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Professional Real Estate Support Team
In my last post, I introduced you to a list of support team members for your real estate investing business. Now, I will begin discussing each one and their roles in helping your business to succeed. An important key point: Make sure that you don’t ever become dependent on any team member. When you become dependent on someone then you can become trapped within your business. Always have other alternatives to consider.
Team Member 1- Real Estate Agent
Whether or not you regularly use the local Multiple Listing Service (MLS) to find deals for your business, a good real estate agent (or agents) is still a critical part of your success. You are somewhat a reflection of what your team accomplishes behind the scenes and a good realtor can do many things for you, including: submission of offers, submission of letters of intent to purchase, streamlining closings with either buyers or sellers, and of course finding you deals or helping you find buyers. None of this requires you having to spend a lot of your own valuable time when you have the right agent or agents on your team and this is one of those foundational team slots that you need to take very seriously.
Team Member 2- Mortgage Broker
One of the most critical team members to establish early on as a real estate investor is a mortgage broker. They can be instrumental in getting your buyers qualified, and allowing you to recognize profits in a more streamlined manner. Buyer qualification is one of the tough issues in today’s real estate market and this team member alone can be hugely impactful for you and your business.
Good collaboration with a reputable mortgage broker can help give you a foundational knowledge base concerning the world of home finance. You don’t need to be up to speed on all emerging trends but what a good broker can offer you gives you informational fuel you can then pass along to your clients and help establish you as both a knowledgeable and credible investor.
Team Member 3- Real Estate Business Attorney
A good real estate business attorney can help you review your paperwork of choice to make sure it is compliant for your area and protects you sufficiently in the event of a dispute. Although it’s often not pleasant to think about needing to have an attorney as part of one’s team, it is absolutely essential, and in fact you probably should have more than one that you can get advice from. Unfortunately this and so many other professions are so tied to lawsuits and other such unsavory topics these days. Therefore you want an attorney on your team for this exact reason. The chances of being sued, especially if you have a successful business are pretty good, and you want to have an attorney who understands your business when that happens.
When choosing an attorney to handle the professional business matters that arise, my best advice to you is not to skimp here or else you may one day be sorry you did. A good attorney also does a lot for your professional reputation. Being able to reference the fact that you have an attorney or need to run something by your attorney is not only a professional and credible approach, but also discourages a client with unscrupulous intentions from pursuing their objectives. The best value a good attorney can offer is to position you where you rarely, if ever, need them.
Team Member 4- Title Company/Closing Attorney
Another critical team member is the person or organization that handles your closings. A title company (or closing attorney in some states) can add a layer of professionalism to your business by making these processes seem simple and with minimal issues. The performance of your title company can be a solid reflection of your business so it is important to choose carefully and make sure they understand the variety of transactions you will be doing with their help. Title companies also perform title searches, which can help you avoid unnecessary issues with transfers of ownership and recording of documents. I would also highly recommend to you that your closing attorney close your rental or lease option agreements. You can find no better witness if a tenant cries foul than your closing attorney. When in doubt, let your attorney do what they do best which in this case is finalize agreements between two parties, so that you can do what you do best which is buy and sell houses.
I owe so much of my investing successes to the support team members I have assembled. Each one has their own purpose and keeps my investment train on track. Next week, I will continue discussing essential team members.
There are more tips for success here: www.freemakemoneygift.com/Invitation.html
The Real Estate Investor Support Team
One of the first things you need to realize as a real estate investor is that you don’t have to master all of the skills in running a successful business on your own. Forget for a moment the image of the solitary and committed entrepreneur, however nostalgic that may seem to you. Every great entrepreneur in history had a good support team around him or her, even if the team didn’t get all the notoriety in the end. Why should you be any different? I have confidence that each and every one of you reading this has the potential for greatness and step one to reaching that milestone is the recognition that you’re not alone.
