Whatever business you are in, the most important function should be to make sales. Sounds simple right? I have seen in my travels a lot of companies (some of mine in times past) that are too focused on things that don’t matter at wind up lost in the weeds.
The death of most companies is due to the inability to sell enough products at high enough margins to become wildly profitable. I have heard of very few business failures based on too many sales! However, this is possible if there is a massive influx of orders/customers and the infrastructure is not built to support it and the resulting brand damage is too hard to recover from.
When you have a widget to sell, you need to price it according to the market and what it will bear – at that moment in time. Using real estate as our context: the goal is to make smart buys for the inventory and then be able to manage that inventory by holding it for cash flow or by increasing it’s value and then selling it for a profit.
If that inventory sits on the metaphorical shelf for too long, then it will eat into your profit margins very fast and put investment dollars at risk – one of the advantages of real estate investing as an asset class, so don’t be that guy. Plan your purchases/exit strategy with contingency built in so that you can reduce costs and get sales to happen quickly.
Some times you will have to make little profit or take a small loss to liquidate inventory of any type, real estate is no different – it’s just a very high priced “widget” that you need to continue to cycle through the sales process. Inventory control and planning is a weak point in many businesses that have cash flow issues. Having multiple exit strategies is critical in real estate, and lessons learned from a low-profit deal or a deal that sells at a loss will make your next purchases that much better because you know what works and what doesn’t.
There is often a best case, typical case, and worst-case scenario in anything in business and if you accommodate for all of these in your real estate plans you will be well-positioned to make great profits in any area in which you operate in. The Alberta market place is an interesting one at the time of this writing full of opportunity, learning, and profits.
Respect The Hustle,