Ok, so I have a gripe...There are too many people out there that don't treat their real estate investing like a business. It kills me to hear about people and businesses that treat real estate investing like a hobby or a side job. There is way too much at stake to be moving forward without a plan.
Your plan doesn't have to be a 200-page dissertation on the state of the market either. But you should have some goals, milestones and some sort of way to track your success.
I used to think that your business plan was like the ten commandments, you know, carved into stone and never to be changed. Luckily, business plans are living documents and have to change and evolve. Your business plan should have enough flexibility to stand the test of time and weather many storms.
The truth of the matter is that your business and business environment are always changing so you need to have a tool that is flexible enough to guide you and give direction, but if it is taking you down the wrong path, you better be able to change course before you are completely derailed!
Even if you only have a one page business plan you should address the nature of your business, what your goals are (short-term, intermediate and long-term) and attach a metric that can be measured...when you use phrases like, I want to be successful or have a bunch of houses, this is useless, because there is no identifiable quantity to measure against. Be specific.
There was a time when I would start writing a business plan with words, but I like to think that I have evolved to the degree that I start out by building a proforma to see if the business makes sense from a monetary stand point. The words are the easy part, but if the business is not a viable venture in the first place, there is no reason to even write one word. My advice is to hunker down and put your business into a spreadsheet. The mere exercise will make you a better business person as you have to ask yourself if you have all of the right numbers in place and whether or not you can accomplish the financial goals you have set for your business.
Once you have a spreadsheet that tells the story of your business, run it past somebody who knows anything about your business to see what they think. It is always best to be conservative when you are running your numbers. It is easy to get caught up in scenarios that show how you are going to make millions of dollars per quarter, but there is usually something that has not been taken into consideration.
Anyway, take the time to write a very basic business plan...just a couple of pages will be worth its weight in gold if you review it on a weekly basis and use it as the planning tool that it is designed to be. Be flexible though, the business that you are in five years from now may not be the business you started out building, but you just might find that the business you intended to start was not a viable, sustainable business...but that the business you ended up running is sustainable and viable.
Good Luck and Healthy Investing to all!
Rob
http://www.LocalRealEstateDeals.com
Showing posts with label business models. Show all posts
Showing posts with label business models. Show all posts
Saturday, July 25, 2009
Thursday, May 14, 2009
New Models
The real estate industry is one of the oldest industries around. As long as people have been around, there has been a need for them to have shelter. In an industry as "old" as this, it is tough to come up with anything new. Sometimes we have to look outside of our industry for inspiration.
Over the years I have become fascinated with business models. Each industry has its own model that follows a line of thinking and most people and companies line up behind that mode of thinking and go out and do business the same way. There is nothing wrong with that, in fact, it is a very smart and safe way to grow your business. Like I said, each industry has its own model, so it is always interesting to me to look at how different industries make money.
Every once in a while, I find a business-model nugget that I can apply to a situation in our own business that let's me address a problem that my old model couldn't or wouldn't address. As you explore different models and challenge the models of other industries you begin to learn a new language of problem solving and business modeling.
There is a company that I am quite fond of that has a unique approach to their own highly-competitive market, that company is Morgan-James Publishing. If you think real estate is brutal, you should take a look at the publishing industry...NO THANKS! Anyway, the founder of the company, David Hancock, does things differently. His company is known as The Entrepreneurial Publisher and they have created their own model that will no doubt serve as the new model for many companies. You see, they have dared to try something new...something that hasn't been done before. It is worth checking out their websiteto see what they are doing.
www.MorganJamesPublishing.com
My point is that we cannot expect to get better results by doing what we have done for years. We have to aggressively search for new ways to conduct business. We have to dare to try some things and understand that not everything is going to work. There are no guarantees, so we have to keep reinventing ourselves and look for inspiration outside of our industry if that is what it takes.
My suggestion would be to do some research on what IT, web and computer companies were successful after the dot com bust, to find out how the industry as a whole responded to the down turn in the economy and the market. We can learn from other industries and other mistakes as if they were our own if we pull our heads out of the daily grind and look around. There are golden lessons to be learned and they are your for the taking. By reviewing other models, we gain deeper insight into how we might move forward in a given situation where we otherwise might have be prone to make snap judgments that tend to make things worse.
We have our challenges, but the answers are out there! It is time to reinvent our businesses and in the mean time, reinvent the real estate industry.
We would love to know what you are doing different in the new economy.
Regards,
Rob
http://www.LocalRealEstateDeals.com
Over the years I have become fascinated with business models. Each industry has its own model that follows a line of thinking and most people and companies line up behind that mode of thinking and go out and do business the same way. There is nothing wrong with that, in fact, it is a very smart and safe way to grow your business. Like I said, each industry has its own model, so it is always interesting to me to look at how different industries make money.
Every once in a while, I find a business-model nugget that I can apply to a situation in our own business that let's me address a problem that my old model couldn't or wouldn't address. As you explore different models and challenge the models of other industries you begin to learn a new language of problem solving and business modeling.
There is a company that I am quite fond of that has a unique approach to their own highly-competitive market, that company is Morgan-James Publishing. If you think real estate is brutal, you should take a look at the publishing industry...NO THANKS! Anyway, the founder of the company, David Hancock, does things differently. His company is known as The Entrepreneurial Publisher and they have created their own model that will no doubt serve as the new model for many companies. You see, they have dared to try something new...something that hasn't been done before. It is worth checking out their websiteto see what they are doing.
www.MorganJamesPublishing.com
My point is that we cannot expect to get better results by doing what we have done for years. We have to aggressively search for new ways to conduct business. We have to dare to try some things and understand that not everything is going to work. There are no guarantees, so we have to keep reinventing ourselves and look for inspiration outside of our industry if that is what it takes.
My suggestion would be to do some research on what IT, web and computer companies were successful after the dot com bust, to find out how the industry as a whole responded to the down turn in the economy and the market. We can learn from other industries and other mistakes as if they were our own if we pull our heads out of the daily grind and look around. There are golden lessons to be learned and they are your for the taking. By reviewing other models, we gain deeper insight into how we might move forward in a given situation where we otherwise might have be prone to make snap judgments that tend to make things worse.
We have our challenges, but the answers are out there! It is time to reinvent our businesses and in the mean time, reinvent the real estate industry.
We would love to know what you are doing different in the new economy.
Regards,
Rob
http://www.LocalRealEstateDeals.com
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