New data shows that real estate companies offer the best odds of success when launching a new business. That said, how can real estate entrepreneurs use this research and build even more success into their new ventures?
According to a 2015 roundup of stats, including research by the University of Tennessee, the success rate for small businesses is on the rise. They used to say that just 5 percent of new ventures would survive the first few years. For finance, insurance, and real estate businesses, that number has reached 60 percent.
With that in mind, how can real estate company founders hone their business ideas even further and maximize success?
Building in Success
Figures compiled from UT, Bradley University, and Entrepreneur Weekly show that wholesaling and services business are among the top 5 types of businesses most likely to succeed. Providing real estate wholesaling as a service could compound the chances of success for more small business owners. However, Statistics Brain also reports that apartment building operators are one of the top two types of businesses likely to succeed after 5 years.
Still, it’s no secret that starting a small business can have challenges. So why do so many startups fail? How can real estate investors, Realtors, and others interested in launching their own companies in this industry successfully navigate the mines which have sunk their predecessors? How can they use the data available to their advantage?
10 Common Reasons Small Businesses and Entrepreneurs Fail:
- Living beyond the means of the business
- Failing to pay taxes
- Lack of planning
- Expanding too fast
- Wasting advertising budget
- Burnout and work-life balance issues
- Lack of market knowledge
- Lack of financial management and record keeping experience
- Having too much money
How to Kick Failure to the Curb
Fortunately, most of the above can be managed with a little common sense, staying organized, and investing in some good real estate and business education. Between the compact real estate education courses available today, and availability of coaching, there’s no reason your plans have to be put on hold. Once you get a good foundation under your belt and have a solid plan, you certainly keep on learning while you earn.
However, it is critical to have a sustainable plan. This should absolutely include scheduling enough time off to avoid getting burned out, and to maintain personal relationships. If you aren’t inclined to spending lots of time going over the numbers and fine details, hire someone who can do it for you. Have them double check your projections, help keep on top of estimated tax payments, and to throw up the red flag when you are taking on too much in terms of debt obligations or ‘entertainment’ spending.
The really good news from this data is that you probably don’t need as much money as you think. However, if you waste your real estate advertising budget you’ll never have enough. Surprisingly, you can see real estate companies, investors, and agents dumping marketing money and leads down the drain every day. They don’t answer phone calls and leads from advertising. They fail to follow up. They don’t over deliver to a level that will generate repeat business and referrals. Get better at these, and you’ll be ahead of the competition.
Catapulting the Success of Your Real Estate Business
Do not stop at what we have mentioned already. Go above and beyond the call of duty. Getting to the next level can attract more funding, and perhaps even more importantly, forge great strategic partnerships. One of the biggest obstacles is instilling confidence. No one wants to put their money into a venture that is going to fail, or associate with a partner that is going to implode.