Your professional team is absolutely essential to the general flow, success and longevity of your business. After all, your clients (present and future) won’t expect you to have all the answers or expect you to be able to do everything, even if you don’t realize that just yet. I’ll say this and forgive me if I repeat it later: it’s OK to say ‘I don’t know’ as long as you mention that you know where to find the answer. Stated another way, it’s far better to defer a question you get from a client to one of your team members than to just make up an answer in fear of saying ‘I don’t know’. Deals fall apart when such things happen so don’t let this happen to you.
For starters, let’s establish the framework for your professional team and then talk about the numerous attributes of having one. Depending on where you may have received some of your real estate education, you may see a team referred to as a wealth team or power team, but I’m talking about the same thing here. Your team is the assembly of professionals who handle the aspects of your business that you either (a) don’t have the background or expertise to handle yourself or (b) choose not to spend time working on yourself. Either rationale is valid and the important thing is to establish a competent team.
So, who comprises your team? There are a couple of ways to think about this. How you do so depends on who you are and how your business is organized. For example, are you currently working on real estate investing as a part-time venture? If so, then having some core elements of a professional team will likely be sufficient to help you get started. If your business is a full-time pursuit, then your team assembly will likely be a more comprehensive undertaking. Below is a list of team members with an asterisk next to those that I find essential for all real estate investors, even those who are part-timers and/or just getting started in the business.
Real Estate Agent Accountant or CPA Financial Planner
Inspector Banker(s) Hard Money Lender
Contractor/Handyman Mortgage Broker Assistant (Live or Virtual)
Real Estate Attorney Appraiser Support Network/Mentors
Title Company/Closing Attorney Private Mortgage Lender
Property Management Company
How about that for a list? Some of this will of course seem perfectly logical and I don’t want you to look at the list as a daunting task if you’re new to the business. This is part of what it means to be a real estate investor. In the weeks ahead, we’ll look at each team member and the assets they can bring to your investment business.
You can still preview the tools I am giving away for Free by going here:
www.freemakemoneygift.com/Invitation.html
Becoming Your Local Real Estate Investing Guru
Story Time - “My Early Days As A Real Estate Investor”
It is interesting for me to think back about my early days as a real estate investor. When I finally made the decision that I wanted to make a living buying and selling real estate, I was filled with mixed emotions of excitement and fear. However, I knew deep down in my heart and soul that this was right and that I was going to succeed no matter what obstacles I encountered and no matter how long it would take. It is definitely easier for me to say this now, however I won’t lie, there were times when I second guessed myself and picked up the newspaper skimming the employment section, “just in case.”
My journey to becoming a successful real estate investor was without question the most difficult thing I have ever set out to do in my life, and yet this journey has also been the most fulfilling and personally gratifying thing I’ve ever experienced to date. There were many nights of sleeplessness and anxiety (and still are on occasion) however I realize now that every experience, positive and negative, was and is meant to be.
I went from a college graduate, to an insurance underwriter on Wall St., to a failed retail coffee shop owner, to a real estate investing novice, to a local real estate investing guru, to an author and a real estate investor coach. This was all over a six-year period, and I have to be honest, I wouldn’t change the past for anything. I loved the business of real estate investing before I could fully comprehend what it was all about and I love it now even more. Real estate is the greatest wealth-generating vehicle on the planet, and I’m proud to be a figure within the industry.
What I would like to do now is give you a little exercise to complete. This simple questionnaire is based upon an honest rating of yourself and (if you have one) your current real estate investing business. Some things you will score high on and others you may not. That’s OK. I’ll have you complete the same questionnaire at the end of the book once you have learned this material so you can accurately measure your own progress.
