When I first launched my residential property management business, I was aware that there was a chance I might not succeed. As confident as I was that my business had the legs to stay the course, the reality is that the entrepreneurial journey, more often than not, ends in failure. On average, only three percent of startups make it to their fifth year.
Ultimately, all entrepreneurs will experience some kind of failure. This is inevitable when you run your own business. However, failure can be one of the most powerful learning tools available to entrepreneurs as it forces us to examine our ingrained assumptions, develop new perspectives on the purpose of our businesses and test and strengthen our resilience to uncertainty and change.
While some types of failures can be productive, there are other kinds that provide no value to an entrepreneur’s ability to scale their business or pursue additional entrepreneurial opportunities.
- Insufficient Industry Knowledge
While a great idea is a necessary condition for success, it’s far from enough. Many entrepreneurs mistakenly equate the quality of their idea or their deep understanding of why it’s valuable as the grounds for immediate business success. The fact of the matter is that a great idea is only the first step. Business success relies as much on how to operationalize and inject an idea into the market as it does on the idea itself. There is no substitute for in-depth industry knowledge and I have witnessed many entrepreneurs going to market prior to executing the kind of due-diligence necessary to understand the markets in which they have chosen to play.
While I continue to believe that my business differentiates itself, residential property management is, more generally speaking, a commoditized offering. Thus, deep market knowledge is critical to maintaining an advantage. Ensuring that I understand my competitors offerings as well as the needs and wants of both tenants and real estate investors, has been absolutely critical to my success.
Questions for Strengthening Your Market Knowledge:
- Who are your competitors and what does their offering look like?
- Who are your target customers and what do they value most about your product or service?
- How do your target customers prefer to consume the type of product or service you are offering?
- Analysis Paralysis
While building deep industry knowledge and refining ideas and strategies are critical components to success, you must also know when to act on what you know in order not to miss an opportunity. Once again, I have witnessed well-intentioned entrepreneurs who became entrenched in a never-ending period of analysis and refinement and as a result, missed the mark on execution. The window for a successful launch, to snag a key investor or to change directions, is often both small and fleeting. When an entrepreneur misses one or more of these, it is unlikely that she will get a second chance.
My story is most definitely the result of gathering and analyzing information, but acting on it quickly. In the early days of my business, I turned to a number of friends who had expertise in the Toronto real estate investment market and who recognized an opportunity well-aligned to my skillset. Proper planning, hard work, commitment and decisive action turned a good thing into something great. The business was able to cultivate high quality relationships with a group of international investors who leveraged my services to rent and manage their Toronto-based investments, which in turn, greatly accelerated my business’ growth.
Questions for Avoiding Analysis Paralysis
- Are priority outcomes particularly sensitive/insensitive to changing variables in your analysis?
- Is there a particular point in time at which a go or no-go decision must be made?
- Are you confident to approach a potential investor with the information you have gathered, analyzed and based decisions on?
- Lack of Marketing
Great products and services need to be supported by equally great marketing. Many entrepreneurs are very reluctant to spend money on marketing, preferring instead to continue to prototype and refine their product or service offering. However, just like a great idea does not translate into a successful business on its own, the perfect product or service will not translate into a successful business if nobody knows about it.
Again, given the commoditized nature of the residential property management industry, I rely very heavily on marketing efforts that appeal to the lifestyle needs of both potential tenants looking to make a home for themselves and those that appeal to real estate investors who are looking to build and diversify their investment portfolios. Most recently I have focused a great deal of attention on increasing my online presence, making use of social media, promotional videos, and content creation.
Questions for Evaluating Your Marketing Efforts
- How does my target audience prefer to consume information about the product or service I offer? Social media channels, a primary website, print media, word of mouth, etc.?
- Do initial interactions with potential customers demonstrate that my product or service is well understood?
- How do my closest competitors execute their marketing strategies?
There are many more sources of failure along the entrepreneurial path. In my view, avoiding the three common sources of failure discussed here, will better position your business for success moving forward.
Written By: Sabine Ghali, Director at Buttonwood Property Management and an entrepreneur at heart who endeavors to help investors create real estate wealth over time in the Greater Toronto Area. Visit her at www.buttonwood.ca