I wrote this post after I received a journalist inquiry regarding women entrepreneurs overcoming the dark side of entrepreneurship:
I am in the process of building The Resourceful CEO through acquisitions. However, I did build a successful real estate investment business, Toca Family Properties, Inc., in the late 1990’s – mid-2000’s. In a few years, I amassed a net worth of over $1 million in the midst of creating a rental property and renovate / flip business (~60 % rental, 40 % flip). It was during this time that one of my investors told me that the sign of a true entrepreneur was someone who could sleep through the night despite not knowing how s/he would make payroll! I can attest to that one.
Three Main Points
The main points are that: 1) You have to have a vision for your business and have faith that everything will work out. 2) You must be flexible because you start out with assumptions that you may take as fact. When those assumptions prove false or somewhat inaccurate, you must adjust your business or even your business model accordingly. 3) Cash is king. You must focus on growing and strengthening your business. However, if you do not have cash coming in from somewhere – revenues, financing, asset sales – then your business will not survive long enough for it to come close to success.
My biggest obstacle was assuming that my success investing in small, multi-family apartments that I held for rent automatically translated into single family homes that I flipped. This was not the case. Because I believed I had mastered real estate investing, I acquired multiple properties at one time — and then had issues with contractors and mediocre real estate agents. Working through these same issues on multiple properties at one time severely strained my cash flow. At one time, I had to get a part-time job to pay the bills. But I eventually sold all the houses and once again re-focused on multi-family properties and returned to financial success.
My takeaway: Be very careful with your assumptions. It can be difficult to differentiate between assumptions and facts. Therefore, it is important to have a (brief) business plan and an advisory board. Both help you to know the difference and to identify potential pitfalls or to more readily recognize them as they first arise. In addition, I strongly advocate continual learning. We don’t know what we don’t know, except in hindsight. By continually exposing yourself to what’s going on in all areas of your industry and in business in general, you learn things and meet people who help you avoid some of the issues. In addition, you may identify opportunities you would not have known existed.