tips for early entrepreneurs then?
Early on what?
Entrepreneurs.
Entrepreneurs, yeah, I think the first thing is,
the first question they should ask is,
where do I go to understand the business
that I'm getting into or that I seek to get into?
Where are the sources of information that allow me to
do an estimate of the situation?
In other words, going into financial planning, for example,
are there resources that would provide me with details
or analysis or information that tells me the survival rate,
that tells me what the likely income is going to be
in the first one, two, three years?
Are there associations?
Are there, for example, in real estate,
there's a National Association of Realtors,
which has significant amount of information,
surveys of agents and how much profit they make or don't make.
And that was a tremendous resource in writing my book
because it gave me the statistics of how many people
were failing in the first two years,
how many people were limping along making minimal income.
It gave me the average hours worked.
It gave me statistical data that I could assess
this estimate of the situation.
And that's a very important term.
The estimate of the situation is what is the industry today
and how will I survive in that industry
and what's my likelihood of success being open-minded
about the positives and the negatives of that
and not having a tunnel vision that I'm so excited by this
and I'm so enthusiastic to do it
that I ignore the warning signs.
And when a person goes into real estate and finds out that,
well, I'll just, Harry, I'll just give you
a real good story.
A gentleman called me up and knowing that I was one of the
very top producing real estate agents in our area.
He called me up and I had helped him purchase a home.
And he said, Sonny, I'm thinking about going into
the real estate business.
And I asked him, how much do you make per year
in your current job, your current assignment?
And he said, about 200,000 a year.
And I said, it will take you, in my opinion,
three to four years to equal that in net profit.
If you go into residential real estate
from the very beginning, three or four years
to equal what you're currently making.
Now, and there's no guarantee of success,
but if you're very good and you study
and you really try and you devote the time to it,
you could probably work your way up to making
about $200,000 a year in three or four years.
This man was a talented, successful businessman.
But a lot of people go into real estate
and they think it's gonna be so easy.
I'm gonna turn on the engine for my new business.
And I'm so enthusiastic, I'm so excited
that I ignore the red flags.
And that's a problem.
Yeah, I have so many names of people
that come to my mind who are going down this path.
And I see it, I see it.
Hopefully they make it with their grit and enthusiasm
and they do it and they prove me wrong.
But I also see the pain coming from the other side.
I'm like, oh my gosh, I should have switched
five years of my life, but I didn't realize why.
Well, in my book, I tell a story of a brilliant man.
He was president of a medium-sized corporation.
And I mean a pretty good sized corporation.
If I said the name of it, most people would know it.
And he, a medium-sized meaning about probably 25,
30 million per year in revenues.
That's not a bad business.
And he retired from that business
and had been successful in everything he had ever done.
And he started a business and he hired me to come out
and evaluate the business and tell him what was going wrong
because he was losing about $20,000 a month
in this small business that he started
after being president of a medium-sized corporation,
having lots of employees, et cetera.
And I did the analysis and determined that he would lose,
was losing 200 to $250,000 per year.
And that his likelihood of continuing to lose that money
was pretty high.
He did not have a business marketing plan,
a business plan or a marketing plan.
He did not have the marketing strategies and tactics
that would allow him to be successful.
He had a boat with no captain.
Even as highly knowledgeable as he was
of running a big corporation, keep in mind,
he had captains of all the different areas.
That's going back to what you said a minute ago
about your most recent activity.
When you look at, you've got to be,
you've got to understand financial.
You've got to understand marketing, technology,
personnel, you have to understand
your marketing strategy.
Your marketing strategy and the marketplace,
you have to know who your target audience is
and what's going to be the hot button for them.
There's so much you have to know
that when you start a very small business
as an entrepreneur and you don't have expert,
subject, expert, expertise, subject area experts
in those other areas, it's going to be risky.
And the fewer of those resources
that you have available to you, the more likely
it is for failure.
And one of the biggest problems is that someone
who's been highly successful in something else
has a false sense of knowledge and security
because they feel like I've been successful,
I've done it before, I can do it again.
It doesn't mean that when they started the endeavor
that they're in currently or previously,
that they were maybe an employee or a team member
or a partner, but when they have to start over
and do everything from the beginning
in a different environment, in a different world
than maybe they were in when they started,
it could be catastrophic.
And this particular man said to me, almost in tears,
if you can imagine a 68 year old man
who has been highly successful
in almost everything he's ever done, losing $400,000
in the first two years of his business,
seeing his retirement funds dwindle
as he funds a non-profitable business,
he looked at me almost in tears and said,
what do I need to do, help me.
And the first thing we went dead was we went back to basics.
What is the audience?
What are they looking for and how do we appeal to them?
And we corrected the shift,
but it took another year to year and a half
and he lost over $500,000 before he started making money.
Well, it took him a long time to recover the 500,000.
I don't want that to happen to people.
I don't want them to go into real estate and work two years
and make a little bit of money.
Maybe they make as much as they would have made
working for someone.
And to that extent, maybe they believe they're successful,
but that's not business ownership.
Business ownership is owning a business
that not only pays the key people who run the business
a meaningful or reasonable wage,
but also makes a profit.