Melbourne Age March 8, 2012

One of Australia’s largest infrastructure projects is about to be unleashed in the midst of a city of 340,000 people. Over the first five years of the venture’s phased eight-year construction life, some $1.5 million will be spent on it every day.

During the peak first three years of building, the construction workforce will average about 2000. And when it’s finished, it will create 10,000 permanent jobs – which immediately tells you that it’s not a resources project.

And because it’s not a headline-grabbing digging or drilling operation, that’s possibly why only the locals really know about it, despite the resources-like multi-billion dollar budget.

It’s also a good example of the growth we don’t see while concentrating on the commodities and capex booms, either spruiking or knocking them. And it’s the growth and restructuring we ignore while contracting manufacturing and flat retail workforces hog attention.

Of course something like the “Kawana Health Hub” doesn’t have the familiarity of a listed retailer’s share price and fewer supermodels, nor does it have a strong union concerned about shrinking membership and it doesn’t court the controversy of a
coal seam gas project. But it’s more important than all the above.

The Kawana Health Hub name and the quoted numbers come from Brisbane property analyst and commentator Michael Matusik who takes issue in his latest blog with the idea that all of Queensland’s Gold and Sunshine Coasts are real estate catastrophes. (It’s an idea often enough put forward, but on this particular occasion he was provoked by a comment on Sunrise by David Koch.)

Matusik agrees there are problems and there could be further falls in some parts of those markets, but points out that they are not uniform entities and cites the impact on Kawana of hosting one of Australia’s biggest infrastructure projects.

The core of the hub is the Sunshine Coast University Hospital which will be the world’s sixth-largest teaching hospital, but there’s more. This is how Matusik summarises the statistics of what’s happening:

• The Sunshine Coast University
  Hospital or SCUH for short will be a PPP (public private partnership) with
  Queensland Health. Construction is planned to start in 2013, with stage one of
  450 beds completed in 2016, expanding to 738 beds in 2021. The hospital will
  create 2000 construction jobs and 3500 permanent jobs once complete. It is
  expected that over 15,000 people will visit the hospital each and every day.
• Ramsay Private Hospital.
  Co-located with SCUH. Construction is now underway and in late 2013 this
  200-bed private hospital will house 700 permanent employees and create 360 jobs
  during construction.
• SARC or the Skills, Academic
  and Research Centre will provide teaching and research within the hospital
  campus. A $61 million capital investment, with 150 academic and support staff
  catering for 1,300 students each year.
• KHIP (don’t you love all these
  acronyms) or Kawana Health Innovation Park will be a commercial precinct
  distributed across a number of sites across the hospital campus.
• Kawana Town Centre and medical
  precinct. The town centre – adjacent to the SCUH, will commence in 2013 too.
  The town centre incorporates 80,000m² of retail, commercial, community and
  entertainment facilities as well a medium density residential sites. The town
  centre is expected to generate around 5000 jobs during construction and similar
  in permanent positions upon completion.

Matusik sees Kawana Health Hub as a game changer for the area, “a recovery catalyst, a smart job generator”.

As Ross Gittins has written recently, those jobs are every bit as valuable as those in manufacturing or mining. (As an aside, it seems Matusik can differentiate between a recovery catalyst of lasting value and a passing circus, as he was one of the few brave enough to criticise the Gold Coast’s Commonwealth Games hoopla.)

Purely from a housing point of view – the bit that most interests him – Matusik reckons that 10,000 new jobs will create the demand for between 5500 and 6000 new dwellings. And that 10,000 jobs figure doesn’t include an estimate for people building new housing.

“The Sunshine Coast University Hospital alone is valued at $2 billion and represents almost a quarter of the current Sunshine Coast regional economy,” he writes.

“It is estimated that it will inject about $700 million into the Sunshine Coast economy every year and will be the Coast’s single largest employer. “For the life of me, I don’t see how this part of the Sunshine Coast can be labelled ‘catastrophic’.”

Looking beyond the housing angle, the Kawana story is an excellent example of our preoccupation with the bad news as the economy restructures. A manufacturer with a few hundred jobs runs into trouble and it’s regularly regurgitated as major news,
part of a harsh list of job losses, but nobody bothers to count the 10,000 new jobs being created in a major health services project.

As the restructuring continues to push us up the value chain, health services and biotech should matter more and more, never mind the demographic imperative bearing down on us. One of the challenges for Australia is how to capitalise on the opportunities that presents.

Blowing government funds on propping up old industries to protect union membership numbers does not help the nation. Investing money in re-training workers, on encouraging more health-related research and development and supporting our promising but small biotech industry makes much more economic and social sense.

Both sides of politics managed to get policy terribly wrong on developing health professionals, barring most of a generation or two of bright young Australians from becoming doctors, with the result that we now have to raid the rest of the world for medicos.

Kawana represents opportunity knocking again for the nation. Only the most bloody-minded olitical opportunists would side with the narrowly self-interested in opposing resource rental tax in the present circumstances, but at the same time, it takes dumb government to channel the funds raised by such a tax into annual budget items instead of investing it in the future.

