A wise man once said, “Take chances, make mistakes. That’s how you grow”.
Starting a new business, regardless of the industry, requires intuitiveness, comprehensive research of the market, a substantial amount of resources and above all the ability to take risks. And when you take risks, you are bound to make mistakes. A smart entrepreneur is one who understands the difference between calculated and reckless risks.
Similarly, the real estate business, albeit different from traditional careers, follows a few fundamental rules that are important to every startup company. Unfortunately, 80% of the realtors abandon their businesses in the first couple of years as they fail to acknowledge the cardinal rules of starting a new business.
Running a business is not an easy feat, and while mistakes can make you proficient, some mistakes are easily avoidable and can help your business survive the initial tumultuous years;
- Mistake #1: Not having a business plan
Failing to establish an extensive business plan can land you in trouble as you won’t have a guidance system to base your decisions on, insights about the resources required for initial startup and marketing, and a projected timeline to achieve milestones.
Establishing a business plan is a vital first step for budding entrepreneurs. It is a valuable tool that provides a clear business vision and checks the viability of your business model before you invest in it.
A perceptive business strategy should include a detailed overview of your finances, budgeting, marketing strategy, business structure, and mission statement among other things. It should deliver a clear picture of where you stand, where you are going and what you can expect in the future.
Another purpose of a smart business plan is to acquire competent professional services of attorneys, accountants, consultants and investors with a viable document they can trust and is compelling enough to retain their services.
If you are uncertain about what to include in your business plan, online resources such as those available on U.S. Small Business Administration website provide great assistance as along with sample business plans to help you get started.
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Mistake #2: Not investing enough in marketing
As a startup company, it is imperative to market yourself abundantly to expand your outreach. An excellent marketing strategy can help you gain ample exposure which is crucial to establish strong footholds in the real estate market and to secure important clients.
Consider the following statistics:
In 2016, 89% of the Millennials, 87% of Generation X and 85% of the young Boomers purchased their houses through an agent. These figures allude to the fact that a majority of home buyers employ the services of a real estate agent. Therefore, you need to market your business locally to these target demographics to propel your business’s scalability.
In addition to investing generously in your marketing endeavors, you should also consider the mediums of marketing. You may be inclined towards print media, but ads in the local newspapers or real estate magazines will not generate as much business for a small enterprise like yours as social media or referrals marketing.
Promote your business dedicatedly on social channels such as Facebook and LinkedIn and promote word-of-mouth by providing exceptional services to your first crop of clients. You can also give incentives to your clients, who in return will refer you to their circle of acquaintances.
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Mistake #3: Not hiring a supportive team
Behind every successful business is a unit of competent, talented employees.
Conversely, if you fail to hire skilled and dedicated individuals, it could be the costliest mistake of your business career. An erroneous assembly of employees with flawed ethics can result in loss of revenue and slow business growth.
Therefore, conduct thorough research before finalizing your team. Vet your employees’ performance diligently and boost their morale by establishing a reward program.
The support team is not limited to human beings. Technological support, such as property management software, is also a great asset for a newly established business with many balls up in the air.
An innovative real estate software makes your job easier by expediting the implementation of the top-quality solution to the complexities of the real estate industry.
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Mistake #4: Not having the proper funding
A real estate business, like other companies, requires substantial operating funds. Your business plan should outline a rough amount of funding necessary to take your business off the ground. After that, it is your responsibility to stick to your budget and refrain from over expenditure.
Another essential element to keep in mind is that at first, you may not generate enough revenue to cover the daily operational costs. You should have adequate savings to carry you through the initial months until your startup gets going. You can also apply for bank loans or forge an alliance with a silent partner to supplement your savings.
According to the 2015/2016 Global Entrepreneurship Report, more than 50% of the businesses discontinue operation due to a lack of profits or insufficient funding.
Therefore, all financial aspects of running a business should be addressed before you take a career leap in the real estate industry or things can go downhill very fast.
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Mistake #5: Not having clear priorities
The real estate business is a people’s business that revolves around creating trust between the broker and the client. You need to connect with your consumer base, express your intentions clearly and advocate transparency in your dealings.
You should focus on understanding the requirements of the clients instead of highlighting the qualities of the houses you are selling because regardless of how exceptional a listing if it does not fulfill the client’s criteria, it is useless.
Real estate business comes with its inherent risks such as the shifting market and fluctuating local conditions, which are beyond your control. However, you can still flourish in this industry by being proactive and vigilant and taking the right risks.