I am constantly asked by real estate investors, “what is the secret to building a real estate investment business?”
I have never been sure exactly how to answer the question, because business has always seemed so instinctive and natural to me.
I had never really thought of actual steps to take when building a business until recently.
I was asked to speak at a business builders expo and had to sit down and really put some thought into what I thought was important. So, I started with the question, “why am I in business?” and went from there. This article hits the 5 high-lights to my talk at that business expo.
Why am I in the Real Estate Investment Business?
This is a very different question from “why do I buy investment property?” That question is all about me and what my long-term goals are as an investor, but it was extremely important for me to think about when answering the question about business.
I needed to know what I was looking for in order to know what kind of investor I would want to deal with. This article is really going to be one article in a two article series. The first one is about building a real estate business.
The second article next week is going to be about determining why in the world you are buying investment property in the first place. The two go hand in hand and the question about being a real estate investor is very important in determine the kind of real estate business you are going to be.
If you do not know what you want as an investor or why you invest in the first place, then you will never be able to truly know what your clients want or what type of clients you want to deal with.
I had to learn the hard way that I wanted to be a passive investor. In order to be a good passive investor, I had to have a team that provided me with a high-level of comfort. They had to provide me with a good product that came with a level of service and commitment that would make me feel comfortable turning everything over to them.
This is what I was looking for as an investor and it helped me hone in on what I wanted to offer the real estate investing community. I knew from my business background that if I could define what I wanted as an investor, there would be plenty of other investors who wanted this same type of investment.
1.) Unique Value Proposition
This realization led me to define my unique value proposition. In real estate, like many other industries there is a lot of competition and most of the players in the industry believe the competition is built on price.
As a business owner, you are looking for what makes you unique. You are looking for your differentiator. What makes you stand out. When you figure that out, then let everyone else compete on price…racing to see who can be the cheapest.
Anyone can compete on price and anyone can race to the bottom. It takes a business innovator to compete on a unique value that no one else can offer.
Whether it is a particular service you are offering that has some real value to it, or a way you communicate and deliver your services, you need to stand out in a crowded room. When you figure out how to be unique in a world full of look-a-likes seeing who can drop to the lowest dollar, you will stand out and have the opportunity to stand above your competition.
2.) Defining Your Ideal Client
Too often you will find businesses who try to cater to every single buyer. They have high priced products and low priced products and in between products and 12 different variations and styles of each product. If you really want to build a sustainable business, then after determining what your unique value proposition is going to be, define the exact client that is going to want that value proposition.
If you know exactly the type of client you are looking for and they are attracted to your unique value proposition, then you should have no trouble building a message meant just for that client. You will not attract clients that do not fit your value or clients that are going to drain your time and resources.
Often times, business owners will go about this step from the opposite angle by first defining the client that they do not want to deal with. They will start by defining what will be a drain on resources and work their way to what would be ideal. This is a step that takes a lot of thought and time and, particularly in the real estate investment business, it helps to get input and advice from other investors.
You will know very quickly based on your unique value proposition if you are going to be attracting your ideal client or not.
3.) Build Your Marketing Message
It is important at this point to fine tune your marketing to attract your ideal client. If you try to advertise for clients in a general way and take a shotgun approach, you will end up wading through more leads and questions than you have time or prefer to take.
Instead, it is important that you quickly figure out how to communicate your unique value proposition to your ideal client in a way that leads them to you. That was a mouth full!
I do not know an easier way to say it and there are no magic bullets. Much of this will be trial and error. I will say, we have found the easiest and best approach is through education marketing.
Offering something of value with no sales or monetary exchange attached. I am not saying generic, two-page reports that really don’t tell an interested prospective investor anything. You do not want someone to put your educational marketing material down and think it wasted the last 5-minutes of their life!
Make your educational pieces memorable and full of something that actually helps the reader. That may seem obvious to some of you but just think back to some of the items you have signed up for in the recent past and ask yourself if they had any real value to them.
As a business person, think about what you are offering in your marketing pieces and make it fit your unique value proposition. Make sure it is memorable and leaves the right impression on your ideal client. Whether they choose to do business with you or not, you want them to remember you and your company and the fact that you did not waste their time.
4.) Match Your Actions to Your Marketing
I have a friend who relayed a story to me once about marketing. He told me about a company that was convinced that marketing was just words and they copied the marketing of a successful competitor almost to the letter. They copied the wording, the materials and even promised all of the same services.
The problem was that they did not actually do all of the same things as the other company. The business owners believed that the other company was successful because they had slick marketing….they never believed that their competitor actually did any of the services that they used in their marketing.
You can probably imagine how this translated. They attracted the wrong clients. They almost ruined their reputation in the market place because the marketing they were using did not match the actions their company was taking. Their clients expected one thing and received quite a different experience!
As a business owner, it is important to know that there are no short-cuts. You will have to go through some trial and some error to get things dialed in perfectly. But you cannot try and copy someone else and pull it off as your own.
We have had a handful of companies that have tried to copy us and three now have copied our websites, our logos even the images and layout of our web presence in a mistaken belief that they can recreate or possibly take from our business. It does not work that way.
The one thing that no one can copy is our family, our history, our employees and our culture. All of these things are going to be unique to each company and it is so important that you use your uniqueness and build on it. Do not try and shortcut the process by borrowing from or trying to duplicate someone or something else.
5.) Create Your Own Culture
Speaking of company culture. This is where I would venture to say that a majority of businesses fail. A companies culture encompasses everything that is important not only to the owners of a business, but also the employees of that business. So hiring is important! I believe in the law that says you will become the six people you surround yourself with so when creating a culture…choose carefully.
Keeping in mind that you have a unique value proposition, an ideal client, a marketing plan to attract those clients and a desire to provide an experience that matches your marketing; you need to think about what the culture in your company looks like to achieve that.
Tony Hseih founded Zappos on this exact model. He wanted to create an online shoe buying experience where the buyer wanted to buy from them even though they had never tried on the shoe and they had no storefront. So the experience had to be phenomenal.
They had to have next day delivery. They had to have a 365 day no-questions asked return policy. They had to have customer service that would literally do anything to meet the needs of that customer.
In order to accomplish that he hired energetic, enthusiastic believers and went about creating a work environment where they loved to come to work every day. Their enthusiasm and genuine enjoyment created a culture that spilled over into the customers experience and that culture helped to build one of the most successful online retail companies the world has ever seen.
Culture means everything to your success and if you match the cultural values of your company and employees to your unique value proposition to your ideal client to your marketing and to your follow-through…
You will build a company that can last for generations!
Those are the 5 steps to follow if you want to build a really special real estate company. I know there is a lot of meat to be filled in on those 5 bones and still more details and decisions. But, if you get any of these 5 steps wrong, it can really set you back or delay your ultimate growth.
Are there any specific steps that you think I missed? I would love to hear what you think about the importance of these 5 steps.
Photo Credit: Dean Terry