in Australia, so you can make informed property decisions. Plus, our suburb reports now provide a comparison report of up to 5 suburbs you want to research.

Any questions, please ring me, Michael Royal 0411 190 474 or email me: michael.royal@bir.net.au

Now, back to the Article! 😉

Author: Michael Royal, BIR Solutions

Disclaimer: as per website www.bir.net.au

Contact:

M: 0411 190 474

E: michael.royal@bir.net.au

 

You only had one job! I love that line – Oceans 11, I recall. Well, once you have obtained a loan from a lender and they have given you their money, you only have 1 job (other than paying it back of course 😊).

That job is to keep checking the rate your lender is charging you – month after month. After all, you need to understand lenders are in the game of making money – and they make their money from you (and they make more if you are not watching them). So, you need to keep checking the rate your lender is charging you – unless you have a broker who is diligently doing this for you.

Strange but true…. the funny thing is, I often hear people tell me ‘I know I should check my rates as I am probably paying too much’ but then, they ark up when it comes to paying for something they or their family really needs. 

 

If you want to be able to save more money or spend more money without changing a thing, then what I am about to share is for you. 

 

This leads me to ask you this question: Who would you rather give your hard-earned $$$ to?

😍 You and your family?

Or,

😮 Your lender?

Tough choice, right?

In this article, I will show you that when it comes to your loan, that is your choice. And if you do nothing after reading this article, your default answer is ‘Your lender’.

The ACCC’s 2020 report into housing loans and interest rates, showed that virtually EVERY borrower is paying more than their lender’s ‘current best rate’. Higher rates equal higher monthly payments – which also means less money in your pocket for you to spend (but more profit for your lender).

Let’s have a look at what the ACCC said in their report, converted into a $500,000 loan:

What this graph says is:

– Borrowers who had borrowed $500,000 during the last year were paying, on average, $77 MORE per month than they needed to (i.e. which equates to a higher interest rate than that which was currently available of 0.3%pa).  Ouch!

– And, those who borrowed more than 10 years ago were paying, on average, $284 MORE per month (which equates to an interest rate they were paying of slightly greater than 1.0% pa. higher compared to the current best rates).

So the moral is, the longer you leave your loan with your current lender without ‘rate checking’, the more you will be paying compared to their current best rate. And, on the evidence from the ACCC, most borrowers willingly pay way too much as they don’t ‘rate check’.

Client story:  And to confirm this data, one of our clients had an $850,000 30–year loan with a major, well–known lender – just shy of 10 years since it was written.  She was paying her lender almost $9,000 per annum more than she needed to – that’s over $170 each week!!!  Her loan product was a variable rate loan with an offset account and her lender was charging her 3.63%pa.  The best rates for a loan she could qualify for were as low as 1.99%pa; and, there were 20 lenders offering rates of less than 2.5%pa.  So choice was not an issue for this client! 

 

Click here to do the maths for you and your loan: your loan repayment calculator

 

You might be wondering, ‘How can the banks get away with this?’  Well, as with most major retailers, their new customers get their best rate (the equivalent of the infamous ‘loss leader’ or ‘introductory’ priced specials) and you, their existing customer, who doesn’t regularly check out and negotiate, gets their higher profit margin rate – with a bit of rate slippage thrown in where they can, so that as the years go by, you, their loyal customer, ends up paying way too much.

Now, before we give you a neat solution, let’s clarify one thing:  we are talking about Variable Rate loans – not Fixed Rate loans.  If you have a Fixed Rate loan, you are not ‘stuck’ with your current lender, but you do have some issues other than the interest rate to consider if you are looking at refinancing.  For example, Fixed Rate loans normally have a break cost if you decide to refinance before your fixed-rate term expires.  And this cost can be significant.

With a Variable Rate loan, subject to a few qualifications, you can change lenders and loans whenever you want.  No break fees with no (or little) in other costs. There is a whole separate topic on the costs and benefits of Variable Rate Vs Fixed Rate Loans Vs a hybrid of both which we will cover in a separate paper.  But for now, we are talking about refinancing your Variable Rate loans. 

