Carefully consider any statements that you have checked. This may indicate that management is inflexible and unresponsive to employee suggestions. Management that is unable to respond immediately to changes in the market signals an inflexible unstable firm. In the rapidly changing business environment such management can mean eventual failure for your business. If you haven’t developed such a checklist do so. It will help you determine if and where adjustments are needed in your management staff.
How To Manage A Business: The 8 Keys
Learning how to manage a business is something that will take time to master. While you may have experience leading a team, managing a business will require new knowledge, skills, and strategies. Here are the 5 keys to managing a business:
Developing a thorough business plan: What need in a particular market are you filling? How do you plan to fill it? How will you acquire customers/leads? What’s your compelling reason for having the business? Include as many details as you can.
Identifying your customers: Be as specific as you can. Not just “homebuyers,” but “first-time homebuyers looking for starter homes in Imperial County, California.” Create an avatar of your ideal customer containing both demographic and psychographic information.
Planning your finances: It’s key you understand the numbers of your new ventures so you can confidently answer an essential question: What can I do to learn how to manage my own business? How will you generate income in your business? By when? How will you finance your start-up business costs? How do you intend to grow the business from a fiscal standpoint?
2. Build Your Infrastructure
Luckily, as a real estate entrepreneur, there aren’t the huge start-up costs associated with many other types of businesses. However, there are certain business expenses that we should be aware of before plunging head-first. And they include:
Business entity set-up: As a real estate investor, this will likely be in the form of a Limited Liability Corporation (LLC), which helps protect you and your estate from potential issues down the road (it also helps tremendously come tax time).
Marketing materials: This includes things like your website, a credibility packet, direct mail postcards, and even the email database tool you use to communicate with potential leads. Though you may not need every item of your marketing funnel completed before you get started, you must get as much set up as possible before you hit the ground running.
Team members: You may be just a one-person show at first, which is okay, but whether it’s hiring a part-time graphic designer or outsourcing your social media to a starving college student, it’s important to budget for additional members on your team.
3. Set Yourself Up For Success
Plunging into the deep end of the real estate business management pool can be daunting, especially at first. It can feel like you’ve got thousands of items on your to-do list, with just a few hours each week to accomplish them. Here are some keys to help you stay on track both personally and professionally:
Document as you go: No matter how small or large the business task, document the steps taken to execute it. This will make it easier to delegate the task later if desired and help you become more efficient.
Keep your marketing focused and targeted: One of the biggest mistakes that new businesses make is to try to market to everybody under the sun. This can make your marketing costs prohibitively expensive and quite ineffective. Make your marketing as targeted and segmented as possible and expand as required.
Set specific, realistic goals: The biggest reason entrepreneurs don’t reach their objectives is that their goals are too vague and unrealistic. Set actionable goals with a defined time period to help motivate you every day.
Go left, when everybody goes right: If the competition in your local market is communicating to clients and leads in a specific way, do your best to try something different. Take risks. Stand out. Don’t be afraid to be unconventional, yet still professional in attracting would-be customers and clients.
4. Tweak And Improve
It may take a little while, but once you’ve got your business up and running, it’s time to look for areas where you can improve and optimize the business. Learning how to manage a business means learning how to improve constantly.
Budget weekly time for education: It’s important to keep tabs on your industry. Whether it’s gathering more data about market trends, or mastering the latest social media marketing strategy, always be open to learning new things that can help your business. According to Nathan Kelsey, Managing Director at Make Me Local, aspiring entrepreneurs need to have a belief in their plan. Still, they also need to be smart enough to know that the learning never stops. “Take time out for self-development on topics that might not be what you are used to – e.g., managing cash flow. Invest in systems early; it’s easier to build these from the start rather than unravel them later,” says Kelsey.
Why Do Businesses Fail?
If you’ve paid attention to the occupancy of shopping malls over a few years, you’ve noticed that retailers come and go with surprising frequency. The same thing happens with restaurants—indeed, with all kinds of businesses. By definition, starting a business—small or large—is risky, and though many businesses succeed, a large proportion of them don’t. One-third of small businesses that have employees go out of business within the first two years. More than half of small businesses have closed by the end of their fourth year, and 70 percent do not make it past their seventh year (Knaup & Piazza, 2011; Knaup & Piazza, 2007).
As bad as these statistics on business survival are, some industries are worse than others. If you want to stay in business for a long time, you might want to avoid some of these risky industries. Even though your friends think you make the best macaroni and cheese pizza in the world, this doesn’t mean you can succeed as a pizza parlor owner. Opening a restaurant or a bar is one of the riskiest ventures (and, therefore, start-up funding is hard to get). You might also want to avoid the transportation industry. Owning a taxi might appear lucrative until you find out what a taxi license costs. It obviously varies by city, but in New York City the price tag is upward of $400,000. And setting up a shop to sell clothing can be challenging. Your view of “what’s in” may be off, and one bad season can kill your business. The same is true for stores selling communication devices: every mall has one or more cell phone stores so the competition is steep, and business can be very slow (Farrell, 2011).
- Bad business idea. Like any idea, a business idea can be flawed, either in the conception or in the execution. If you tried selling snowblowers in Hawaii, you could count on little competition, but you’d still be doomed to failure.
- Cash problems. Too many new businesses are underfunded. The owner borrows enough money to set up the business but doesn’t have enough extra cash to operate during the start-up phase, when very little money is coming in but a lot is going out.
- Managerial inexperience or incompetence. Many new business owners have no experience in running a business; many have limited management skills. Maybe an owner knows how to make or market a product but doesn’t know how to manage people. Maybe an owner can’t attract and keep talented employees. Maybe an owner has poor leadership skills and isn’t willing to plan ahead.
- Lack of customer focus. A major advantage of a small business is the ability to provide special attention to customers. But some small businesses fail to seize this advantage. Perhaps the owner doesn’t anticipate customers’ needs or keep up with changing markets or the customer-focused practices of competitors.
- Inability to handle growth. You’d think that a sales increase would be a good thing. Often it is, of course, but sometimes it can be a major problem. When a company grows, the owner’s role changes. He or she needs to delegate work to others and build a business structure that can handle the increase in volume. Some owners don’t make the transition and find themselves overwhelmed. Things don’t get done, customers become unhappy, and expansion actually damages the company.