Knowing that so many of our readers are not just real estate investors. Many are entrepreneurs and small business owners s well and we thought this was a great article to publish this week. 2015 is starting with a bang and as unbelievable as it sounds....January is already half way gone! So this article is all about big decisions and big improvements and how to make both!
Work it harder and do it faster, as the band Daft Punk would tell us, and it makes us better. While we can certainly psyche ourselves up with the notion of being more fast and efficient, different businesses need different things. Some think that becoming bigger is the right course of action for any business. After all, growth is a sign of progress, right?
Sometimes it’s smarter to enhance what’s already there, no matter the size, rather than work towards the simple goal of being “bigger.” Good, efficient work is more a benchmark for success than scale. When you fine-tune your systems, you’ll find that your business will naturally become more profitable.
As we start into 2015, we thought it was appropriate to give some advice and let everyone know we take this advice seriously! After continuing to grow every year and planning for continued growth in 2015, we have also placed extra emphasis on improving our processes and systems. Enhancing what we currently do well...to make sure we do it better than anyone else!
That is what enhancing what you are already doing is all about. We utilize a lot of technology in our business and right now is a great time to rethink how everything works together. From communication to reporting and everything that occurs in between, we are working hard to improve the experience that a possible client has with our company before buying and even harder to improve the experience that a client has after closing on a property. So we thought it was a good time to list out three strategies we use year-round, but especially at this time of year, to improve our real estate company and keep us focused.
3 Business Strategies for Increasing Profitability
Recognize the Difference Between Revenue and Profit
When looking at numbers in business, the big number to watch is cash flow. While your big business might have plenty of revenue, it may not be as profitable as it should be. After expenses and paychecks, how much have you really earned? Being profitable is all about good money management. Small businesses that are efficient can have better positive cash flow than bigger companies. Your goal should be to increase that positive cash flow, not simply being “big”. With good profits, the size of your company will demand expansion in due time.
We use a variety of reporting methods to view cash flow, balances, expenses as well as payables and receivables and those different reporting methods allow us to look at each of these from different angles. Often times, revenue is extremely important, but the flow of capital in a company is much more important. Tracking that flow is a vital task that all business owners, real estate investors and entrepreneurs needs to make sure they learn.
Fine Tune What You Already Have
Rather than constantly looking for where to grow, look at enhancement first. There’s always going to be a point where you’ll need a bigger team, a better space or a bigger budget. Growth is good — but the timing has to be right, too.
If you have visited the main Memphis Invest website, you will have noticed that we have a Truett Cathy quote at the top of one of our pages. "If you concentrate on getting better each day, your customers will demand you get bigger". This quotes sums up what every real estate investor should pay attention to if you are going to work with a passive real estate company. “More” isn’t always the solution. “Better” is.
Look at the way you run things, track how time is spent and how things can be made better. This can be a long process, and solutions won’t come immediately. Looking for ways to maximize your profits, however, will pay off in the end. Even little tweaks can mean a few extra dollars in your pocket. Over time, it adds up!
Don’t allow yourself to become complacent and stuck in old processes that aren’t serving your business in the best ways possible. Always look to get better. When it is time to grow, your clients will help you grow.
Revisit Your Value
As time goes by and you gain more experience in your field, it’s important to look back at your value. Never undersell yourself, for one, but you may need to re-evaluate the value you offer to your customers. Part of your growth may be branching into new services for your customers or appropriately raising rates. Whatever your value is, you need to make sure that your messaging and delivery both match your value.
Too often, companies will adopt what they see as a winning strategy from other companies without looking internally. The ask questions like "what is that companies winning strategy?" or "what are they doing that we can copy?". The question they should be asking is "what is our unique value?". When a company can focus in on what they do better than any other company in their field....in the world....then they have a real value!
We see it all the time in the real estate investing industry. We are a company that caters to passive real estate investors looking to invest in what is commonly referred to as Turnkey real estate. We have been blessed as our company has grown and we have been consistent with our sharing of data, ideas and successes as well as failures in our business plan. However, we often see companies that take our marketing messages, plans and even copy word for word from our materials thinking that our secret is in the message. It is not.
The secret for every great service company is linking your message with your actions. Messaging itself, especially from a marketing standpoint, is only part of the story. It has to be congruent with action. Enhancing your message to fit your value is much more important than trying to copy a message from other companies that you see as successful.
We would love to share with you part of the incredible reason our company has grown. These three business resources are fantastic and we would love your thoughts on how they led us to build and grow our company.
What business strategies do you utilize to increase profits? Lets us know in the comments.
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