Habits for Entrepreneurial Success
As I prepared for the Multifamily Investor Nation Summit, I had some inspiration (and realizations) of what it takes to make it in this business when you're starting out – even if I were starting at square one today...
Be Prepared to Sacrifice
It's easy to look at someone in a successful position today and think it was always easy for them, and not realize what it took for them to reach that point. Someone listening to me talk about entrepreneurial habits for success would see BAM: the 80-employee company, nearly $300 million in assets under management – but not see not the journey to get here. The reality is I started BAM in a spare bedroom of my home, by myself, with a part-time book-keeper coming over every other week to make sure I didn't screw up the books. The fact is I had to grind and during that time I had a lot of trials, a lot of ups and downs, and a lot of failures!
What it Takes
For me, the subprime crisis had hit and I started this business $200,000 in the hole, and about $5-6,000 in the negative expenses every month. I had to figure it out, and it wasn't easy. Step one: you have to get your money right. That means cutting out all the crap and finding every way possible to save money. I was buying shoes at WalMart, and at the lowest point (which not many people know), I actually drove 45 minutes to a suburb to deliver pizza for extra income. I can remember coming home with $20-$50 in cash in my pocket, which at the time was a lot of money for a late 20s guy trying to start over, pay back what I owed, and start a business.
At that point, I already had my broker's license and it was a buyer's market; so I would try to help buyers purchase investment properties, any kind of clients I could get – I was hustling! Today it's a seller's market, so if I were in that position today I'd be chasing listings, whatever I had to do to get income in the door to grow a business.
The reason I started the property management side of the business is not because I love property management: spoiler alert, no one loves dealing with the “tenants-and-toilets” aspect, rent-collection part of the business. I knew if I could figure out how to build and grow a management team, I'd have repeatable income, I could scale the business, and I could afford to hire people – so that's what I did.
Back then, my only criteria for a property I'd manage was that I wouldn't have to carry a gun! I'd manage anything, as long as I didn't have to carry a gun. That's how I got started, and I learned everything the hard way.
How NOT to Do It
You're not going to find success in getting your business plan, your phone line, your office space rented...you have to get out there and do it! I got a cell phone and a corner in my spare room. I didn't have business cards when I started, and I was using my personal gmail account! Today, it's easier than ever to get a business handle. If you're trying to maintain a job while you're starting, more power to you – but you're going to have to cut some other stuff out. If you're still partying on the weekends, going out with your buddies, enjoying fantasy football leagues, taking your wife out, going on vacation, you're doing it wrong.
It takes an immense amount of effort. Just like you can't go into the gym a couple times and expect progress – to see improvement it takes making small changes every day. The good news is that the changes aren't rocket science, or complicated. Most people won't do whatever it takes, or they get sidetracked, or the first bump in the road throws the car off the highway. I had to change my mindset: I knew I'd fail, I knew I'd have to figure out managing people, leadership, hiring/firing, but that there was no getting around it – whatever it takes. When those inevitable failures happened, I'd close my eyes and remember what I had told myself: this was part of it, and that I wouldn't give up because I was on the right track. How many times did Edison fail creating the light bulb? Well, those were all the ways not to make a light bulb, in addition to the way to make the light bulb.
If you can: hang on for a few years, keep banging away, looking for the solution – and keep trying. It's what we tell our kids when they fall: it's about getting back up. Don't wait for tomorrow to take that action, because tomorrow never comes – you only have today.
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