Questionnaire (Round 1)
On a scale of 1 to 10, with 1 being the least and 10 being the most, write down your number for each of the following:
- I would rank my current understanding and development of a professional support team as…
- I would rank my current level of real estate investment education as…
- I would rank my positive attitude as a real estate investor as…
- I would rank my current understanding of the necessary skills as a real estate investor as…
- I would rank my current passion for real estate investing as…
- I would rank my current professional appearance as a real estate investor as…
- I would rank my current office set up for my real estate business as…
- I would rank my current accumulation of credentials and testimonials for my business as…
- I would rank my current real estate transactional experience as…
- I would rank my current understanding and development of a professional business plan as…
- I would rank my current marketing plan for my real estate business as…
- I would rank my current understanding of and approach to holding effective meetings as…
- I would rank my current understanding and mastery of real estate paperwork as…
- I would rank my current understanding of and commitment to customer service as…
- I would rank my current tax/corporate structure for my real estate business as…
- I would rank my current understanding and pursuit of private lending as…
- I would rank my overall credibility as a real estate investor as…
Did you know that the statistics are not in your favor? By that I mean, it is accurately estimated that only 20% of readers will complete the above survey, and the other 80% will choose to skip it. Interestingly, these statistics are quite similar to the income levels in the Unites States, where approximately 20% of the population would be considered upper class and the remaining 80% is lower class. Knowing this, I’ll wait if you want to go back and complete the self-evaluation questionnaire!
In my next post, I’ll begin sharing how trustworthiness and expertise fit into becoming your local real estate investing guru. Until then, be sure to fill out the above survey and hold onto it, we will be revisiting it again to see our progress. Now go check out the invaluable real estate investing tool that I have personally put together just for you!
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How To Become Your Local Real Estate Investing Guru
To better understand the psychological nature of real estate investing, you first need to understand the nuances of the real estate market, and how the opinion of the market differs between investors and the rest of the universe. Consumers might use the following terms or phrases to describe the current real estate market: bleak, dismal, sluggish, and catastrophic.
Investors, on the other hand, might use a slightly different set of descriptions for the exact same real estate market, because we will always view market conditions different from the majority. Examples include: opportunistic, a rare gem of possibility, a millionaire maker, ripe for the picking and a never-ending opportunity.
The truth, for investors, is that there has rarely ever been a market condition that is better than the one you are experiencing right now. Like the hundred year flood, you may never see the likes of this again in your business lifetime and it represents a rare and exciting opportunity for people like you and me. The public, influenced as you know by the popular media, sees things differently and in a much more pessimistic light. As real estate investors, you have an amazing opportunity in front of you, and in the spirit of building a multi-million dollar business, you also have to bear in mind that your view of the market is dramatically different than the one your clients will have. This is a gap that needs to be bridged if you are to have optimum success.
In part because of the difference in perception about the market and in part for reasons I’m about to describe, it is the unfortunate truth that investors, as a group, often get a bit of a bad rap and have a questionable reputation in the world of real estate. Why is that? I can think of several reasons that are worth discussing:
Greed
Jealousy
Ignorance
Dishonesty
Lack of Credibility
First, you have the greed factor. Basically, in a nutshell, what I’m referring to here is the small percentage of real estate investors who let their pursuit of power, money, and glory get in the way of running an ethical business. Ultimately, the emphasis should be on creating outcomes that benefit all parties. We’ve all come across examples of greed in this business, and if you haven’t, you will. It could appear as the slumlord that maintains slovenly apartment units to better line his or her pockets with revenue from rents. It could appear as the scam artist who dupes others into sinking funds into phantom projects that never actually materialize. It could appear as the heartless person who promises the world to a client in pre-foreclosure and then leaves them stranded at the eleventh hour. I could go on and on.
These select few make a bad name for the rest of us and it is an unfortunate reality for those of us who wish to run our business the right way. There’s not much you or I can do about it. Real estate is a commodity from which tremendous profits can be realized, and as a result, some greedy people are going to get into the mix. What you can do is recognize how these people affect the reputation of real estate investing as a business and place extra emphasis on building a reputable business that will show the true colors of your craft.
Second, you have the issue of jealousy. I might be going out on a limb or sparking a little controversy here but some of the current reputation for real estate investing as a profession comes from that which is explained by real estate agents and brokers. It is unfortunate, but some (not all) of your real estate brethren are often working against you either consciously or subconsciously. If these select few would simply take the time to learn something new, and open their eyes to the many unconventional and creative opportunities that real estate offers then they would truly understand why you choose to be a real estate investor, rather than a real estate agent. There are hundreds of differences between selling houses for a commission, and buying and selling houses for equity and profit. Personally, I’ll take the equity and profit any day of the week.