Michael Pascoe is a BusinessDay contributing editor

 Rod Russell 

One of the most important assets you can develop for your business is a powerful brand. Brands are not just logos, colours or tag lines. Brands are the culmination of who you are and why a customer should do business with you.

To survive and prosper in business today it is more important than ever to have a clear point of difference relative to your competition – a wow factor, something that your customers will remember and tell others about. With many businesses out there all looking for similar customers, you need to come across to the customers as “different” to your competitors, so they feel that you will have the answers to their problems.

Effective branding can elevate your product or services into something unique, instead of blending in with the crowd. Standing out from your competitors is particularly important as clients automatically extend their perception of your business, as they have come to know it. Perceived value exists simply from association with your business brand.

Whether you’re an established business or starting up, a brand has tremendous impact. A brand instils confidence, creates loyalty, and many times can command a premium price for products and services and importantly will also add value when you decide to sell your business. But most of all a great brand reduces a buyer’s perception of risk and makes the purchase choice easy.

By promoting the benefits that your business has over others in your industry, you will create a flow of clients and customers who will become raving fans. And raving fans will happily promote your services to their friends and family as they love what you do. What a great way to boost profit and increase the value of your business.

“As I look back over the year in 2011, there have been a number of highlights as well as some challenges,” the Savvy Business salesman said. “Among the highlights was completing the largest business sale on the Sunshine Coast for the past three years. It was a large food wholesaler that had been established for 10 years and it sold for in excess of $2 million. “Another highlight is seeing a huge increase in the number of businesses that I am receiving from repeat and referral clients.”

After being in the industry for close to four years, Michael is starting to resell some of the businesses he sold in his earlier days. He is also seeing a lot of business come through referral, and some of these businesses are off the Coast. “An example of this is when I sold the Sunshine Coast territory for TFH (Temporary fence hire) earlier this year. The sale went really smoothly and head office was happy with the work that I did so they have recommended me to their Cairns area and Hervey Bay Territories which I have listed at the moment. “In an industry where word of mouth is such a strong form of advertising, to have my services recommended to others is the greatest way to gauge whether you are doing a good job.” One of the challenges at the moment, Michael sees, is under-supply of good quality businesses coming on to the market.

“There is a perception out there that it’s not a great time to sell a business, but the multiples that we are receiving for top shelf businesses has not changed at all over the past three years. I think that our sales results at Savvy Business Sales reflect this with a good variety of local businesses changing hands throughout the year.”

Michael says he tries to make sure that everything is done to the highest standard possible and that he gives clients the same service he would expect if he was selling a business.

Savvy took out the prestigious Small Business of the Year award at the 2011 Sunshine Coast Excellence in Business Awards on Saturday night.

Principal Rod Russell said that Savvy continues to enjoy success, in spite of challenging times.   “Business broking Australia-wide is finding life very tough with many formerly profitable businesses becoming unsaleable. In contrast, we’re going from strength-to-strength.

“In fact, by the end of this year we’ll have doubled the size of our team to cater for the growth we’re experiencing,” he said.

Mr Russell said he was extremely proud of his team, and praised their contribution in Savvy Business Sales being recognised as the Sunshine Coast’s best small business. “Most businesses are small businesses, employing less than 20 staff. So to be named as the best small business on the Coast is an incredible accolade.”

Small business plays a pivotal role in economic prosperity, with 96 percent of all actively trading entities being small businesses. Collectively they employ almost half of the nation’s workforce.Specialising in business sales above $300,000, Savvy lives up to its motto of “raising the standards in business sales” – proof being that nearly 70 percent of sales originate from referrals or repeat clients.

“Many of our clients have bought or sold businesses through Savvy previously, and return to us because we’re forthright and don’t offer false hopes. Most also appreciate our innovative marketing and the systems we’ve developed specifically to support their sale,” Mr Russell said.

Savvy has achieved more than $140 million in business sales over the past four years.

“I feel that the outlook for businesses on the Sunshine Coast is really looking up, and accordingly Savvy has set an ambitious target for attracting new clients in 2012.

“This is our third Sunshine Coast Excellence in Business Award. We previously won the Business Services category in 2008 and 2009, and so it’s fitting that we’ve taken out one of the major awards,” Mr Russell said.

More than 200 business leaders attended a half-day forum in Maroochydore yesterday to see how they could be part of what will be a $3.5 billion injection in the local economy from the hospital and surrounding development. (Read more) http://www.sunshinecoastdaily.com.au/story/2011/09/16/our-resources-boom

Tourism has been down, the weather been horrible and the building industry has been slower just to name a few of the problems. With all these factors considered, there are probably many thinking that it might not be the best time to open a business.

However it is the ideal time to purchase an existing business and with buyer enquiry being so strong lately, it seems like I am not the only one with the opinion.

One of the benefits of this slower economic climate is that it sorts out the good businesses from the ordinary.

If a business has come through the downturn in a fair state, there is every chance that it is a sound business built on good fundamentals.

The greatest concern a buyer has is purchasing a business only to see the their investment head south after they take over. Naturally with a lot of capital on the line, all buyers are looking at minimizing their risk and buying now could be a great way to do this.  After two years of slower economic conditions, buyers are more likely to be seeing a business after going through its toughest period. This should give them more confidence in the business that they are purchasing as a solid investment. There are probably many people out there who bought a business 2-3 years ago who wish they could have had the benefit of seeing their business go through a slower economic period.

