In my 33 years
of business, I've made countless mistakes and I'm going to share with you
my top five. Number one. Stay in your lane. I made this mistake so many times for me. We're a multifamily investor,
builder and manager and that's all I should ever be. But I veered off the path many,
many times. So you need to be clear on what is your business
and then be the best in that niche. Most people cast a wide net and don't
really even have a business plan. This is why most businesses fail. One example is I started a carpet cleaning, installation
and repair business. I figured why not?
I have all these rentals. Why not capitalize on all this carpet
and flooring turnover? What a huge mistake that was. I hired guys, I bought trucks,
I bought machines, I got extra space, and then I tried to manage it
all on about 5 or 10 hours a week. You can't run a successful business
and scale it on 5 to 10 hours a week. In two short years,
I had many sleepless nights, spent a lot of time off of my core business,
and spent hundreds of thousands of dollars only to wind it all down at some point
just three years later. The point is, is that
I could have used that extra 5 or 10 hours per week to grow my core business
if I would have stayed in my lane. I see a lot of people doing this today because they're just trying
to generate some side hustles. The truth is, staying in your lane
requires focus and discipline. It's really,
really hard to stay in your lane and eliminate all the distraction options
that will continually come to you. When you own a business. Not only you, but investors, staff, banks everyone needs some kind of a direction,
whether that's in-house or consultants. Because without some kind of direction
and some kind of focus on some kind of a goal, it's extremely hard
to measure progress and performance. Another example is when we started doing
condo conversions, we started buying apartments,
which is exactly what I do now. But then I started to sell them off
individually as condos. And while we made a lot of money
and we paid a lot of tax at the end, we had no asset and we worked our butts
off for about five years. I sometimes look back at that time
and wish I would have never sold those properties off,
and kept them as apartment number two, leveraging Opt,
which is other people's time. The number one thing of all
business owners is that they all think that they're the best at what they do,
and no one can do it better. And they try to do everything themselves. Think of a dentist,
a doctor, CPA, realtor. They are so smart
that they don't believe anybody else can help them achieve their goals
or run their business better than that. So instead of a business,
they have a busyness and then at some point
they run out of time because there's only so many things
one person can do. So one of the things that I did
as a young man over 20 years ago is I took the Colby test, which is Colby,
and they're local here in Arizona. But what they do
is they test your individual strengths. It's called an instinctive assessment. So I did that. But then I did it for my whole staff
because I was trying to figure out what am I really, really strong at
and what am I really weak at. And then how do I find team members
to be able to fill those gaps? The Colby test at the time
had four different categories. One was a fact finder. Two was follow through. Three was quickstart
and four was an implementer. And they put everybody in those categories
based on a series of tests. I of course, was a quickstart,
which I still am today. I like to start companies,
but I hate all the details. I hate the follow through, I hate the fact
finding and all the implementation, even though I like to manage
all those kinds of things. It drives me nuts to do all those
little things, but I do have the ideas. So that was really helpful for me
because now I was able to understand, stay in my lane
with regard to who I am, then leverage out the people's time to be able
to do things that they're strong at. So it's a win win
because not everybody is a salesperson. Not everybody is a quickstart. There are many people who are fact
finders, like attorneys and CPAs
traditionally fall into those roles. So find out who you are
and then build your team. So as I move my company forward,
there are things that I do not like to do. Like tax, like legal, like due diligence, those kinds of things. I do like to look at deals
and I do like to review the underwriting, but I don't like to do the underwriting. I don't want to have to be
the person that takes all that data and sticks it into the spreadsheet,
but there are people that love to do that. So find those people
and only do what you love to do, and only do what you're the best at,
because that will move the needle the most for your business,
and then figure out what you're not good at and find people
that love to do those things. The third thing I learned as a business
owner is that you have to be flexible, and you have to learn
how to pivot on a daily basis. Not everything falls in line with some business plan or some idea
that you might have thought of a year ago, but the process is simply what I call R&D,
which is Rob and duplicate. So what do I mean by that? What I mean by that search
for the best practices with the competitors in your business,
and that is simply rob and duplicate their best practices
and bring them into your own firm. You should be doing this anyway. You should always be looking for things
that other people are doing to move their own
individual needle better than you. I don't know about you, but sometimes when I drive around
I see all these businesses like chiropractors and dentists
and doctors and restaurants and I always wonder, like they're in every single block and