Should real estate investors to be alarmed? Not necessarily. Rather, it is important to be aware of the preconception that exists in this business. Credibility must be built in spite of this obstacle, rather than simply expecting that things you can’t control will somehow change.
Third, you have the issue of ignorance, not as much on the part of your colleagues but on the part of the general public. I’m not suggesting the public is ignorant in a general educational sense. What I am suggesting is that the general public is very unlikely to be up to speed with the kinds of concepts and techniques that you will be utilizing as a real estate investor. For example, the majorities of homeowners only buy and sell a few homes in their lifetime and in doing so utilize realtors who are pretty much driving the transactions based on conventional wisdom. We as investors on the other hand are trained to buy and sell properties as a business and perhaps have completed dozens if not hundreds of deals or more. That said, while this type of ignorance may impact the reputation of investing as a profession, it also opens a key door of opportunity for you to really establish a local name for yourself and your business that will literally make believers out of your clients.
Next, is the unfortunate issue of a few dishonest investors out there who threaten what you do on a daily basis. Whether it’s an unscrupulous developer who cuts corners or abandons a project, or foreclosure investors who skim equity or take funds up front from clients and then disappear, the bottom line is the same. Like any industry, real estate investing has its share of “bad apples” and unfortunately, these people get more attention than the good ones. The media loves a story where some evil investor scams an innocent consumer because; (a) it’s negative, and (b) people pay attention to that kind of stuff. My commentary on the media aside, it’s important that you recognize what your clients are likely hearing or reading and how it relates to what you do for a living. You do not want to let yourself become defensive about it but understand that your reputation will in part be built upon showing clients that you do not fall into the “bad apple” category.
Last on my list of things that give investors a poor reputation is a simple lack of true knowledge & professionalism. In short, some of your investor colleagues just don’t know what they are doing and this can impact the overall perception of what you do as a business. While I can’t oversee proper education for all investors, I think (in fact I know) that this can work to your advantage. Where other investors fall short, you will finish. Where other investors are weak, you will be strong. Business is about survival of the fittest and, even though some investors may damage the reputation of the business as a whole by not being very good at what they do, that can and should be seen as a great opportunity to establish your own reputable foundation and build from it.
I will continue this topic next week. Until then, check out my set of tools that when used correctly will easily make you stand out as the educated, smart, and confidant investor. Using the same techniques with the integrity and honesty with which we should all do business, I have created a very successful and highly profitable investment company.
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Why Investors Get a Bad Rap in the Current Real Estate Market
Welcome friends to one of the most beneficial series of articles on real estate investing that you may ever read. No, I’m not here to offer you the next and greatest technique on how to profit from the booming foreclosure market. No, I’m not going to get into the fine details of creative real estate finance or the intricacies of land development. What I am going to do is discuss what I believe to be the foundation for success and longevity as a real estate investor. This all-important topic is professional credibility. This issue is one of the most critical you may ever face because it is something that is both constantly under scrutiny and something that is also fairly easy to develop, once you know exactly what you need to do.
What is credibility? One could easily apply a very broad definition and thus simply presume it to be related to believability. I think a little more depth is necessary to really get at the importance of this issue so, with a little help from our friends at Wikipedia, I can describe credibility as:
“The objective and subjective components of the believability of a source or message. Traditionally, credibility is composed of two primary dimensions: trustworthiness and expertise, which have both objective and subjective components.”
Let’s take a closer look at this definition and break it down to a simplified level. Credibility has to do fundamentally with the quality of a message. That message has everything to do with your credibility as a real estate investor. Whether it’s a marketing message, how you convey yourself over the phone, and especially how you come across in person, the quality of your message has everything to do with your perceived credibility.
If you want people to believe in the
message that you are saying, they
must first believe in you.
A second feature of the definition of credibility is the pair of factors that most influence credibility. Credibility is too often seen as being overly related to trustworthiness when in fact, the issue of knowledge and expertise is equally important. This is particularly true for the real estate investor. It’s one thing to be trustworthy and do a good job of convincing a client that you are as advertised. Not to be a cynic here, but any good salesperson can convey a level of trustworthiness and I’ve seen both consumers and other investors alike burned by the real estate investor who was high on sales skills and low on ethics. In my opinion, there is no such thing as business ethics, only ethics in general.
