Show notes from podcast episode 112.
Determination and energy, keys to a successful entrepreneur, can also lead to overcommitment. Letting scope creep get the best of you can lead to clients demanding more of your time for the same price, and may negatively impact the work you’re producing.
Today’s caller, Nico, is just a few months into his digital marketing agency but has already landed luxury clients like Ferrari and Maserati. He is doing nearly $10,000 a month in revenue all from his bedroom living a lean lifestyle at his parent’s home.
With this newfound business, he’s finding himself struggling with time management and committing to a set direction to grow his business while sticking to what he does best.
Even though Nico is on a monthly retainer with most of his clients Nick suggests tracking his time so he knows where he is most profitable and what customers may be costing him money to service.
Customer’s are as needy as you let them become and if they get used to instant responses and drop everything kind of service they will grow to expect it and your life will become a stressful mess.
Nico is suffering from scope creep – taking on work of all kinds without being sure that it is in his wheelhouse and his highest value per hour work. Nick suggests hiring out and outsourcing the lower skilled work so Nico can focus on his core competency:
SALES.
Its fine to cast a wide net and dote on his clients. He’s 21 years old and growing something special. But as time passes and he grows his business he will have to pick and choose carefully what kind of work he takes on and what he spends his time doing.
Nico also discusses in this episode how cold calling and walking in businesses earned him these early clients. Connecting and speaking with the clients in person was all it took to convince them to give him a shot.
Nick also discusses getting serious about a morning routine free of distractions. That is when the deep work should happen because you are less likely to get distracted by customers or general surprises of the day.
Highlights:
Tracking time for your own benefit [7:20]
Customers are as needy as you let them become [14:15]
Nick’s podcast, book, and routine recommendations [17:00]
The fascinating story of how Nico’s agency [20:20]
The decision tree of your business’ future [27:20]
Also referenced:
Scaling Up Your Business Podcast: How to Plan Your Week for Success
Tim Ferriss podcasts with Ryan Holiday: One and Two
Delegation + crappy systems = more problems.
Delegation + good systems = more productivity.
Delegation is important and it is the only way to scale. But if you delegate before you create bombproof systems you’ll do nothing but amplify your problems and stress.
So don’t just start to delegate and figure it out as you go. Take a step back and build a system that works.
Build a system where your employees have a framework on which to make all decisions and there are no questions they go to you. It could be a logical framework. It could be a literal framework. Just make sure that it’s there or you will be a babysitter and the bottleneck in your business.
I haven’t been as active on here lately. As some of you know Dan and I are doing big things right now. We’re closing on the big self storage facility refinance in about 2 weeks and will be pulling out about $2.1MM in equity in the form of cash. We were considering selling the property after we got a nice offer this summer but decided instead to go this route.
We’re glad we did because 2019 Q3 was extremely profitable.
Our Plan:
We’re looking to buy properties with value add opportunities in one or more of the following areas:
With our remote management capabilities we can target smaller properties than most self storage buyers. Most REITs (Life Storage, Public Storage, Extra Space) target 30,000+ net rentable square feet with the plan to place a full or part time on-site manager. With low on-site labor costs and paperless operation we can achieve strong returns on smaller properties.
Our Goals:
Our long term vision is to build a portfolio of self storage properties with healthy and consistent cash flows on a month to month basis. Over the next 5 years we plan to build a portfolio of 500,000 rentable square feet of storage, all operated remotely with a centralized call and administrative staff. We may sell the storage portfolio to a larger player at the 5 year mark if the price is right. We plan to buy storage at about $40-50/sf and the value we project at year 5 is north of $80/sf.
Progress So Far
I’m pounding the phones for off-market deals as well as working Loopnet and other sources. I’m sourcing them, negotiating them and also raising the money and securing the financing for them. We have 5 properties currently under contract and 2 more hopefully tied up soon. We’re closing on 4 of the properties in the next two weeks as well. Three of them are in Erie PA (24,500 SF under contract for $632k) and one of them in Pittsburgh (11,400 SF under contract for $472k). Have a 5th under contract in Tompkins County NY near our main location (10,200 SF + 5 mobile home pads for $387k).
My partner Dan is working on securing bank financing on a few projects as well as focusing on preparing them for operations and giving them a facelift. The Erie portfolio as well as the Lansing NY property have been mismanaged but the Pittsburgh property is already cash flowing nicely.
Putting together the deals
We’re getting creative with the deal structure. We could easily go around buying storage leveraging our own capital 80/20 or 70/30. Meaning 80% bank financing and 25% cash or 75% bank financing and 30% our cash. The small deals above we are doing it this way. Erie and Pitt we secured 80/20 financing and Lansing is 75/25.
The larger properties we are getting creative and I’m working my network to raise some capital on each deal. Instead of putting 25% of our own capital in, we’re reducing that to 10% and raising 15% from outside investors for pro rata ownership. So instead of owning 100% of the portfolio we’ll own 85% but be able to go out and buy 2x as much storage because out $2.1MM in cash will fund a lot more deals. The more storage in the portfolio the more value on the open market.
Follow along
The best way to follow along is to listen to the podcast and subscribe on YouTube. I’ll be uploading videos as I visit properties, close loans, meet with investors and operate the properties.
Another way is by email. Each time a deal gets close to contract I package it and share cashflow projections with my network of followers/investors/mentors. I also send management and P&L reports for each property under management each quarter.
Join the email list here.
If you have feedback of any kind we’re always open minded about things we might be missing!
Casey Walsh went from almost dropping out of high school to the owner of a junk removal business that brings in $4MM a year at an 18% profit margin. Stand Up Guys Junk Removal operates in 6 states and has 7 locations.
In this episode Casey shares how he overcame obstacles to start the business as a 19 year old in Marietta GA. He grew the business slowly and about 4 years ago began to rapidly expand and there is no end in sight.
He has 54 employees and a lot of this episode is devoted to managing, hiring and motivating those folks. Casey has a special connection with his people.
J Scott, host of the BiggerPockets Business podcast, bestselling author and successful real estate investor came on the podcast today! It was an incredibly insightful episode about the business of house flipping and real estate investing in general.
We discuss: