338: The golden rule of Real Estate and Small Business Success

I talk a lot about sales, small business, and entrepreneurship. And the key to success in any of them is quantity. To make a sale, you need to make 500 cold calls. To make money as a venture capitalist, you need to invest in a lot of things. There are a lot of areas where you need to invest in quantity in real estate to make money, too. If you take enough at bats, you’ll start to get some hits. Where people mess up and get distracted is in quality. My golden rule in real estate and small business is knowing when to start taking quality over quantity.

As a capital allocator heading a small real estate private equity company over the last few years, I’ve been really selective over what deals we do. It allows us to only do good deals; sometimes this is small deals, single deals, and if we didn’t do deals it didn’t tear at our business. Since we were so small, a good quality deal could change our life.

We’ve had multiple small properties that have been life changing. It wasn’t about deploying capital, it was about choosing the right deals to do. When it came to saying yes, we said no to most things and yes to just a few thinks that changed our lives. The advantage that we have over a big real estate shop here is that we don’t have a large staff that forces us to buy $100M of real estate in a year to keep operating. If those big shops stop doing deals, business stops. But the quality of a single deal doesn’t move the needle for them, they just need to hit their number.

My brother made a quality over quantity choice with his lawn care company, which he’s grown to over $150K in revenue. He made the decision that he will fill his funnel and aim for a lot of quotes, but he’s going to bid jobs high. He wants to charge enough and deliver a professional enough service that he only converts 30% of the people that received a quote. He’s able to do less work by choosing quality over quantity and focusing on profitable jobs. He works 30 hours a week for 32 weeks a year and then spends the rest of the year traveling across America. 

This applies to so many areas of business. Early on you need to say yes, fill the hopper, make cold calls, and knock on doors. Once you choose where you will focus your energy, it’s all about quality. As you grow your business, and your portfolio, don’t just grow for the sake of growth. Volume is not always the answer.

Early on in real estate, we got family shops offering us capital to invest but wanting 80% of the profit, we would have needed a high quantity of deals for us to make money. We turned that down, and now we have access to capital and are selective and operate on friendly terms for us because we opted for quality over quantity.

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About Me

I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship.