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Calculating your client acquisition cost | REM

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Don’t fret, you don’t need an MBA to figure this out. If you watch shows like Dragon’s Den or Shark Tank, you will see a question asked repeatedly, “What’s your client acquisition cost?” When a business pitching these billionaires knows that cost, they almost always get an investment. Would Kevin O’Leary invest in your business (regardless of whether you’d want him to)?

Treating your business like a business is about knowing key metrics, such as marketing spend, cost per lead, return on investment – and most importantly, your client acquisition cost (CAC). Again, you don’t need an MBA for this. You simply need to do a little basic math.




How to calculate your CAC:

Look at the amount of money you spent on advertising and marketing and how many clients you acquired for that.

For example, if you spend an average $1,000/month on advertising and marketing and get an average of two clients (not including those coming from your sphere, referrals and repeat clients), then that math is simple, $500 per client acquired.

If you are generating your leads online, you can get your exact client acquisition cost. You look at how much you spend per lead and multiply that by how many leads it takes to get a client. For example, if your average cost per lead is $7 and you’re converting one in 50 leads, it would be $7 x 50 = $350. So, $350 is the CAC in this example.

If your client-acquisition strategy is all non-monetary and based on offline things such as open houses, door knocking and networking (unless you’re spending money to do so), you need to calculate the hours you put in to get the client. For example, if you spent 45 hours prospecting and you acquired three clients, then it takes you 15 hours of prospecting to get a client. That will put you at a cap of around four to five clients (60-75 hours) a month as you need to do all the work post-client acquisition. Unless you want to work 80 hours a week, you’re capped with this method.

What CAC means to your business:

Take your client acquisition cost and compare that to the average net profit you get from a sale. For example, if your CAC is $500 and your average net profit per deal is $7,500, then you are making 15 X on your money. That is your return on investment (ROI). And with these example figures, that is a business that O’Leary would invest in all day long.

If you’re spending too much money on your client acquisition cost (say it’s $1,000 per client acquired and your average deal is $2,000 profit), you need to bring that figure down to grow your business and income.

Reverse engineering your income: 

Using your CAC, you can reverse-engineer your income. Let’s say you want to make $100K per year, and your average profit is $7,500 per deal. You will need 13.333 clients (but let’s say 15 because some deals won’t work out). So, if you need 15 deals and your CAC is $500, then you need to spend roughly $7,500 in advertising and marketing.

How To improve your CAC and overall business: 

You have your client acquisition cost, awesome – because if you don’t measure it, you can’t improve it. To improve it, you need to look at each of the ways that you’re spending your time and money in marketing and advertising.  Where are most of your clients coming from? How much are you spending on each avenue? Which is the most productive and yields the best cost in terms of time and money? Double down on that.

If you’re doing online lead generation, reducing your CAC can be done in one of two ways: by lowering your cost per lead and improving your conversion rate. Sounds great, but how do you do that? You test your ad concepts until your cost per lead comes down. For the conversion, this can be a little trickier. If you aren’t working your leads as hard/well as you could, that’s the first step. If you are working them, then consider a lead-conversion training program.

Treating your business like a business means understanding your numbers. Those numbers have incredible power. Without them, you have significantly less chance of creating and managing the business you want – and most importantly, having control over how much income you make.

If you aren’t already tracking your numbers, then start there. It will change how you approach your business and change your success trajectory.

Having said all this, it is most important to nourish your prior clients and sphere/database. It is generally eight times more expensive to acquire a new client than to retain someone in your database. But that’s what breaking through is. After you’ve nurtured your sphere you need to break through that barrier to build your business beyond your database.

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Real Estate

Window repair or replacement is the responsibility of the condo corporation

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If the windows in your condo are hazy, drafty, or have rotting frames, it’s an indicator that they need repairs or outright replacement.

However, under the Condominium Act, it is the responsibility of the condo’s board to carry out such changes as a replaced window is a common element.

“Under the Condominium Act, a declaration may alter the maintenance or repair obligations of unit owners and the corporation but cannot make unit owners responsible for repairs to the common elements,” said Gerry Hyman is a former president of the Canadian Condominium Institute and contributor for the Star.

“A declaration for a high-rise condominium invariably provides that the unit boundary is the interior surface of windows. That means that the entire window — whether it is a single pane or a double pane — is a common element. Necessary repairs or replacement of a broken pane is the obligation of the corporation.”

According to Consumer Reports, selecting an installing windows replacement can be very overwhelming for homeowners. Therefore, if you aren’t covered by your condo’s corporation, it would be necessary to hire professional hands.

Wood, vinyl and composite windows need to be tested on how they can withstand various natural elements. For wind resistance, a window can be very tight when it’s warm but get quite cold too—especially when it begins to leak a lot.

Whatever the case may be, the bottom line remains that replacement windows can save you heating and cooling costs, but it’s best not to expect drastic savings.

Additionally, while getting a new window might help you save on your electric and gas bills, due to their expensive cost, it may take a long time to offset their cost.

Mid-last-year, the government withdraw a $377 million Green Ontario program that provided subsidy on windows to installers and repairers. Window companies had to install energy-efficient windows in order to qualify for the government subsidy that pays for up to $500 of a $1,000 to $1,500 window.

Due to the largely generous subsidies from the government under the Green Ontario program, a lot of window dealers were fully booked for months—even after the program had ended.

“We’re fine with the program ending, we just need more time to satisfy consumers,” said Jason Neal, the executive director of the Siding and Window Dealer Association of Canada, the industry group representing window dealers in a report.

According to Neal, the Progressive Conservatives acted hastily, making massive changes with no prior notice.

“No notification was given to us by anyone,” he said, noting he learned about the change through one of his dealers.

“It’s created a ripple effect.If they had just given us notice we would have pushed that down the line from the manufacturer right into the dealer right down to the consumer.”

Neal noted that he wasn’t particularly sad to see the Green Ontario program end, as it was “the worst rebate program in the history of the window industry.”

“It’s been horrible,” he said. “$500 a window has created such hysteria.”

However, despite the program ending about a year ago, numerous homeowners have been contacting window dealers consistently with concerns that they might not be able to afford replacement windows without the government’s subsidy.

“I understand their concern,” said window dealer Chris George. “I would suggest they reach out to their local representative of the government in their riding and let them know about their concerns.”

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7 Vancouver Real Estate Buying Tips

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The real estate market in Vancouver is turning around for good for everyone looking to purchase a home.

Previously soaring prices are now beginning to ease up, making it a perfect time for buyers—with real estate agents already getting ready for a very busy spring and summer season.

However, before splashing cash on a new property, there are some very important tips you need to know to ensure you make the most of the buyer’s market.

Here are some few expert tips that would guide you when purchasing a home in the sometimes frustration Vancouver seller’s market.

  1. Get adequate financing

It is very important that before you make the move to purchase a property, you put into careful consideration your credit score.

Normally, home buyers with lower scores use the secondary mortgage market to finance their purchase, as they’re more likely to pay a higher interest rate.However, it is advisable to get loan approval long before purchasing the house. This way, you are fully aware of how much you are able to spend—but never be tempted to borrow the maximum amount of money available.

“What’s your mortgage payment that you’re comfortable with? And take into the fact the taxes you’re going to have to pay, if it’s a strata – what the maintenance fees are, if it’s a home what type of maintenance are you going to have to pay in the future?” said Phil Moore, president of the Real Estate Board of Greater Vancouver in a report.

Always be careful of the type of loan you secure and ensure that you can comfortably afford it over a long period of time.

  1. Get a real estate agent

Buying a property without professional help is a very risky move and can be likened to choosing to represent yourself in court without a lawyer. While you might trust your negotiation skills, only realtors are permitted to present offers directly.

