Investors often take a haphazard approach to their investing
businesses rather than approaching the business with a strategy. Imagine, for example, building your dream home and
how you would approach it. What things do you consider when you think about your dream home? The size of
your family or the family that you eventually plan to have? The activities that you enjoy and need your home to accommodate?
The surroundings? The neighborhood? The location? The schools? The type of construction you like best?
The look and feel of the home? You would create a clear vision of your dream home and then create a strategy and specific
plan to create that home. Certainly you would not go out on a piece of land, anywhere and just begin to pour out some
concrete, throw up a few studs here and there, plant a couple of bushes, then do some plumbing and so on. Taking this
approach would probably not yield the home you have in mind, whereas, a strategic approach would. The same holds true
for business – operating chaotically without a strategic plan will not yield success but will leave you with far less
than you initially envisioned or set out to obtain.
Most investors decide to invest,
take some classes, begin looking for property and jump into the tactical side of business, often without ever having a true
strategy. They bump along from deal to deal, opportunity to opportunity trying to decide if each one is right or wrong
for them. Decisions are made day-to-day, deal-to-deal, often with confusion and much debate rather than with a clear
strategy and approach to doing business. Busily working “in” the business from a tactical standpoint, investors
forge forward leaving no time to work “on” the business from a strategic standpoint.
a strategic plan will make a huge difference in your business results and accomplishments. According to the U.S. Small
Business Administration, over 50% of small businesses fail in the first year and 95% fail within the first five years.
You’ve heard, “fail to plan, plan to fail.” In creating a strategic plan, one of the objectives is
to look at strengths and weaknesses, threats and opportunities and appropriately address these with strategies and objectives
to ensure your business success. In fact, it has been proven that planning pays high dividends, as much as ten to one.
For every hour you put into planning, you will see dramatically higher returns on your business.
much more effective would your business be if you had a strategic plan giving you direction and decision making capability
in everything you do in this business? With a strategy, you first create a clear vision of where you want
to end up and work backward from that place. This plan is not a plan or strategy that belongs to or worked for someone else.
This plan is the place where you put all the pieces together and create a strategy to obtain the results that you desire.
Working “on” the business from the strategic standpoint is about strategizing, defining your vision and mission
and defining the entire big picture approach to creating success in your business.
Your strategic plan should include the following:
Assessment of your business – past,
present and future
vision and mission statement
of strengths, weaknesses, opportunities, and threats
to obtain objectives
An action plan
to meet objectives
Let’s look at a comparison of what your real estate investing business is
like without and with a strategic plan. Imagine that a property deal comes across your desk. Your typical response (without
a strategic plan) is to analyze the property and the numbers and determine if it looks like a good deal or not.
Sometimes the decision is an easy one, other times it is a grueling experience – wondering and questioning if this is
really a deal that is “right” for you. Let’s look at the deal now from a strategic viewpoint: you
analyze the deal, run it through your mind, checking it against your strategic plan and your specific objectives (where you
have specific criteria set for doing deals). Now, you are looking at this potential deal based on how it fits into your
overall portfolio and looking to see if it meets your overall and key strategic objectives. It either fits into your
plan or it doesn’t. Just having a strategic plan will make it easier to analyze deals, find opportunities, compete
in the market place and operate from a philosophy that you have clearly defined. With a strategic plan, you can save
time, make decisions easier, increase profitability and transform your business.
Take time to work “on” your business
Create a strategic plan
Review your plan regularly & adjust as necessary
Share your plan with your team!
- Operate only “in” your business on a tactical basis
- Delay planning because you think it takes too much time
the risk of failure due to operating without a plan
© 2009 Nancy Spivey