Welcome to the 2nd quarter 2005 edition of the Smart Growth Report from the Childs Company. I hope you find the information here useful in developing plans to meet your business or personal goals. Please contact me if there is anything we can do to facilitate implementing the ideas contained in this report. I would love to help you.

Childs Company is a growth partner for emerging companies and entrepreneurs. We work with a limited number of small business owners who are serious about growing their business.

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Founded in 1998 by Sarah and Terry Swanson, a mother and son team with more than forty years of successful real estate experience, Results Realty Services is one of the fastest growing residential real estate brokerage firms in the metropolitan Atlanta market. The company currently has 150 agents and focuses primarily on the fast growing corridor between GA 400 and I-85.

Matt Childs has teamed up with the Swansons and the management team at Results Realty to develop and implement a growth plan designed to substantially increase the company’s market share and to offer a wider array of real estate services to its agents and its customers. In the past year alone, the company has:

- Created a mortgage company, Results Mortgage Services, which offers a wide variety of competitive mortgage products

- Formed Results Home Improvement Services, a general contracting company which offers everything from home inspection repairs to full remodeling

- Further developed a New Home Sales and Marketing division which offers home builders a complete package for marketing and selling through their new home communities

- Initiated the formation of a commercial brokerage, Results Land and Commercial, which will focus on land sales in the Gwinnett and Forsyth counties

During the next several months, the company will open two new prototype offices. These offices are being designed to create a compelling and attractive environment for successful real estate agents and their customers.

This Quarter:

• Hardball: Are You Playing to Play or
  Playing to Win?
• Housing Prices: Is The Bubble About to Burst?
• GA Economic Indicators: 1st Quarter 2005
• Business Partner Profile: Results Realty

Hardball Are You Playing to Play or Playing to Win? By George Stalk and Rob Lachenauer       with John Butman

In their recent book, Hardball , strategy experts George Stalk and Rob Lachenauer note that the winners in business have always played hardball. When companies play hardball they use every legitimate resource and strategy available to gain advantage over their competitors. They play with such a total commitment to the game, such a fierceness of execution and such a relentless drive to maximize their strengths that they ultimately neutralize and even punish their competitors.

The authors outline a “Hardball Manifesto” with strategies which include:

Stalk and Lachenauer reveal how hardball companies achieve decisive victories—without bending the law and without compromising their obligations to customers and stakeholders. These companies often play rough, and they don’t apologize for it. Yet they are also adept at the the “soft” side of management—rallying talent and building culture by focusing like a laser on the few issues most critical to success.

Visit the Hardball web site

Does your company have its own "Hardball Manifesto"? We can help. Click here to contact us.

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Housing Prices:
Is The Bubble About to Burst?

You can’t pick up a newspaper or magazine without reading articles about the booming residential real estate market. Record high percentages of home sales are being made to investors and pure speculators are active in a number of markets. Noted economist Donald Ratajczak now believes that too liberal financing (100% loans, interest only loans, etc.) has, in fact, led to a bubble and he says to “expect a price collapse in the housing market.” Others say that well-located real estate, especially in coastal and mountain markets, will not decline due to increasing demand by baby boomer second home and retirement buyers.

Most of us are torn between being afraid of missing out on the boom and being afraid of buying at the peak of the bubble. What is one to do? Here is our advice.

There is definitely a place for real estate (in addition to your personal residence) in a balanced portfolio. Get with an advisor and establish a target percentage of assets for real estate. Each individual has different circumstances so the percentage may vary widely. What’s important is to establish a target that makes sense for you. Brian Frank, SVP and Senior Trust Advisor with Morgan Stanley, states, “We have all along focused on a detailed outline for creating our clients’ macro asset allocation. Depending on the client’s goals, age and life situation , we encourage our clients to have exposure to the traditional financial markets (stocks and bonds) but also real estate (primary residence, second home and investment real estate) along with alternative investments (non-correlated to the economy). A balanced target macro asset allocation might consist of 40-60% stocks and bonds, 30-50% real estate and 5-10% alternative investments.

Use conservative financing to acquire real estate. If you can’t afford to put down 10 to 20% and afford to make monthly payments that amortize principal, then it’s probably too risky. Stay away from interest only loans and more seriously consider locking in to fixed rates which are still historically low.

Don’t be a speculator. Lean towards income producing real estate instead of counting on appreciation to cover your negative cash flow.

These suggestions may be too conservative for some (especially those of us who are sick of hearing their neighbors talk about the $300k condo they bought in Destin that’s now worth a million dollars). However, following them will allow you to participate in the real estate market without taking undue risk.

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Reviewing the Numbers:

Economic activity in Georgia has been strong this year. Despite rising fuel prices, consumer spending has remained strong, with many retailers reporting better than expected sales in March and April. Automobile sales have been mixed with foreign brands improving market share while sales of domestic trucks and SUVs are down versus last year.

Single family home construction and sales continue at record levels although the pace of growth has definitely slowed versus a year ago. The commercial real estate market is improving although comparisons are against low levels of activity in the past few years.

Labor markets improved slightly in the first quarter although businesses continue to be restrained from hiring due to the rising cost of health care benefits and due to a lack of qualified applicants in some industries. Core inflation remains modest although building materials and petroleum-based products have experienced significant price increases. Many businesses report that they have been able to pass along higher material and energy prices to their customers.

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