Run Your Investing Business Like A Startup Company
By JD Esajian on May 13, 2016
The business world is ever changing. Advances in technology have completely shifted the way business is currently done. In the past if you wanted to open a business you needed to apply for a bank loan and master your business plan. Today there are many more outlets in finding capital and information. The same is the case in the real estate world. The best real estate investors are those that have embraced the current landscape. Instead of sticking to their business plan at all costs they understand that their roadmap may be a moving target. In today’s real estate world if you can run your business like a startup company and not an old school business you will have the best chance at success. Here are five steps to help you get there.
- Analyze Your Strategy. Instead of getting bogged down with goals, plans and numbers start with a general strategy. Goals are always important but they are much more beneficial once you have closed a handful of deals. In the early stages of your business they can actually do more harm than good. Instead of trying a deal that you see value in you may avoid it because it does not fit your current plan. The alternative is to draft an overall strategy for how you can get your first deal under your belt. Keep in mind how much you have to spend, where you want to invest and what you want out of the deal. At this stage it is important not to get bogged down with specifics. Your goal should be to get your first deal under your belt as quickly as possible. You really won’t know what niche you like or what strategies work until you have a few deals to compare.
- Action. The single biggest trait that separates successful new investors is their ability to take action. All the education and planning in the world doesn’t matter if you don’t take action. You don’t need to be an expert in every area of the business to get started. In fact you will learn much more by doing than by anything else you do. As long as you are comfortable with the risks involved in the deal you are ready to move forward. Too many investors wait until they have more than enough capital and education to get started. News flash: there will never be a perfect time to get started. If you don’t have enough capital you can find someone to partner up with or utilize a hard money lender. If you don’t feel like you know every step of the process you will learn it by doing. There may be some mistakes along the way but in most cases these are much less harmful than you think. If you really want to get started in real estate you need to take action.
- Evaluate Action. Taking action is great but you also need to learn from it. During your first few deals you should take copious notes about every step along the way. You should treat these deals as the important learning tools that they are. Whether you close the deal or not after you are done you need to take some time and evaluate what happened. If your offer wasn’t accepted what could you have changed about it? If your offer was accepted would you want to make any changes with the process? Where could you have sharpened your pencil or negotiated a little differently? Whatever you did or whatever happened during the transaction you need to look at the cause and effect. Things will always change based on the individual transaction but you will get a general feel of what works and what doesn’t. It is important not to be stuck in your ways in thinking that something definitely works before you test it in your market. If you take notes on your first dozen deals you will have a very good sample size to draw from in the future.
- Give Yourself Flexibility. To borrow a poker term you always want to give yourself outs. Many new business owners are so excited to open their doors that they forget about the bottom line. As a real estate investor you don’t want to commit to any niche or any market until you know it works. Dumping thousands of dollars on a marketing campaign will come back to haunt you unless it yields results. As you are just starting out you should look for deals as inexpensively as possible. As your business grows and you find what works you can start to spend money. Until you really get going you should spend money only when necessary. There is nothing wrong with working out of your kitchen. By conserving capital you give yourself flexibility to make changes when needed.
- Willingness To Change. As a real estate investor you need to know what works and what doesn’t. Your education may tell you that a certain niche should work. It is only when you try it in your market that you will really find out. If something doesn’t work you need to be willing to change as quickly as possible. There is a fine line between giving something a chance and folding a bad hand. If you look at any new business after the first year it is probably much different than after their first month. You can’t be stuck in your ways or unwilling to change when necessary.
The current business model has changed and you need to change along with it. The better you are at adapting to this change the more successful you will be.