In any business failing to prepare is preparing to fail. In the world of real estate, it is essential to have some kind of business plan to act as a guide. Your plan doesn’t need to be outsourced to someone in high-level corporate management. Something as simple as an old-fashioned pen and paper plan is enough if you are willing to follow it. Without a plan it is easy to get lost in the crowd and end up pursuing deals or niches you really don’t desire. With just a few wrong turns you will be left frustrated and disappointed in your business and looking for ways to hit the reset button. All this could be avoided with a little foresight and planning from the start. Here are five reasons why every real estate investor should have a business plan.
- Action Plan: The first meaningful step in any endeavor is action. You can plan all day, but unless you act it doesn’t make a difference. Having a plan will help you decide which action to take. Many investors get overwhelmed and confused on what to do when just starting out. This either leads to trying to do too much or doing nothing. Neither of these options is very productive. With a well thought out business plan you will have an idea of what action to take, when to take it and how to follow up. You can avoid most of the guesswork which is the culprit of inactivity. Knowing what to do will eliminate indecision and help get your business moving in the right direction. Plans often spur action which is exactly what any real estate investor needs.
- Defined Targets: The more questions you ask about yourself and your business will help you lead you on the path to success. What do you want from your real estate business? The question seems simple enough, but many investors aren’t sure how to answer. They usually say that they want to make millions of dollars but aren’t exactly sure how to go about it. With a business plan in place you will have an idea of who you want to target and where you will get your deals from. This will help eliminate the constant chasing of deals which eats away at your day. No longer will you drive a few hours a day looking at deals you don’t end up wanting anyway. A defined target will help you develop an investing niche over time. Your niche will also help create a brand that is instantly recognizable to you. This is important in marketing and finding the right networking partners. All of this starts by taking some time to create and develop a business plan.
- Mindful Of Bottom Line: The goal of anyone in business is to make a profit. This doesn’t necessarily need to happen overnight, but eventually your business needs to make some money. There are too many investors who go from deal to deal thinking about acquisition instead of profit. They view ownership as a prize, instead of the investment it should be. With a business plan in place you will be more focused on the bottom line. Before every action you make you will think about how this impacts the finances of your business. Instead of making foolish impulse purchases you will be more focused on your business. Eventually you will start to feel the impact and your bottom line will be much healthier. You can have a steady stream of deals close, but unless they produce profits it doesn’t make a difference. A business plan makes your more conscience, and responsible, to your bottom line.
- Review Goals: Your business plan helps you constantly set and achieve more goals. Anyone can have a goal for their business. However, without a plan attached to your goal it is often nothing more than an empty promise. A well thought out business plan has you taking action that produces results. Every morning, or before you go to bed, you will write down a handful of tasks you want to accomplish that day. Instead of wasting time in the morning looking through emails or playing on social media you will be more efficient. You will get more done in less time and ultimately work smarter instead of harder. All this starts with setting and reviewing goals in your business plan.
- Pivot When Necessary: The hardest thing for anyone in business is to know when to change gears. There is always a fine line between tweaking a seemingly good idea and scrapping it all together. With a business plan in place it will help you know when, and how, it needs to be done. Getting off an idea a few months early is always better than being a few months too late. You never want to dump good money after bad. With your business plan you will be able to react without being stuck in the mud. Your ability to pivot and follow your goals can single handedly have save or resuscitate your business.
Regardless of where you are in your business it is not too late to get a business plan in place. It could be the single best thing you do for the health of your business.