sometimes there's multiple in every block. So what makes one better than the other? It's the small little things that they do
better than their competition. And you have to always be on the lookout
for things like that because the market continually changes. So new products change, pricing change,
and of course today tech is changing. So AI is driving
lots of different changes. And if you aren't adapting,
you're actually falling behind. If you're standing still in your business,
you're actually falling behind. You have to be always progressive, and you have to always
be implementing these things because your competitors
are going to do it. You've all seen small businesses
go out of business over time. It's typically because they don't adapt. There's nothing more constant than change. And if you don't adapt,
you're going to fall behind and you'll soon be out of business
and you'll lose sales over time. Number four and the beginning. When I first started my business,
I didn't follow the money. So you may know that 40% of businesses
fail because they run out of cash. Every single business on the planet
depends on cash flow. Every single one. Without income, without cash flow,
the business doesn't succeed. The problem is, most people don't really have the financial skills
to understand how a business runs. Most business owners
learn this on the fly. The exception, of course, would be a CPA. I would hope that they understand numbers,
but many entrepreneurs start off because they're really good
at sales as an example. We all know that person that's really good
at sales and they're gregarious. They have all the nice do stuff, but
they have less than $1,000 in the bank. That's the classic example of somebody who
doesn't know how to manage their money. Most business owners
fall into this category. So I have learned three things. The first thing was I establish KPIs or key
performance indicators in my business. They measured my sales
and they measure my expenses. The second one,
I was always taking a look at my margins no matter what I was doing. You have to look at your margins. A lot of people say sometimes to me, oh,
we can make it up in volume. Well, that's the dumbest thing ever,
because if you don't have margin volume, it's not going to help you. So when you take on an account
or your pricing something, there has to be enough profit in there to be able
to pay everything, including you. A lot of people just take on business
blindly and price things blindly without really understanding
how it impacts them financially. The third thing is
you have to have a budget, you have to know your budget, and you have
to understand what it takes to cover it. And I'll give you an example of
just yesterday. I'm looking at investing
in a new business. And my number one question was at
what month do we break even? And the answer was eight months. I want to be very clear on how we're going to generate the revenue
to get to that eight months, but also after that, those are just
simply opinions and calculations. You really have to understand
where your income is coming from and your expenses,
and needs to be top of mind at all times. And you need to check this each
and every month. And this extends beyond business. So when I was a young man, I thought,
okay, I just got to make a bunch of money and I just won't spend anything
and I'll live off of nothing. Well, that is one strategy,
but you really need to understand
what your monthly cash flow is. The whole goal is not to live
below your means. It's actually to live within your means
and make way more money than that so that you're happy, comfortable,
and you're doing everything that you want. When I was a young man,
I just focused on how much money I was making, and I had very little focus
on the expenses. But as I rolled into business,
I realized that you can't roll into business with that same philosophy.
You're going to need other people. You have to pay for their time
and their services. You really need to understand
your net cash flow each and every month, and then you should have a plan for that
money and not just digging into savings. If you want some help
getting started on your personal finances. You can grab the download at the link
below. The fifth mistake was ignoring marketing. With marketing, I've spent too little
and I've spent too much. You need to know who your customer is. So your job is to figure out
what do they like? What do they want? Who are they? And then you can direct
all your advertising toward those people. You need to understand your customer
better than they understand themselves. You can articulate their problem to them
and come up with their solution. You're going to have a customer for life. When I started,
I wasn't focused on the customer, but now that's all we focus on
because if we can solve their problems, then we'll continue to have customers
for a very long time. Most people focus on getting new customers
when they should be focusing on their existing customers
that are already giving them business. So for whatever reason, there seems to be
this huge focus on getting new people and you have to do that. Don't get me wrong, but really
the best thing you can do is retain and take care of the people
that are already giving you money and are already paying you
for your services. This is a big push
that we do internally in our old company. It's called retention. We are working with our residents months
before they're even moving out to find out what their plan is
and the hopes that we can, of course, renew their leases. You need to be communicating with
the customers to find out what they want, which overall will help
stabilize your cash flow and help your business
succeed in the long run. Before you start a business, you need to be able to answer three
very specific questions. I just did a video on that here.