When the Coast economy starts to turn around these businesses will be well placed to capitalize on the future and an improvement in the local economy probably isn’t too far away.

Large infrastructure projects such as the Kawana Hospital and the return to better weather patterns are likely to help things improve over the next few years.

If you are looking at buying a business, it is still important that you take the necessary steps such as due diligence to ensure that it is suitable. However you can take confidence from the act that a business that has come through the ownturn is likely to continue to trade well into the future.

Despite this, most buyers will eventually find their match.  The key point to be patient and do as much
research as you can, stay within your financial limits and, most of all, ensure that you have the ability
to competently operate the business you are interested in.

Show that you are keen – local business brokers get swamped with inquiries from buyers on a daily basis.
Often quality listings will get snapped up quickly once they are marketed online and in the press.  So if you
are serious about it and establish a good relationship with local brokers to ensure that you are top of mind.

Research everything – if you find a suitable business do your homework and learn as much as you possibly
can about it.  Are there new competitors coming to town, research the services and products on offer, how
easy is it to find industry experienced staff, is the rent fair for the location, what is a fair value for the
equipment, will you need to upgrade the fit-out, are there special licences required to own the business?
These basic checks can be done easily and shouldn’t cost you money – well worth the peace of mind.

Risk and return – the most common question that I get asked is “how do you value a business?” There
is no black and white answer to this question.  However, I suggest looking at the level of risk in the
business and what the return on investment is.  Obviously a buyer would expect to pay more money
for a long established business over a business with only 18 months history.

However, many experienced business operators would take a risk on the newer business and take advantage
of a lower asking price.  This is where the risk and return scenario will depend on the buyer’s situation.

Due diligence – an absolute must!  Take the time and spend the money to do a thorough due diligence on the
business while the contract terms allow you to.  Your investment with solicitors and accountants is normally
only a fraction of the purchase price of a business yet it could save you from losing everything.  It is of
utmost importance to ensure that you are dealing with qualified advisors who specialise in business and
commercial transactions.

Tuition – most buyers underestimate the knowledge and the role of the seller.  Most sellers have years of
industry experience and an intimate knowledge of clients, products and staff etc.  You must take
advantage of a suitable tuition period after settlement.  This is not a time to arrange bank accounts and
credit applications.  This period is crucial to a smooth takeover and your ongoing success in the business
and is the very best time to learn everything you can.

by Rod Russell
Principal

Preparing well to sell

INTEGRITY LEADS TO WIN

MICHAEL Yared is always striving to improve his operating standards to be among the best.  Yet the 30-year-old business broker never thought he would achieve what he has so quickly.

Last Thursday night Michael took out the prestigious Business Broker of the Year Award for 2011 at the REIA (Real Estate Institute of Australia).

It’s an historic win as Michael is the first Sunshine Coaster to receive an REIA award.

It is also a fitting tribute to his grandparents Frank and Daphne who have been the biggest inspiration for Michael.

“My grandfather emigrated here from Lebanon when he was two years old, sadly his mother died soon after”, Michael said.  “When he married my grandmother  they started out with nothing.  With a lot of hard work they built up several different businesses. “More than just being successful in business, they are also great people – selfless, generous, with strong morals and integrity.

“Always putting others first they have incredible integrity and morals.  They had a great work life balance and built a very successful business by working hard and doing the simple things.  They are both elderly now – my grandfather turns 97 next week – and even now they still try to serve others as much as possible and put others first.

“I hope that I live my life the way that they have”.

Michael won the Queensland state awards in February which elevated him to the national finals with other state winners.  The awards were held on the Gold Coast last Thursday.  Now in its sixth year, the REIA awards recognise real estate professionals who have contributed at an outstanding level to their business, their industry and their community.

“It is really encouraging to be rewarded for my hard work and it drives me to work even harder” Michael said.

“To win the award is very humbling, there are so many good business brokers across Australia and to be named the best of them is a huge honour.  We’ve worked very hard at to improve our systems so I can offer clients the very best service and results possible.

“I am really looking forward to the year ahead as the business sales market is still strong and we are achieving excellent results across the board”, Michael said.

As well as his family, Michael attributes much of his success to Savvy Business Sales principal Rod Russell – someone who has been in the industry for as long as any broker on the Coast.

“Rod has a lot of experience and he is a great person to have on your side”, he said.

And it gave Rod a great deal of pride to see Michael accept the award.

“It is excellent recognition for the effort that Michael has put nto his career and into the industry over the past three years,” he said.

“His work ethic, tireless commitment and sales results in tough economic times have been outstanding.  The team at Savvy are very proud of Michael and the fact that he bought such a prestigious award to the Sunshine Coast”.

Two-time winner of the REIQ Business Brokers of the Year, Ron Frank of Business Brokers Queensland, has also been supportive of Michael, who completed a bachelor of commerce degree at university and said it had helped him.

CONTACT: Michael Yared – 5444 3300 or 0409 931 600