In this episode, Dr. Matt Motil explains in 3 steps how to transition your business!
Although this is real estate related, I think regardless of what industry you are in… this applies!
Keep in mind entrepreneurs are either all in or all out.
We will have an on-going example throughout this podcast: flipping vs wholesaling.
We see 8-10 cycles in real estate markets.
Let’s get started…
Entrepreneurial Shift – How To Transition Your Business In 3 Steps
1. Why Shift?
A. Market Changes
As markets shift, you may find a reason to shift your business from one type of investing to another.
When the market shifts, you do not want to have 20 active rehabs at a time.
This is because if there’s a softening in the market (dramatic price drop) you do not want to be sitting and holding the bag with a bunch of properties that may not be worth what they were 2 weeks ago, months, etc.
When the market starts to pick up again like 2011-2012, wholesalers took off.
Now for the next 12-18 months, the market will start to slow down in certain areas, and wholesalers will need to shift their focus.
B. Lifestyle Changes –
How can I shift my business for more time? Realize your time commitments.
For flippers, you soon realize it’s an incredible amount of time.
It is resource heavy, time heavy, material heavy, etc.
It is a lot of work to get to the end.
How much stress is this job costing me? Maybe I want to do something different?
Think about the stress of your cliental, are you having as much as you were in the beginning?
Think about your cash flow management.
Wholesaler: cash comes quickly.
Flipper: cash takes time.
What is your best option to live the lifestyle you want?
As you make a shift from one to another: what does that look like? How do you make the happen?
2. Make a Plan
You need to ask yourself these questions below before changing your marketing and strategy:
A. Where are you currently and where are you wanting to go?
Example: I am a wholesaler and want to shift to buy and hold investor.
B. How much difference is there between the two?
Customers now VS future, what is the difference?
C. How is the revenue generation different?
Your revenue generation is the most important question, it is what keeps the business running.
Wholesaler: you make money by selling the contract for a fee.
Flipper: you make money on a monthly basis from the tenants.
D. How is the sales price different?
Wholesaler: your customers are the buyers AKA house flippers, turnkey, buy and hold investors.
Flipper: your customers are the tenants and potentially private lenders and/or banks
3. Operating on Two Parallel Tracks
A. You can’t shut down the main source of revenue
You have to be doing all the steps so that the sales are there.
B. Ramp up the second source of revenue
You need reserves before ramping up the second source of revenue.
C. Once second source is sustainable, you can throttle back the first source
It’s almost like you are running 2 separate businesses at the same time.
4. Decide on Fate of Original Business Model
A. Are you keeping the original model at all?
B. Are you scrapping it completely?
You need to think are you keeping any type of your original business model or are you completely switching your business.
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