Therefore, it is necessary to get a professional real estate agent in the area to represent you. So, screen a few agents and select the best one who has in-depth knowledge of the markets and has a great reputation.

“They’re there to protect you. They’re there to walk you through each step of the process,” Moore said.

  1. Sign up for automated alerts

Most—if not all—realtors have access to the Vancouver real estate board’s database which is updated approximately two days before the public MLS website.

Therefore, you can request from your realtor to sign you up for automatic real-time alerts of all new listings. Doing this gives you an edge as you’re among the very first to know about new properties.

  1. Do a thorough inspection

After receiving an alert for a new listing, it is necessary to push almost immediately for an inspection from your realtor. In this current market, buyers now have time to make an inspection.

Making a quick inspection eliminates any surprises—as there could be major maintenance or repair issues that could spring up. Therefore, you can now table your offer based on the outcome of the inspection, with clauses about claiming your damage deposit back if everything isn’t as was advertised.

Additionally, if you notice that renovations were done, you need to be sure that it was permitted work and carried out appropriately. Failing to do this would ultimately lead to further cost down the line and simultaneously affect the resale value.

  1. Have a back-up plan

There’s always the possibility that everything may not go as smoothly as you’d want. From the inspection being a failureto the property not living up to your expectations—or not being able to agree on the closing date that matches with your needs.

However, a professional real estate agent will definitely help you get past all of these things. If you plan on selling the property as you buy, you can table that and make it part of the deal.

“You’ve got an option, especially in a buyer’s market: you can put in an offer subject to selling your place. So maybe you want to have a place lined up,” Moore added.

Additionally, building contingencies into your buying plan is necessary. Things such as unexpected delays in closing the deal, closing cost and moving costs that could result in added living expenses if that’s your permanent home.

  1. Don’t fall for the buyer frenzy

The Vancouver market buying frenzy that caused a serious climb in the prices a couple of years ago has ended. Thus, it is important not to get caught up in bidding wars with properties that have been deliberately under-priced—with the hope of initiating multiple offers.

“Some of the sellers have been on the market for over a year and they’re eager to sell. So what I’m saying to consumers is: you have a lot of choices, you’re in the driver’s seat, let’s go out and take a look at what’s available,” said Moore.

  1. Never be wary of multiple offers

When purchasing a property, don’t be afraid of multiple offers as you have the same opportunity as anybody else.

Typically, there are just a few offers below the asking price: a couple priced fully, and two or three above the asking price—depending on how close the fair market value is from the asking price.

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Do you know what kind of condo you’re buying?

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(NC) Condominiums can come in all shapes and sizes. But it’s important to know that not all condos are created equal when it comes to warranty coverage.

Whether you’re buying a condominium townhouse, loft-style two-bedroom or a high-rise studio, they are all classified as condominiums if you own your unit while at the same time share access (and the associated fees) for facilities ranging from pools and parking garages to elevators and driveways, otherwise known as common elements.

The most common types of condos are standard condominiums and common elements condominiums. The determination of how a condominium project is designated happens during the planning stage when the builder proposes the project and the municipality approves it.

When you’re in the market to buy, you need to know how your chosen condo is classified because it affects the warranty coverage under the Ontario New Home Warranties Plan Act. Standard condominiums have warranty coverage for units and common elements, but common elements condominiums only have unit coverage.

How could this affect you as the owner? If your condo complex has underground parking and, for example, there are problems with leaks or a faulty door, the condo designation will determine whether there’s warranty coverage.

If your unit is a standard condominium development, then the common elements warranty may cover the repairs. If it’s a common element condominium development, then repairs might have to be covered by the condo corporation’s insurance, which could impact your condo fees or require a special assessment on all the owners.

To avoid surprises, you should have a real estate lawyer review the Declaration and Description attached to your purchase agreement to be sure that you know the designation and boundaries of the unit you’re looking to purchase. Find more information on the types of condos and their coverage at tarion.com.

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