Successfully Start a Business, & Successfully Invest in Real Estate

In his book, ‘Ready, Fire, Aim: Zero to $100 Million in No Time Flat’, Michael Masterson says that "Nothing matters more than selling." "Many first-time entrepreneurs have the impression that they are doing things in a logical order when they look for the perfect office space, have logos designed, and order a lot of inventory. The reality is they are wasting valuable resources on secondary and tertiary endeavors. If no one is going to buy what you want to sell, you've just wasted a bunch of money on a business that will never be."
Author Susanna Hutcheson, commenting on Masterson’s book, says “I see this when a client comes to me and has spent most of his small budget on Web site design and left the important thing, the sales message, for last --- just to fill in the beautiful design. They've spent their money on the least important and have no money left for the most important… I've seen this first hand in my own consulting business. Entrepreneurs tend to put their values and their money on all the wrong things --- and this leads to certain failure.”Here are Masterson’s three steps to starting a business:Step one: Get the product ready enough to sell, but don't worry about perfecting it. Step two: Sell it. Step three: If it sells, make it better.

While this all sounds fairly easy, it's not. "Selling can be terrifying," Masterson says. "It can be tough, gritty, unglamorous work. But when you make that first big sale, you realize it's also exhilarating. And like it or not, you probably won't become a successful entrepreneur until you can sell your product or service in your sleep."

Masterson also shares that you have to give far more than you expect in return to succeed. Similarly, I have read numerous times that you should give customers more value than they expect to get for the price, and I believe it.

What does all of this have to do with real estate? Two points.

First point. Several years back I talked to an investor who I saw at my Real Estate Investment Association every week for a few years. It was the first time we really spoke at length, and I asked him if he rehabbed houses. No, not yet anyhow. So rental properties is your game? No, but I wouldn’t mind doing those some time. Okay, then you wholesale houses? No, but I almost did wholesale one, and I would have made big money, too, if it worked. So now I am at a loss, and I ask him what he does do in real estate. He is still learning, and trying to figure out what will work for him. This after a few years of going to meetings every week religiously!!! [some of you are in my real estate investor association, and meetings are every other week; well, back in the day we were hard core, and met every week]

I see people all the time that buy real estate courses like they are candy. I go to free seminars and watch the same people rush to the back of the room to buy three and four different courses – any one of which would probably provide more information than they would need to get started. I see people study, read, spend time and energy learning the business, networking, and several years later they have still never made one red cent in the business. I see people with LLCs, corporations, accountants, attorneys, fancy business cards, using real estate investor terminology that I have never heard before, and they still haven’t done one deal.

I have seen people that have gone through every secondary and tertiary endeavor possible, but they never stopped to ask the most important question of all… Can I go out, locate bargain properties, and figure out a way to make money on them? At what point do you stop studying, learning, buying courses, buying sophisticated software, networking, etc., and just ask “can I make money in this business (or investment)?” [I think many who call themselves real estate investors are not investors, but are running their own small business, but we will save that for another article…]

Masterson says people starting a business need to sell, but it is hard, so they do everything else first and don’t find out until afterwards if their product or service is wanted. People interested in real estate investing find it somewhat fun and easy to learn, study, read, network, set up companies, set up offices, etc., etc., so they do those things, but they wait way too long to go out in the marketplace and find out if they are able to locate properties, negotiate bargains, and find a way to make money on them.

That leads into my second point. Personally, I believe that almost all businesses should be started on a shoestring, while you accomplish that one task… Find out if there is a market for the product or service you want to sell, and can you make money meeting the needs of that market place. If the answers are yes, then start meeting those needs, and base your expansion on your success and the level of demand for your product or service.

Real estate investing should be done in a similar manner. Personally, I did most of my studying in the early years in the library, and by picking the brains of a couple of co-workers that were successful real estate investors. I may not have spent one red cent until I bought my first property, and if I did spend some before that, it wasn’t much. The fact is, by many standards, I still run my real estate investing on a shoestring budget. I minimize all expenses, except for when it comes to giving the customer the best product I can at a reasonable price (part of my formula is to rehab houses nice, giving potential tenants and buyers more than they expect in a home in a given price range).

You might say, “Ready, Fire, Aim” (from Masterson’s title) is crazy, and you have seen some investors that rushed into crazy deals and got in over their heads. I agree with you. But don’t they still have the same issue as in my first point – they tried to buy, buy, buy, but they didn’t stop first to ask “can I go out, locate bargain properties, and figure out how to make money on them?” “Can I make money in this business?”

Anyhow, not my best article, but those were just a couple of points I noticed and wanted to drive home about how to successfully start a business, and successfully invest in real estate.