5 Areas Of Your Business You Must Stay On Top Of
There is much more to investing in real estate than finding properties to pursue. Where many investors slip up is not recognizing the importance of staying on top of every area of their business. As cliché as it sounds you need to treat your investing like the business it is. This means keeping a constant scorecard of where you are at all times. Having success in the short term won’t last very long unless you know how you achieved it.
Knowing the numbers behind what works and what doesn’t is the single biggest factor in improving your business bottom line. There are more statistics in sports now than ever before. In the past there were roughly half a dozen key stats in baseball today there are three times that amount. The smartest people in sports and business know how to use these stats to their advantage. You should do the same in your real estate investing business. Here are five areas of your business that you need to constantly stay on top of.
- Marketing. The first area you should focus on is marketing. Marketing can be one of the most expensive and time consuming aspects you will deal with. There are many investors who are throwing large chunks of marketing money down the drain every month. You may be generating some leads and deals but don’t know exactly how and where they came from. Before you start a new marketing campaign you need to be ready to track every aspect of it. You can make the argument that your tracking is just as important as the success. By knowing costs, volume, open rates and location you can better allocate your money in the future. Additionally you will get a better idea of how your money is being spent. If you don’t know what works it is difficult to make a decision on your next campaign.
- Networking. There are many people who dismiss networking as something they would rather not do. The best investors recognize the value and importance of good networking. It is not enough to show up at meetings, look at your phone and wait until it is over. You need to make solid connections that add something to your business. To do this you need to keep track of the events you attend, the number of people you speak with and how many contacts you gain per person. If you give this a few months you should be able to get a good idea of which events are the most beneficial. Much of your networking success depends on the follow up but it is also a numbers game. The more people you reach out to the more that may eventually want to work with you. You should keep a separate spreadsheet with everyone’s name, email, phone number and a brief note about what you may have discussed. If you don’t keep track of your networking you will not have the results you desire.
- Income Generated. Leaving a closing with a check is validation of all the hard work you put in. As great a feeling as this is you need to know how you got there. There are many investors who have a roundabout idea of how their bottom line was calculated but don’t know exactly. As a business owner you need to know every dollar that comes in and out. Getting a check at closing doesn’t mean you made money on a deal. You need to look at the big picture of the deal and go through it step by step. There are several smaller expenses and payments that must be taken into account. If you are working on a rehab you need to know how you reached your end sales price. Getting a check at closing is great but you need to know just how this income was generated.
- Expenses. Income and expenses can generally be lumped together. If you owned a restaurant you would have a good idea of rent, food costs, labor costs and more. The same should be the case with your investing business. You should know every dollar you spend for marketing, due diligence and rehab carrying costs. Just like in your household expenses seem to add up very quickly. By constantly staying on top of your expenses you can get a good idea of which areas you can sharpen your pencil. By reducing your expenses even 10% it will have a big impact on your bottom line.
- Lead Generation. It is not enough to know how much you spend, where you spend it and if it made your phone ring. With every marketing and lead generation campaign you start you need to dig into the numbers. Start with the total number of pieces or contacts. From there make note of every contact that replied. From the total number of contacts you want to see roughly 1% of those turn into actual deals. With your deals you should see if there is a common theme for the sellers. It could be anything from location, price point, age or motivation. If there is a trend that stands out this should be your target sub group inside of a larger group. Increasing lead closing efficiency by just a few percentage points has a much bigger impact than you may think.
Technology has made it as easy as ever to stay updated and organized. You can use any system you are comfortable with as long as it works for you. By staying on top of these five areas you will see a big change in your business bottom line.