Trustworthiness is best demonstrated by results. In short, do what you say and say what you do. It may sound like an oversimplification but it does carry a lot of weight and can go a long way towards establishing the trustworthiness component that your business will need to be successful. As previously alluded to, the other factor that ties in so critically to credibility is knowledge and expertise. Don’t confuse experience with expertise because they are two different things. Experience has more to do with time, while expertise can be achieved much more quickly.
The last feature of the definition of credibility that I’d like to point out to you is the reference to both objective and subjective components. Your trustworthiness and expertise can be evaluated both objectively and subjectively and it’s important to not underestimate the value of either. For example, a client could find you subjectively credible (i.e. they have a good impression of you or feeling about you) but, if you don’t back up what you say, the objective side of trustworthiness will come back to haunt you. That’s why it’s important to act out and achieve results, rather than just talking a good game.
Similarly, one could subjectively present a good level of expertise by communicating with industry jargon and relying upon client ignorance to get ahead. This may work for a select few but the expertise you present can and needs to be backed by real knowledge to create sustained levels of success. I’ve heard a few pundits out there say things like “Fake it ‘til you make it” but I find this to be a slippery slope that can cause permanent damage to your business if you aren’t making the proper effort to really learn what you are doing. If you think education is expensive, try ignorance. A better quote is this: ‘be real, every deal.’ Your customers will, at some point, come up with an objective assessment of your expertise, and in the absence of real knowledge, you might find yourself in trouble. Education and evaluated experience is the key to true knowledge and expertise that can be backed up.
On Friday, we’ll explore some nuances you need to understand in the world of real estate investing and I’ll share more of how I became a successful figure within this industry. In the meantime, there are investment tools I have made available to you and you should take full advantage of the incredible offer I am extending to anyone with the same intense passion I have to turn real estate investing knowledge into a wealth creating lifestyle.
Go to: www.freemakemoneygift.com/Invitation.html
How Do You Feel About Your Investing Potential?
Do you ever feel like you are working too hard for your living… not getting ahead fast enough? Perhaps everything you are doing as an aspiring or established real estate investor feels like 1 step forward and 2 steps back.
Do you ever feel like you’re missing something and that something must be slipping through the cracks and keeping you from reaching your full potential? Chances are, this missing element may be basic real estate knowledge. If you’re like me, you weren’t born a real estate investor. Perhaps you just started this business recently. Whatever your particular situation, there are some tricks of the trade that will help you move faster along that proverbial learning curve to reach greater levels of success. If you could learn to be more efficient at tapping into your own potential and, in doing so, become more successful, how many additional doors of opportunity do you think may begin to swing open in your business and in your life?
If you would love to find a single, all-under-one-roof, one-stop-shop source of legitimate, tested, proven, yet original, innovative, even radical strategies for becoming the real estate investing guru in your local market, then this cutting edge information is for you.
If you’re reading this article today then you are probably someone who has an interest in becoming a real estate investor or growing your already existing real estate investing business, and for that I congratulate you.
If you’re ready for NEW opportunity, you’ve definitely found yourself in the right place at the right time. If you’re ready for that supercharge and creative experience that’ll get your real estate entrepreneurial juices flowing like never before, then you’re going to be THRILLED that you got this book!
If you’re frustrated with being a ‘victim’ of the real estate investing industry’s smoke and mirror secrets that other trainers don’t share with you about what it really takes to become successful in this business, then Do NOT blame yourself because it isn’t your fault. I promise to show you that you can learn the secrets to the real estate magician’s tricks, which will allow you to BECOME YOUR LOCAL REAL ESTATE INVESTING GURU!
