The Fundamentals of Business are the same whether it is flipping houses, wholesaling, or running any other business. We are going to dive into 10 essentials to building your business foundation while interviewing J Scott who wrote a book on flipping houses that Bill used to guide his first flip.
In real estate your inventory is hundreds of thousands of dollars so people often think it’s not a business but it is and it follows the basic principles of any business. The truth is, real estate is just a business vehicle, and people fall in love with it. That passion however can shift to leadership, your team, how to build up who you hire, and how you create your vision.
A little of J’s backstory:
J Scott spent much of his early career in Silicon Valley, where he held management positions at several Fortune 500 companies, including Microsoft and eBay. In 2008, J and his wife Carol decided to quit their corporate jobs, move back East, start a family, and focus on real estate investing. In the past ten years, they have bought, built, rehabbed, sold, lent-on and held over $60M in property all around the country.
J is also the co-host of The BiggerPockets Business Podcast and the author of four books on real estate investing, which have sold over 200,000 copies and have helped investors from around the world get started with real estate. J wrote the book 10 Essentials for Building a Solid Business Foundation with this idea in mind: If I could go back in time and tell you what I learned the hard way, this would be it.
J’s Essential Business Lessons
- The biggest mistake you’re making in your life today is not saying “No” enough.
Many of us want to do everything and therefore we say yes to everything. The problem is, many of those opportunities we are saying ‘yes’ to don’t contribute to our success. Even if they do pan out, if we say yes to everything we are spread too thin and we don’t actually accelerate any one venture. In the early days it is important to turn down things that take your focus away from the main goal you are pursuing.
Most people think success has to do with having a unique idea. We don’t agree. We believe 80% of ideas are neutral but the execution of that idea is what makes it amazing.
Saying no, allows for amazing execution of one idea rather than mediocre execution of multiple ideas.
Remember, if you are saying yes to one thing you are generally saying no to something else. So make sure what you are saying No to isn’t more important, like time with your family. People respect your ‘No’ when you are solid in why you are saying no.
You can also say ‘yes’ while putting boundaries around the ask and making sure the compromise focuses on your needs.
- Money is not the goal – it’s the currency you use to achieve the goal. Until you realize that, you’ll never feel settled.
Money is simply the currency to help you accomplish whatever goals you want to achieve. When you start making money you realize that the money doesn’t make you happy, it’s a safety net that allows you to feel confident, and a tool that moves you towards a purpose. When you are clear on that purpose you know how much money you need. What is important to you defines how much money you need to be making.
Some great questions to ask yourself are: What are you using the money for? What are you providing for your family, yourself, your friends?
- It’s unlikely you’re going to make money doing something just because you love it. It’s unlikely you’re going to make money if you don’t love what you’re doing.
You can love what you are doing but that can’t be the only reason you are doing it. There is a balance between practicality and passion. When a new project comes across your desk ask yourself ‘Would I enjoy doing this? Does it present a challenge I will enjoy taking on?’ If the answer to those questions is yes, go deeper into what opportunities the project actually presents before deciding if you will take it on or not.
Figure out what’s going to make money, and then ask will I love doing this? Is there passion there? Because if there isn’t passion, you will quit when the going gets tough.
- Your desire to look wealthy is a detour on your road to being wealthy.
If you spend so much time trying to portray a lifestyle, or a personality, or an agenda you aren’t putting in the effort to actually build the reality of that lifestyle etc.
Don’t try to look like you know it all before you do, the reality of being a beginner is compelling. You can’t be ashamed about the fact that you are starting out. If you are afraid to be authentic your ego will keep you from continuously growing and learning through the process.
- If the amount of money you earn is limited by the number of hours you work, you will never be wealthy.
This is the difference between an employee and an investor or entrepreneur. If you are earning your money hourly no matter how lucrative your hourly rate, you are still a slave to your time. People that are truly wealthy are those generating income in their sleep. There is active income and passive income. The only way to get to passive income is to create active income first. You can then take money from your active income and invest it to create passive income. You trade your time for money till you have enough money for that money to earn money on it’s own through investing. Figure out what your active income streams are and then figure out what your passive income vehicles will be. Work on both of those simultaneously.
- The Fastest Way to Build a Successful Business is to Copy off Someone Who Has Already Done it, (and No this is Not Unethical)
So many people think the only way to be successful is to be the first person marketing a completely innovative idea (an Elon Musk). That is one way, but if you really want to be successful find a business model that works and copy it. That being said, you do want your business to have a competitive edge. If 10 million people are doing it, find something that maybe a million people are doing and find a way to give it that ‘something extra.’ Tried and true models will help you reduce risk. Don’t reinvent the wheel where you don’t have to. Test, modify, and adjust. You can use someone else’s template for success by adapting it to reflect you.
- At the end of the day, being a successful entrepreneur boils down to only two skills:
1. Building a great product and 2. Being able to sell it.
People waste time on minute details like cards and websites. Ninety percent of your time needs to be focused on creating a great product and how you sell that product. The details can come into play later as you start to need more structures to refine your business. Trying to figure out the ‘how’ can sometimes get you stuck in analysis paralysis. The most important thing is to get out there and do it; make your first deal, flip your first house.
- In business and investing, there are two main sources of leverage: Money and People. If you’re not using both, you’re under-performing.
You have to value relationships as much as you value the money they can give you. You can expand your business quickly by using your network. Too many people try to go at it alone and do everything themselves instead of being the person in leadership delegating. Get a great team of people that are working in their genius and leverage their talents. You can also be a tremendous team leader and not know how to leverage money. Find your weaknesses and allow other people who are really strong in them to fill that space so you have time to invest into leveraging your own genius.
- Want Lots of Money? Stop focusing on your problems and start focusing on other People’s Problems.
Good real estate investors are in the business of solving other people’s problems. If you are buying a house for under market value, it is usually because you are solving a problem for the seller that is more valuable than money. The great deals you make are a result of people ‘paying’ you to solve their problems.
- Give credit, take responsibility Not the Other Way Around.
This is the single most important motto we run our business with.
If anything goes wrong in your business, it is your fault. Taking ownership is key to being successful. If you take ownership of anything that isn’t working, you can see where you can do things differently in the future and immediately implement them into your business. If you do not, you put yourself in the position of victim and are likely to repeat the same mistakes again. A good rule of thumb is anything that goes wrong is your responsibility as the business owner and anything that goes right the credit belongs to the people who you are leveraging. If you run your business that way you will get the respect of your customers, employees, vendors, and contractors.
We hope you will use these gems to inspire you and propel your business forward!
They have made a huge difference in how we run ours.