Business & Marketing Plan – Part 1
Money in your pocket!
There are two types of entrepreneurs. Those that make excellent profits and build a highly successful business and those that struggle, lose money and close shop in a few months. The SBA’s research shows that 23% of new businesses fail in the first year. Another 42% fail within 5 years and only 32% of entrepreneurs are still in business after 10 years. Don’t get discouraged, I’m here to help.
If you ask why so many real estate investors fail, it’s because the vast majority never begin with a written Business Plan and its most important section, the Marketing plan.
I’m publishing this important blog just before Thanksgiving 2021. Why now? Because for years, I’ve set aside the long Thanksgiving weekend to put together my Personal and Business Plan for the coming year. So, my first suggestion is… do the same. Why over Thanksgiving weekend? Because most people, 9-5ers and entrepreneurs, have a long 4-day weekend and it’s a perfect opportunity to invest some time in you and your business instead of being glued to the TV watching football. When New Year’s Day hits, you want to hit the streets running! If you’re reading this and Thanksgiving isn’t close by, just take some time off from ‘life’, hide away for a weekend and put together your Business/Marketing Plan. And don’t forget… it must be in writing!
Before I get into the Marketing Plan, I want to make a suggestion for your general Business Plan. Look at your calendar for the next year. Block out time to spend with your family, spouse and friends first. Block out specific weekends to escape, build and reaffirm your relationships with the most important people in your life. Successful entrepreneurs have a tendency to work crazy hours. You’ll need some long weekends, lots of fun date nights and 1-4 weeks of vacation time so you can recharge and fall back in love with your life. At the end of your life, you won’t be saying, “Oh, if I had only done one more deal!” You’ll be saying, “Thank God I was smart enough to spend a ton of time with the ones I loved.” So, begin by looking at your calendar and block out special times to be with the ones you love. You’ll never regret it!
OK. With that said, let’s jump into the most important aspects of your Business & Marketing Plan. The budget!
To me, the only place to begin is with your budget. Your overall business budget will determine what you can spend on marketing. Unfortunately, many wannabe real estate investors get into real estate because they’ve been doing the 9-5 corporate grind for years and came to the Ah-Ha realization that they’re never going to reach their financial and personal goals there. Unfortunately, this probably means they’ve never run a business, let alone completed a strategic business and marketing plan. One of the top reasons most new businesses fail is because they are under-capitalized. When you make your Business Plan, it’s extremely important to look at how much money you’ve saved to start your business and how you’re going to allocate it. Here are some of the major areas you’ll be budgeting for.
1) Purchasing properties. This includes earnest money, inspections, contractor payments, materials, advisors, (accounting & legal), lender fees and closing costs.
2) Pay for any staffing, whether it be local or virtual.
4) Networking/entertainment costs.
5) Computer and software/apps.
8) Personal funds to live on while you build your new business.
9) Leasehold space. (Most new entrepreneurs work out of their home if there’s space).
10) Office supplies and furniture.
11) After all these other expenses, you still need to budget for marketing and advertising.
Once you complete your written business budget, you’ll have a better idea on how much you can devote to your marketing and advertising. It will also tell you whether you should even start a real estate investing business in the first place. Let me tell you, expenses add up much faster than you think! If the numbers don’t make sense, I’ve just saved you a lot of money, time and heartache. I’m not in any way discouraging you from starting a new real estate investing business. My hope is that you go into this fun and crazy field with your eyes wide open!
Let me share a story. Not too long ago, I was contacted by a person that had heard about my success in real estate and wanted to know how to get started? The first thing I asked her was, “Do you have enough personal savings to pay for month-to-month expenses for 1 to 2 years as you build your investing business? She said, “No.” My next question was, “Do you have enough money to fund your business for the first 1-3 years? And I mean at least $100,000?” She said, “No.” Then I asked, “Do you have enough money to either pay cash for houses or the minimum 20%-30% down to get a loan on investment properties, let alone the other transactional and closing costs to close on a property?” She said, “No.” My last question concerned time. I asked her, “Do you mind working entrepreneur hours?” She looked at me funny and said, “What’s that mean?” I said, “The majority of successful real estate investors put in 60-90 hours a week, which includes reading time to learn RE investing skills (it’s a complicated business), researching properties each day, viewing properties with the owner or realtor, researching comps, driving the comps (when necessary), writing up offers, handling multiple counters, setting up inspections, working with your contractor(s), title, lender, bookkeeper, attorney, reviewing dozens of pages of paperwork and so much more. It’s easily 50-60+ hours a week, especially in the beginning when you have no idea what you’re doing.” She had a frown on her face. I probably burst her entrepreneurial bubble, but I probably saved her a lot of money, stress, headaches and tears. She looked up at me and said, “Thanks, I think?” I gave her a hug.
Yes, if you’re highly motivated, smart, hard working and creative, you can still make money as a real estate investor, but unfortunately, too many people get into real estate investing without knowing the money game. It’s not like all the rehab and flip shows you see on TV. That’s Hollywood baby and Hollywood is fantasy land. Successful real estate investors are very nuts & bolts people. They’re analytical. They’re number crunchers. If that’s not you, that’s OK! If it is and you have the time, money and a great work ethic, you can be a successful real estate investor. And man-oh-man, you can make a bunch of money!
If you have a realistic handle on your budget (money & time) and it truly makes sense on paper, then you’ve covered the first major hurtle in preparing your Business & Marketing Plan and finding success as a real estate investor.
Since this is a wide-ranging topic that I could write a book on, I’m going to divide it up into several blog posts. Stay tuned for the next one as I continue with the theme of creating a realistic and action-oriented Business and Marketing Plan.
Marketing Makes Millionaires. ™
© 2021 Chasen Chess – Solution Street Homes