You should be motivated like never before in your life by the epic real estate investing opportunities lying right in front of you every single day. If you are already an established real estate investor then perhaps this book will entice you to reinvent your real estate investing business 100% for the better. Ultimately, my motive is simply this…I want to help you. It really is this simple. I am passionate about getting this message out all across the country, and I hope you will somehow “sense” my sincerity and love for real estate investing within this book and be motivated by the information to take your dreams to the next level. I know from personal experience that you will “see the light” about the business of real estate, and be richer, safer, smarter, and happier as a result of this new knowledge that I’m offering you here.
You’ll learn how to turn an ordinary business into an extraordinary business. How-to immunize and insulate yourself in a down market. How-to dramatically increasing your income, how to instantly decrease your stress, and how to make your real estate business your slave rather than your master.
If you would love to join the ELITE Real Estate Investors then you are about to tap into your inner genius to become smarter, more progressive, more aggressive and develop a true love for real estate investing, along with a new and sincere desire to get rich and richer (with no apologies for doing so). I will help you develop an optimistic, forward-looking attitude where I will share with you timely information (based on my real life experiences) about “what’s working today.”
If you would value discovering and connecting with a teacher, trainer, coach, author, and advisor who wasn’t invented yesterday on the internet, …who has actually built a solid real estate investing business from scratch, …who has a track record ….who routinely cashes large checks from real estate deals over and over and can prove it ….then you and
I are about to become fast friends.
Over the next few weeks, I’ll be sharing with you how to become your local real estate guru. I will share most of what got to where I am today, nothing held back. If you would like the additional tools it takes to get to that higher level of profitable real estate investing then you have to check this out: www.freemakemoneygift.com/Invitation.html
The Real Estate Investor Credibility Kit – Last Installment!
Supporting Documentation
You must include any documents that lend support to statements made in the body of your company’s business plan. The following is a list of some items for your consideration. Please be aware that this list is not complete and may vary depending on the stage of development of your business.
1. Resumes
2. Credit information, include in Appendix
3. Quotes or Estimates
4. Letters of Intent from prospective customers
5. Letters of Support from credible people who know you
6. Leases or Buy/Sell Agreements
7. Legal Documents relevant to the business
8. Census/Demographic data
The completed business plan should be bound. For internal purposes, three-ring binders work well. Additions and changes can easily be placed in the binders. For the business plan that is to be circulated to a lender and/or investor, many types of appropriate folders and binders can be purchased at office supply stores.
Once the business plan is completed, it should become an operational tool to measure the success of the business. This plan should be updated as milestones are reached. Often companies will spend enormous time, energy and financial resources to complete this arduous task just for the purpose of obtaining additional capital. The companies that shelve the business plan after its completion and presentation to lenders lose out on the real value of this useful tool in the growth and development of small and large businesses.
Part III: Taking Action
As with any program, a big part of putting your credibility together is committing to taking action to do it. Maybe this guide has been just what you needed to take that next step and start getting your own kit together. If so, then I’m glad I’ve helped fill that void for you and now, you just need to do it. Consider the value of not assembling a credibility kit vs. the perceived benefit of doing nothing and that should be plenty of motivation (if you need any) to get you going.
Are you one of those readers who feels you need more than just having read through this guide to help get your own credibility kit put together? What you need to do right now is think about what else might be holding you back. I mention this simply because many investors choose to do very little (or even nothing) to document their credibility for two simple reasons. Time is one reason and the other is what I like to call ‘writer’s block’. Let me spend a moment elaborating on each.
Time is one of those enigmatic commodities that, on one hand is so very precious, yet on the other seems so limiting at times. Personally, when it comes to your credibility and the kit that will help support it, I don’t buy the argument that you just don’t have the time to do this. It’s just too important! If you legitimately feel you don’t have the time to do anything that is important, then you simply find someone who can do it for you. There just can’t be excuses made regarding time if you aren’t willing to take steps to account for those things you personally don’t have the time to do.
Maybe you are among the many out there who cringe when your child asks you for help with a theme paper they are writing or feel you have trouble enough organizing the garage, much less an important document that will give you professional credibility. I get it and recognize that many of you, however accomplished you may be at talking to clients on the phone, struggle a bit more when it comes to written documents. For many real estate investors, things like cover letters, business plans, and credibility kits can be quite painstaking (or at least very time consuming) and, if this sounds familiar, then you’re certainly not alone
Concluding Remarks
Well, we’ve reached the end of the guide on credibility kit development, but this is only really the beginning, isn’t it? The real question is ‘What are you going to go do now?’ I’d certainly like to think that this guide has been helpful to you in both illustrating how a credibility kit can and will help your business, and in lighting a fire under you to take action and do something about it.
Don’t forget why you are doing this. It’s not for posterity or to have something that looks good sitting on the shelf in your office. The credibility kit is designed for distribution, to be handed out or presented to lenders, prospective partners, colleagues, and especially would be private lenders who need to see that you aren’t just an idea, but rather a tangible business that operates with the necessary seriousness that points to a business that has their act together.
Maybe time is a significant limitation; at least in the way you look at things. Perhaps you are the primary “call center” for your business right now and you are focusing on doing deals, which is great. Perhaps you are among the host of investors who are presently doing this part-time, while still maintaining a primary means of employment. In either case, the importance of the credibility kit is equally essential.
In closing, I hope you have found this guide helpful. My goal has been to increase awareness of the importance of a credibility kit and also increase the number of investors who are out there successfully using them to build their own businesses. I wish you the very best in success.
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The Real Estate Investor Credibility Kit – Part 10
Personnel
The success of a business can often be measured by its employees. Seventy percent of consumers will go elsewhere if they don’t receive prompt and courteous service. You must consider the following questions in completing this section of the business plan:
- What are your current personnel needs (full or part-time)? How many employees do you envision in the near future and then in the next three to five years?
- What skills must your employees have? What will their job descriptions be?
- Are the people you need readily available and how will you attract them?
At the heart of any business operation is the accounting system. It is important to have a certified public accountant establish your accounting system before the start of business. At times, there is a tendency to do it yourself. Remember that an incredible number of businesses fail due to managerial inefficiencies. Leave it to the trained professional to help you in the area of accounting and legal matters. If your business can’t afford a public accountant to establish your books, then you are undercapitalized. You need to secure additional resources before starting.
One of the first steps to having a profitable business is to establish a bookkeeping system that provides you with data in the following four areas:
- Balance Sheet - indicates what the cash position of the business is and what the owner’s equity is at a given point (the balance sheet will show assets, liabilities and retained earnings).
- Break-Even Analysis - is based on the income statement and cash flow. All businesses should perform this analysis without exceptions. A break-even analysis shows the volume of revenue from sales that are needed to balance the fixed and variable expenses.
- Income Statement - also called the profit and loss statement, is used to indicate how well the company is managing its cash, by subtracting disbursements from receipts.
- Cash Flow - this projects all cash receipts and disbursements. Cash flow is critical to the survival of any business.
If the goal of your business plan is to obtain financing, you will be required to generate financial forecasts. The forecasts demonstrate the need for funds and the future value of equity investment or debt repayments. This exercise is critical in obtaining capital for your business. To obtain capital from lending institutions you must demonstrate the need for the funding and your ability to repay the loan.
The forecast that you generate should cover a three to five-year period. This is a period in which realistic goals can be established and attained without much speculation. Forecasts should be broken down in monthly increments.
Projections and forecasts are an integral part of your financial portfolio. Carefully and accurately state your assumptions. Honesty is the best policy! Over-optimism and over-inflation can lead to failure.
We are getting close to the end of the business plan, stay tuned for more…….
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The Real Estate Investor Credibility Kit – Part 9
The Competition
Understanding your competition’s strengths and weaknesses is critical for establishing your product or service’s competitive advantage. If you find a competitor is struggling, you need to know why, so you don’t make the same mistake. If your competitors are highly successful, you’ll want to identify why. You’ll also want to explain why there is room for another player in the market.
Analyzing your competitors should be an ongoing practice. Knowing your competition will allow you to become more motivated to succeed, efficient and effective in the marketplace.
