Many people feel they have to come up with a brilliant idea before they can start a business. Or they must have a 300 page business plan in place, approved by ten people before they can risk going out on their own. In my experience it is good to have a plan, an idea, and be prepared, but you don’t have to have every contingency planned for. In fact, sometimes a mediocre plan and idea will work if you have the ability to see things through, work hard and be flexible when starting a business. Success is not about brilliant ideas and knowing how everything will work before you start. The world is full of brilliant ideas that never went anywhere and the best plans will have to be changed. Some of my businesses and best ideas were started on a lark with little planning, but I started! When I got started my path became clearer and I was able to change and adjust my plans based on what was working.
Is it okay to start a business without a detailed plan?
There is a great saying from T. Harv Eker and he may have gotten it from someone else.
“Ready fire aim”
This metaphor is perfect for business and most anything you do in life. No matter how much you plan for something, the best way to get to where you want to be is to start something. Take action and begin, then when you see some results and feedback on what you are doing you can adjust your course or continue dead ahead. It is rare that our original plans are what we end up with in the end.
How much planning do you need when you start a business?
Even though it may seem really easy to fire at a target without aiming, there is still a lot of work involved. You have to decide what you are shooting with, what your target is, when you are going to shoot and where. You can’t blindly set up any business and hope it will succeed with a few adjustments. You do have to have some sort of plan, idea and it helps if you are passionate about the business. It is hard to say exactly how much planning is needed for a certain business since a lot will depend on someone’s situation.
If you are a single mom who is quitting her job and you have to support your kids, you will need to be more careful starting a business than someone who is retired and has all the money they need whether the business succeeds or fails. Some businesses you may be able to start part-time while you keep your day job.
- You can be a real estate agent part-time, although it is tough and your schedule needs to be flexible.
- You can flip houses part-time, but I suggest not making all the repairs yourself.
- You can buy rentals part-time as well.
- You can start an online company part-time like a blog or small retailer.
- There are many other business that can be done part-time as well if they are set up correctly.
If you are quitting your job and putting everything you have into a business, then you may need to have a detailed business plan and account for as many contingencies as you can. You also don’t want to get stuck in analysis paralysis and never make the jump, because you don’t have everything planned.
As you can see it is really hard to answer the question of how much planning you need. I will give some examples of how I started some of my businesses to show what I have done.
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How did I start a successful real estate blog?
It is hard to say how many blogs there are, but it is estimated there are over 150 million blogs! Very few of them will ever make money or be “successful”. I knew this when I started InvestFourMore back in 2013, but I still started it and here is how it happened:
- I was at a conference in Dallas and was lucky enough to be on a panel on stage. This was my first time doing something like this and being a natural introvert it was incredibly scary and exciting at the same time. On the panel we were asked if we blogged and how it helped our real estate business. Not one of us said yes we have a blog and I had absolutely no inclination to start a blog. That was late January of 2013. Somehow in less than six weeks I had come up with the idea to start a blog and I wrote my first articles.
What’s even funnier is how I came up with the idea for the blog. Justin my team manager had some help with the idea. But here is how the idea first evolved:
- Justin was still working at a large corporation as a senior level manager. We had both gotten on the positive thinking self-help kick. We were brainstorming ideas to start a new business.
- I was trying to think of what was missing in the world of real estate. At that time it was really hard for investors to get more than four loans. (It still is hard if you don’t know where to look) I had a local lender that would finance me, but I knew that was hard to find for many people. I decided I would start a national bank specializing in investment loans.
- I started researching how to start a bank, what the federal requirements were and I even found a website that detailed how I could start my own bank! The problem I faced was simple: it is incredibly hard to start a bank. I had no contacts, not a lot of money and no experience in banking.
- I spent a lot of time figuring out if I could really start a bank. I came to the conclusion, that I could not or at least it was not worth the incredible effort it would take.
- I did not just give up. I still had knowledge of how to get loans and I knew there was a missing piece in the market place. Justin suggested I start a blog. So I did. I had no idea what I was doing, I hadn’t written anything since college and I am not a techy person. I still started writing almost immediately.
How was I able to start a successful real estate agent business?
Another huge milestone in my career was when I bought out my father’s business in 2013. It all started when I asked Justin if he wanted to work for me. I knew he didn’t like the corporate world and wanted a way out. I thought hard about asking him, because we were very good friends and I didn’t want to ruin that. Once I decided I needed to ask him, because it could change his life for the better if I did. But I didn’t have it planned out what he would do, when it would happen or how he would get paid. I assumed that would work itself out. Luckily it did and because he started working with me I was able to buy my Dad out. I didn’t have a clue about payroll, employees and all of that, but Justin did, or at least he was able to figure it out.
I had thought about buying out my Dad for a long time, but I knew it would be a massive task. We had the flipping business, the real estate agent business and a couple of assistants and agents on the team. I knew I needed to take over, because I had a lot of ideas that were not being implemented. I did not know how I could afford to buy him out or how I could handle running the business. Luckily deciding to work with Justin gave me the management person I needed to figure everything out.
When I asked my father about buying him out and taking over, I did not have everything planned. I asked him if he was interested and when he said yes, we figured it all out.
How have my plans and businesses changed with rentals?
I don’t have all the answers for everyone. Maybe I got lucky in by business by not planning everything out and just doing it. However, I know many people who get stuck in the planning stage and never try. I think it is definitely better to try to make it than to not try and wonder if you could have made it. I am also a huge fan of using my time efficiently. I try to do things that bring me the biggest return on investment or are the most fun for me to do. I don’t like spending hours or days on a business plan and what if nobody cares that I have a business plan?
I see a lot of people create huge, detailed business plans relating to rentals. It is great that you are writing down what you want to do and how, but does anyone else want to know? If you are trying to get private money, the investor is not going to read a giant business plan. He wants to know the numbers and your experience. A bank will want to know your financials and the properties financials. When I decided to buy rental properties I did not have a business plan. I researched the best ways to invest and I knew rental properties were the way to go. Then I started creating simple projections for how much money I would make after buying a certain number of properties. When I saw those numbers I got excited and knew I had to buy as many rentals as I could. Creating a detailed business plan would have frustrated me and killed my momentum.
I took way too long to buy my first rental, but I did eventually buy it in 2010. Then I bought more and more. I was using the snowball method to pay off my rentals at first, because I thought it was a good idea. After looking at the numbers, I realized paying off my rentals, was not the best use of my money. I should be reinvesting that money into more properties or using it to flip more properties. My plans changed and I made more money because of it. It is very hard to know exactly how everything will work out in business until you start and see what happens. One problem with an extremely detailed plan that you spend a ton of time on, is that you are more likely to be stuck to it when obvious changes could improve things.
Business plans are needed for some situations and some investors. For many businesses and ideas they can be a burden and keep you from taking action. If you hit a road block when trying to start a business, sometimes the best thing you can do is to take action. Forget about all the details, the what if’s and just see what happens. There are many businesses that can be started without risking your livelihood or your life savings. You also do not need a brilliant idea to start a business. My silly idea to start a bank turned into InvestFourMore.
Quick reminder: The Complete Blueprint price increases on February 1st. The price will be jumping from $397 to $997. I am doing this because of the time it is taking to help students out, be on the calls and manage the course. We do coaching calls twice a month and are up to 25 recorded calls that are included with the course totaling over 10 hours.