It is hardly an exaggeration to suggest there are easily a hundred or more ways to profit from and to make money in real estate from single family homes to multi family properties, from raw land to commercial non residential properties, to everything in between. Many a savvy real estate investor will suggest similar themes that among the easiest ways to make money in real estate are from real estate appreciation and from buying and flipping or buying, holding, then renting discounted properties. Another way of saying this is to tout the three primary ways investors can accumulate wealth:
(1) An increase in the real estate value
(2) Rental income derived through property ownership
(3) Profits generated from any business activity through property ownership
This blog, however, is neither about making money in real estate nor how to accumulate wealth through real estate. This blog is all about how to measure your business success now that your vision has become a reality, then develop those habits to repeat what is successful, avoid what is not, and develop the strategies to keep your business lean, focused, and very profitable. A real estate investing enterprise is therefore little different than any other small business operation, all with very similar goals and strategies to mark that success.
Being profitable seems to always be the primary measuring stick to determine business success. If you make money, perhaps lots of it, after all your bills and other obligations are satisfied, with all the other resource costs fully taken into account, your business is a success. If there is little money in the till after you account for each and every operating expense, you are hardly keeping you head above the water, if at all.
Keeping your business lean means having all you need and discarding all you do not need. To stay lean is to be more focused, more efficient, and allows your business operation the space for meaningful and productive growth.
Staying lean requires an honest assessment of where you are and where you plan to be. It requires a full and measured examination of every facet of your business, what you need to address, where you need to retool, and where you need to adjust efforts and priorities. Staying lean requires a full understanding of resources and how to best manage and utilize them for optimum profitability. Staying lean means to eliminate inefficiencies and tasks that need to be minimized or discarded. Staying lean and focused will ensure your greatest opportunity for growth, expansion, and continued success.
It is always good advice, in both business and in life, to never forget “what got you here”. Never forget your well conceived and thought out business plan, vision, and goals. Having a laser focus on them allows you to find and secure your solid footing before getting reckless or greedy and seeking too much too soon. Once you establish that solid footing and your core business is thriving, then maybe now is the time to spread your wings with a further game plan to expand and diversify your revenue potential while decreasing the risk of following a singular revenue stream that may dry up unexpectedly. Only then can you have the presence and wherewithal to handle the new exit strategies and risks attendant to the expansion and diversification.
Staying lean with your ongoing honest examination and acts of fine tuning, when appropriate, you will more than likely avoid business bloat which can and likely will retard or damage your current and future business success.
So you properly focus on your profitability and create the habit of driving for sustainable profits by pursuing those parts of your business that provide solid profit margins and learn to recognize them and then avoid those that do not. You need to uncover then minimize or eliminate those steps and tasks that waste precious resources, waste your valuable time, or are profoundly distractive with little or no upside. Always maintain a tight handle on all operating costs and expenses that waste resources if mishandled. For a real estate investor, having a market presence, pursuing your optimum marketing magic, and creating a brand recognized in your chosen target market, will be indispensable.. Creatively outdo the competition. Have a solid handle on every aspect of your marketing and launch effective laser focused targeted advertising campaigns to stabilize then increase profitable business margins. Make use of all the business tools at your disposal and employ systems boosted by the available cost sensible technology to further your most profitable pursuits. Understanding your goals clearly as you expand and diversify is vital. Always have a cautious, efficient, well considered and defined handle on your numbers, resources, and expenses. Never get over your head recklessly or cavalierly.
Business consultants will counsel small business owners to have a business support plan which is a long term well documented plan of action describing in detail how you can best stick to the business model and vision most efficiently and cost effectively. It will document what responsive steps you must employ with exit strategies in place if circumstances require. These support plans are a key component in maintaining and maximizing your business success.
How you get lean, how you maintain remaining lean is key for optimizing your success. It requires an honest, transparent, realistic review of your business with a willingness to seek and accept constructive criticism. You need to maintain a creative, positive view of your future promise and an ability to maintain efficiency at all points. You need to be fair but ruthless. Nothing is sacred. Reviews must be ongoing and thorough. Empower your team to provide feedback and to freely offer and express ideas.
Business consultants will advise that a lean well constructed business operation does require hands on attention. It makes sense to grow but do so without careless risk, never ignoring where you have come from or where you need to go. You need to keep your core vision with focus and commitment and follow a path to a healthy bottom line.