Operations
Now that you have had an opportunity to really sell your idea and wow potential investors, the next question on their mind is how will you implement the idea. What resources and processes are necessary to get the ball rolling? This section of the plan should describe the purchasing, staffing, equipment and facilities required for your business.
You’ll want to provide a roll out strategy as to when these requirements need to be purchased and implemented. Your financials should reflect your roll out plan.
In addition, describe the vendors you will need to build the business. Do you have current relationships or do you need to establish new ones? Who will you choose and why?
The Management Team
For most investors, the experience and quality of the management team is the most important aspect they evaluate when investing in a company. Investors must feel confident that the management team knows its market, every detail of the product or service, and has the ability to implement the plan. In essence, your plan must communicate management’s capabilities in obtaining the objectives outlined in the plan. If this area is lacking, your chances for obtaining financing are bleak.
If your team lacks in a critical area, identify how you plan on compensating for the void. Whether it is additional training required or additional management staff needed show that you know the problem exists, and provide your options for solutions. You should include the following four areas:
- Personal history of the principals
- Work experience
- Duties and responsibilities
- Resources available to your business
On, Wednesday I will continue outlining the business plan. Please check out the following offer I have decided to extend well into the New Year for those that want to possess the most effective and successful money making real estate investing tool on the planet!
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The Real Estate Investor Credibility Kit - Part 8
Sample Business Plan Outline
Author’s Note: Although there are numerous ways to assemble a quality business plan, this particular outline can be easily adapted for a real estate investing business and is thus an excellent recommended choice for you to consider.
The Executive Summary
The first page of your business plan should be a persuasive summary that will entice a reader to take the plan seriously and read on. The Executive Summary should follow the cover page, and not exceed two pages in length.
The summary should include:
- A brief description of the company’s history
- The company’s objectives
- A brief description of the company’s products or services
- The market the business will compete in
- A persuasive statement as to why and how the business will succeed, discussing the business’s competitive advantage
- Projected growth for the company and the market
- A brief description of the key management team (if any)
- A description of funding requirements, including a time-line and how the funds will be used
The Product or Service
It is important for the reader to thoroughly understand your product or the services you currently provide or plan on providing. However, it is important to explain this section in layman’s terms to avoid confusion. Do not overwhelm the reader with technical explanations or industry jargon that he or she will not be familiar with.
It is important to discuss the competitive advantage your product or service has over the competition. Discuss any barriers that you face in bringing the product to market, such as government regulations, or the effects by any competitors.
Areas that should be covered in this section include:
- Is your product or service already on the market or is it still in the development stage?
- If you are still in the development stage, what is the roll out strategy or timeline to bring the product to market?
- What makes your product or service unique? What competitive advantage does the product or service have over its competition?
The Market
Investors look for companies with a thorough knowledge of their target market. If you are launching a new product, include your marketing research data. If you have existing customers, provide an analysis of who your customers are, their purchasing habits, their buying cycle.
This section of the plan is extremely important, because if there is no need or desire for your product or service there won’t be any customers. If a business has no customers, there is no business.
This section of the plan should include:
- A general description of your market
- The niche you plan on capitalizing on and why
- The size of the niche market, including supporting documentation
- A statement and supporting documentation as to why you believe there is a need for your product or offering by this market
- What percentage of the market do you project you can capture?
- What is the growth potential of the market? Include supporting documentation.
- Will your share of the market increase or decrease as the market grows?
- How will you satisfy the growth of the market?
The Marketing Strategy
Once you have identified who your market is, you’ll need to explain your strategy for reaching the market and distributing your product or service. Potential investors will look at this section carefully to make sure there is a viable method to reach the target market identified at a price point that makes sense.
Analyze your competitors’ marketing strategies to learn how they reach the market. If their strategy is working, consider adopting a similar plan. If there is room for improvement (and there usually is), work on creating an innovative plan that will position your product or service in the minds of your potential customers. The most effective marketing strategies typically integrate multiple mediums or promotional strategies to reach the market. Such as TV, radio, print, web, direct mail, trade shows, telephone, public relations and promotional materials.
Next week I’ll continue the business plan outline starting with knowing your competition.
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