The real estate industry provides savvy investors with ample opportunities to succeed. However, once they close a few deals and avoid the landmines of investing, they may find it too easy to become complacent. Soon enough, every investor will be presented with obstacles that will test their resolve. How they handle these obstacles will define their entire career. Unfortunately, unexpected obstacles are responsible for the majority of investors that fail to make it past their first year in the business. On a larger scale, almost three quarters of all businesses in general don’t last ten years. This is most likely the result of inexperienced businesses that only focus on what they need to grow and never think about what can ruin their position. Learn from the mistakes of others and you can avoid potential pitfalls.
Let me be very clear. It does not require you to have a negative mindset to predict unexpected complications. People are often too worried that their negative perception will impact their business and in turn their profitability. However, the exact opposite is usually the case. In order to know what not to do, you have to think about the worst case scenario. As cliché as it sounds, prepare for the worst but expect the best. Look at unsuccessful companies or investors and see where they went wrong. Learn from their mistakes and do whatever you can to avoid repeating them. Did they grow too quickly? Was their management poor? Were they too aggressive in their strategies? Whatever the reasons were, take note of them and make it a point not to replicate them.
It is easy to dismiss other people’s failures and say that they will never happen to you. Why is this? Nobody ever starts a business and expects to fail. Most people have a similar drive and the resources they need to succeed. However, success comes down to the right mix of aggressiveness, knowledge and the willingness to change gears when you feel something isn’t working. You can study all of the successful people in the business, but you may get more out of talking to a struggling investor at your next investment meeting. Ask them why they are struggling and you can avoid the mistakes they made. Their answer will help you more than reading how to become the next millionaire investor.
Neglecting to adapt to the climate around them will ultimately lead to the failure of many businesses and investors. Remember when Blockbuster was the king of movie rentals? It wasn’t that long ago when you could go to almost any city and find one. However, you would be hard-pressed to find a video rental store in today’s market. That was only 10-15 years ago. The change in how consumers watch movies ultimately ruined their business. Was this something that they could have foreseen? Did they assume they controlled the rental market share and it would remain this way forever? Even when your business is booming and you have a good system in place, think about what could derail it. What shifts in the market or changes in how you operate could cause your business to start to suffer? If you are content with your success, sooner or later that will shift and leave you looking for answers.
Setting goals and being driven are important, but they are not enough. While you are looking at what is ahead of you, take a peak every now and then at what is behind you. Looking back and looking at what could ruin your business is as important as what could make it successful. There is nothing negative about thinking of failure, as long as you don’t become obsessed with it.