 

Your 4 Step Process to get the interest rate you deserve

You can follow this 4 step process yourself or, if you want, we can do it all for you – at no cost to you.

 

Step 1: Do the research

Everything starts with research. The hard yards. The slightly boring yards. Either you or your broker has to do these hard yards (your lender won’t – they are sitting back chilling out on the rate you are being charged).

Go online to your lender’s website and see what their current advertised rate is for your product, then, compare it to the rate shown on your statement.

Go to a rate checking site and see what the best rate is you think you could get.  This can be a bit tricky if you are not comparing like for like with your loan’s product features.

Hints:

1. Make sure you know which product you have with your lender before you start your research.

2. Get a copy of your current loan statements.  Online is often easier these days via your lender’s online portal unless you are being mailed paper-based copies and you are keeping them handy.  From your statement, grab your current rate plus your account details (you will need these for Step 2).

 

Step 2: Talk (to your bank)

This is when it gets interesting!  A simple request to your lender, armed with your information from your research is now needed. 

But…. be prepared for some frustration as you are about to experience the wonderful ways lenders make it difficult for their ‘existing’ customers to quickly reach the right person! 

Your options:  you can try to contact them via their Contact Us on their online portal or via their website; you can send an email (trying to find ‘the right’ email address for this can be tricky 😊); or, you can ring them – but be prepared for a half hour wait (or longer).  Remember, you are not their ‘next customer’; you have already bought from them, so they are not in a rush and urgency is much less (for them). 

Show them your research and see if they will match their current best rate for you or even better, match a competitor’s best rate. 

 

Step 3: Success! Follow up required

Once you have communicated with your lender, AND they have promised to reduce your rate to their current rate, it is time to make sure they hold their promise to you – and reduce your rates when they promise to do so.  Don’t forget to check your new statements to make sure the rate change has been implemented. 

 

Step 4: Eternal Vigilance

Now is the time to watch your lender’s rates for their next rate change.  When any lender makes a public announcement relating to a rate reduction, check your lender and see if they adjust their rate.  We recommend doing this a month or so after a lender (not yours) announces a rate change as it can take time for an industry-wide rate change to filter through to all lenders.

 

So, what can this process save you over time?

Well, for each rate change of 0.1%pa on a $500,000 loan, the benefit is going to be around $372 pa for a 30-year loan.  That’s a small amount but over time, you will find that the interest rate differential can become quite sizeable.  For example, the ACCC research suggested a less than 1-year loan was already at a 0.4%pa difference from the current best rates.

One thing to look out for:

– Beware if you have a Fixed Rate loan AND a Variable Rate loan

Let’s say you have a $500K loan made up of a 3-year fixed rate loan for $250K and a variable rate loan for $250K and you are in year 1 when your lender changes your variable rate down by 0.1%pa.  Now, whilst the above 4 Step process still holds, your negotiation strength is reduced as you are stuck with your lender for 3 years UNLESS you are prepared to break your fixed-rate loan agreement.  And breaking this agreement will typically come at a cost, commonly called a break fee cost.  This is the lender’s way of saying to you ‘if you want to take advantage of our fixed-rate product and you decide to cancel out of it early, we are incurring a cost in time and potentially rate cost (I won’t go into the details of why there is a rate cost for your lender if you break your fixed-rate agreement as the reasons can be complex and varied but it is their option under their agreement with you). 

If you had the time, you might look at the break cost and think about whether the potential saving from breaking your agreement with your lender was a practical possibility for you – but remember, there will be a time cost to doing this too as you will need to find a new lender.

 

Client Story: one of our clients had decided to get a mix of fixed-rate and variable-rate loan products as they viewed interest rates were likely to rise in the next few years.  They should know as they are experts in macroeconomics!  Anyway, when I went in to re-negotiate their rate, they were paying on their Variable Rate loan, the lender pushed back and effectively said ‘Your client is stuck with us for the next 4 years. l can give them a small reduction in their variable rate but not the full amount.’  They knew my clients could not go elsewhere without paying the break cost to extradite themselves from their fixed rate facility.  I did the maths and, without complicating the story too much, the lender was correct.  The break cost of over $8,000 made the break-even point of any possible rate reduction a few years away. 

 

12 good reasons to refinance + a bonus extra!

Other than paying too much, there are other good reasons to refinance.  Here is a checklist for you to consider.  Before we go into these reasons, let me share with you another client story.

Client story:  One of my client’s properties had increased in value dramatically over the past few years; particularly their family home, which had increased in value from $1.3M to $1.8M in 3 years! Nice if you can get it 😉   

They wanted to ‘lock in’ this upside in value by obtaining what is called an equity-release loan.  This is sometimes also called a ‘cash-out’ loan as that is the end objective.  They had no specific purpose in mind and in the short term, they were going to place these surplus funds in an offset account until they had something to spend it on.   

We did the analysis and found that they could borrow up to $900K more than their current loan limits ($800K) i.e., a total of $1.7M.  Their net debt remained at $800K and they would pay interest on only $800K if they placed their surplus funds ($900K) into what is called an offset account (which is connected to their loan account but sits as a separate account with its own statements etc.)

Our analysis considered their income and expenses as well as the values of their properties and their current loans and credit limits.  Even at $1.7M, their LVR (Loan to Value Ratio) was still well below 80% so there was no requirement to pay any LMI (Lenders Mortgage Insurance).   

Because of the lenders we recommended them to consider, they were able to borrow this additional money ‘no questions asked’ and at highly competitive rates.  There were other lenders who would have considered lending my clients a large amount of ‘cash-out’ like this, but they needed documented evidence as to how my clients were going to spend this money (e.g. a Contract of Sale, building contracts etc).  As my clients had no specific and committed purpose for their funds, these lenders were not an option.  

Of note, as part of our initial enquiries, we also considered whether their existing lender would provide this cash-out facility.  As they had a maximum limit on cash-out of $350,000 for existing clients, they were not an option (even though their rates were competitive).  In other words, it is always good to see if you can stay with your current lender.  You should only consider a change if they cannot provide what you are after or, they are going to charge you too much to stay.

 

 

 

 

#

The good reason

Relevant for you?

1

 You are paying too much in interest because your lender does not adjust your rates to their current ‘sharpest’ rate.  See the examples above. 

Yes / No

2

 Your borrower profile has improved.  So, you can obtain a lower rate loan. Perhaps when you first applied, your credit score was impacted or your income was lower but now, you are flying at a higher level.

Yes / No

3

 Your property value has increased.  Now, you have a lower Loan to Value Ratio (LVR) which will give you a better interest rate with a suitable product. 

Yes / No

4

 You have some personal goals.  Take a holiday, buy a car, renovate… and you would like to use the increase in equity in your home (its value less your loan) to do just that.

Yes / No

5

 You want to build your wealth.  Using your available increase in your equity might be able to fund the purchase of another property.

Yes / No

6

 You want a more suitable loan product.  

Perhaps you thought you didn’t need an offset account but now you have surplus funds earning you zilch interest after tax and if you had an offset account, you could save the full value of your loan interest rate. 

Or, perhaps you want to lock in a Fixed Rate loan before you think the rates go up.  

Or, perhaps you are on Interest Only and want to change to Principal and Interest to start making a dent in the amount you owe.  

Yes / No

7

 Your Fixed Rate loan period is about to expire, and the Variable Rate being offered by your current lender is not that attractive (HINT: it won’t be attractive – they are banking (sic) on you not checking). 

Yes / No

8

 You want to take advantage of benefits being offered by lenders such as Cash Rebates.

Yes / No

9

 You want financial freedom.  By paying off your loan more quickly (because you can) allows you to think clearly about your future without debt.

Yes / No

10

 You want to reduce your financial stress.  You can do this by increasing your loan term and paying less each month (but more in the longer term).  Still, lower stress is a good thing if things are tight financially. 

Yes / No

11

 Family issues need to be resolved.  As unfortunate as it is, a family break-up will probably require a refinance for one of the parties if they wish to stay in the family home. 

Yes / No

12

 Consolidate your debts.  When life has been a bit stressful and you have personal debts and loans, it can be smart to consolidate your debts into your lower-interest rate home loan.  Just be careful you don’t think ‘I’ve got 30 years to pay this off’ as the longer term and ongoing interest repayments will eat into the short–term interest rate saving you thought of when you decided to consolidate your debt.

Yes / No

13

 Pay off the taxman.  You are a business owner and you have found that your business has got behind in paying the ATO.  The ATO may be a bit impatient and want payment sooner than the longer–term payment plan you had in mind. 

Yes / No

 

 

So, go to it! Look after you and your family and have a look and see what you can save!

Or, give me a call and I can do it all for you – at no cost to you.

 

M: 0411 190 474

E: michael.royal@bir.net.au

 

Book a time for a chat: Calendly

 

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

ACCC (Australian Competition & Consumer Commission): https://www.accc.gov.au/focus-areas/inquiries-finalised/home-loan-price-inquiry

Background

James Spenceley co-founded wholesale telecommunications provider Vocus in 2007, and since then the company has exceeded his expectations, turning over profit every year, with 2008-09 revenue of $5.2 million. The company was listed on last year s SmartCompany Start Up Awards.

But the biggest improvement occurred only this year, when investment firm Investec bought the company for $20 million, and listed it on the ASX as Vocus Communications. Spenceley says the company is now able to pursue a number of expansion projects overseas that it couldn’t have done before.

The key, he says, is finding a good investor. Spenceley believes small businesses looking for investment should analyse themselves constantly and look for ways to make themselves attractive to larger, cashed-up companies.

 

Are you happy with the ASX listing this month?

Absolutely. We knew we had prepared, we thought the offer was reasonably priced, it was great to see such a good result from day one. We think it started off very, very strongly.

 

When did you first start looking for investment?

We always knew we wanted to have a big investor. One of the things I’ve noticed is that once you get a big investor, it adds a lot of value to the business. One of the things we were missing in our business was someone with a lot of financial markets expertise, and we think that s one of the areas Investec is great in. As we grew the company we knew we were lacking in that area.

 

Did you require the cash, or was it more that you wanted to look at new projects?

We laid the initial money for the company when we started, and our goal was to not lay any more cash until we were in a position to decide on our investor. Often companies have to raise money to do this, but Vocus performed well enough that we d never had to do that. By not raising money, we could wait for the right opportunity and this will help us grow.

I think that s key in any deal. When you need money you tend to try and take the first few that are available without considering the future, and that s something we’ve avoided with this deal.

 

How did the conversation with Investec start?

We were introduced by a third party. It went very positively. We just explained what our business was and what it did, and the Investec representative talked with us for awhile. They were looking for a telco, and we were looking for a serious partner so it was a good match.

 

Did you have any non-negotiable terms you wanted included, like full control?

That was one of the things we really wanted. I suppose we didn’t know them that well, and so you re obviously a bit suspicious of anyone new straight away. But we wanted to get control, if the partnership wasn’t working well we didn’t want terms dictated to us. Any deal we considered we wanted to include our core focus, which was growing the company quickly and not having anyone really interfere with that.

 

How did the decision to add former Oz Email chief executive David Spence to the board come about?

David didn’t come with the Investec people, that was an approach we made separately, but it was a good decision. He’s someone we’ve known for years, he is incredibly well-connected with the technical side of the business and it was the right time to bring someone on, now that we’ve made this deal. We needed someone with more financial expertise.

 

So identifying weaknesses was a big part of your decision-making process?

That’s one of the things we really looked at when deciding this. We know where we aren’t strong, and the financial side of the business is not something we were great at. I take the helicopter approach think about your board meetings from a downwards view who is interacting with you? Who s talking with you?

That was where David was a key decision for us, because he understands the financial world very well, he understands our industry. So rather than just having two sides of the table, opposed and talking across to each other, we have someone who knows both sides very well.

 

What advice do you have for small businesses looking for investment?

I think you’ve always got to have a plan. Think about where you need to be to get that investment, and then take as many steps early on to put you in that position. For us, it was making sure our financials were sound. We did an audit when we turned over just $150,000, but that audit showed others we were serious.

It s really important to take as many steps as you can. Do as many things as you can early on to get you into a position where you can present yourself for investment.

July 2010 by Patrick Stafford www.smartcompany.com.au

 

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au