When you think of successful businesses, visions of investor-backed ventures and overnight startups probably spring to mind.
While there are some cases where companies quickly make it big, the fact is for most companies that’s not the case. More often than not, success is a process. It’s a gradual development and the result of a significant amount of work.
At Renters Warehouse, we started out as a small, locally based property management company in the Minneapolis-St. Paul area. We worked behind the scenes building the company, hiring staff, and increasing our customer base. We also developed our business concept, eventually franchising it and taking the company national.
Whether you’re toying with the idea of starting your own brokerage or interested in growing your existing real estate business by expanding your reach or adding services, you should know that behind the scenes work is essential.
Starting small can help you to develop your company in a way that’s sustainable for long-term growth. Here’s how you can give your venture a fighting chance, by scaling the right way.
1. Study Demand
First, spend some time studying demand. You’ll want to find a need and fill it. This will help you to define your market position — it’s the foundation upon which everything else will be built. It will show you which direction you’ll want to take your company.
Once you’ve settled on an idea that you feel is viable, test it out. Start by conducting surveys. Gut feelings can be great, but you’ll always want to test your suspicions to make sure your ideas check out. If you have an e-mail list, this could be the perfect way to get feedback. Tools like Key Survey or FluidSurveys make short work of conducting surveys and help you make sense of the data. For best results, make sure you ask survey questions that work.
2. Set Your Sights High
Be a big-picture thinker. Success rarely happens because a company “fell into it”; rather, it’s the result of clear direction and goals. In addition to setting your sights high, be specific. Unclear objectives are almost as bad as no goals. So don’t be vague. Define what success means to you, and then start developing your business plan.
Unfortunately, many startups neglect this all-too-important stage in planning. Often, unless there’s a clear need for a business plan – for example, if the bank or investors request one – this step tends to be shoved aside. In fact, real estate coach Jan O’Brien estimates that less than 20 percent of real estate agents she works with actually prepare a written business plan and set annual goals.
Still, the importance of a clear and actionable business plan cannot be overstated. “In my 20-plus years in the real estate industry, it has been my experience that the agents who actually write down their goals and utilize a real business plan always meet and usually exceed their desired outcomes,” says O’Brien.
Regardless of whether or not your bank or investors want to see one, develop your plans. Don’t neglect this crucial step.
3. Lay a Solid Foundation
While it’s tempting to go all-in on an idea, success with a business or real estate venture isn’t usually dependent upon the speed at which you accelerate. It’s usually the result of laying a solid foundation, getting your cards in order, and then growing your company, smartly.
Instead of scaling vertically as fast as you can, work to develop a company or concept that can run independently of you. While it may be tough in the beginning, as you grow it will allow you to work on building your business rather than just working in it.
As we grew Renters Warehouse, there was a tremendous amount of work that went into creating a business model that was truly scalable. The result was a franchisable concept that we were able to package and sell to other property managers nationwide. Creating a company that was based on repeatable business operations gave us unlimited growth potential.
4. Start Small and Expand Your Reach
Start local. Start with a niche. Don’t spread yourself too thin too soon. Know your market, and become an expert in the area that you will specialize in. Whether it’s starting your real estate company or adding ancillary services like title insurance or property management, it’s important to be well-acquainted with the sector that you’re going into. If you’re trying to position yourself as an expert for new high-rises in the area, make sure you know these buildings inside and out.
5. Carefully Consider Your Financing Options
While visions of investor funding may come to mind, in many cases it’s best to bootstrap in the beginning. Again, this will give you a chance to learn the ropes before investing too heavily – when there’s a lot more at stake. It’s also unwise to put all of your debt onto credit cards when starting your company. Have a clear plan for expenses and, more important, a plan to pay it back. Before you spend, do the math. Find out how you’re going to fund your venture – and how long it will take to pay down any debt you accumulate.
6. Try to Build Your Public Profile
Whether you’re building a business or a name for yourself, creating a public profile is important. Today more than ever, social media is where it’s at. Having a LinkedIn account, a healthy online following, and a blog will help you to establish yourself as an expert in your niche. It will also help you to establish credibility and get the word out about your business and real estate expertise. As you know, your reputation is everything in this industry – always keep that in mind, because sometimes it’s worth sacrificing a sale in order to keep your integrity and your reputation intact. Consider the big picture in everything you do.
7. Be Prepared to Pivot: Don’t Be Afraid to Go in a Different Direction
Finally, remember that nothing stays the same. As you move forward, you may find that you have to go in a slightly different direction than you’d planned, and that’s okay. Before he founded Microsoft, Bill Gates was busy trying to sell his traffic data machines to people. It didn’t work out, so he went in a different direction, founded Microsoft, and the rest is history. Whether you are selling condos to retirees or marketing starter homes to millennials, remember that the market can change, and fast. Supply and demand will shift, the economy will regress, or interest rates will go up. The secret to long-term success is knowing when to pivot. Don’t be so attached to a specific idea that you are unable to shift direction to keep up with the changing tide.
While it’s easy to believe that you need to have instant success to make it in today’s competitive marketplace, this couldn’t be further from the truth. Study demand, set your goals, and work behind the scenes to make things happen. It’s less dramatic than the overnight startups that you hear about, but in most cases it’s a more sustainable path to success.