So you’ve finally got that spark of inspiration, and a healthy dose of motivation. You’re going to start a business! (This article focuses on real estate, but applies to all businesses generally).

Not having much experience in this arena, you aren’t really sure where to start, but you know that you’ll need a few things. You have of course want to look legitimate. You also need a way for people to find your business. And you heard about those sweet tax advantages, so of course, you’ll need a formal business entity. And another thing, where will you put all of the piles of cash? Well, you had better get a business bank account.

And another thing…..and another thing…. and it’s six months later, and you haven’t made a single god-damn dollar! What happened?!?

I’m speaking from experience here. I’ve done all of these things, and wasted a ton of time in starting my business. After several months, I still didn’t have any income to report whatsoever. I had also racked up a few hundred dollars in expenses that I never capitalized on. So learn from my mistakes.

The Time Wasters

The time wasters are activities that feel productive, but completely unnecessary to get your business started. These things can either be put off indefinitely, quickly accomplished with little thought immediately or can be hired out to be done cheaply at a later date once you’re actually making money.

Setting Up Your Website

Unless your business is an online store, blog, or some online based business specifically, creating a website is a massive waste of time initially. For most real estate businesses, your product is not online based at all. When you’re finding properties to either fix and flip, wholesale, or buy and hold you need to be finding great property deals to work with. Furthermore, no one is going to be looking you up online, as you don’t have a business yet.

There are many online tools which can make the running of your business smoother such as CRMs, lead generation websites, property management software, and on and on. Once you have done a few deals, these tools are extremely helpful to help you and your team manage your business more effectively. But when you’re just getting started, they are a huge distraction.

Learning WordPress and some simple web-development take hours of time in order to get set up. I have created several websites, and each time find myself spending hours of time getting things going on a process that I’m already familiar with.

If you absolutely MUST have a web-presence, quickly set up a Facebook businesses page. Simply follow the prompts, and you should have a webpage for your business all set up in less than an hour.

Designing a Logo

Again, before you have any deals under your belt, you don’t have a business at all. You have a business idea. No one is going to be searching for your non-existent business. Your businesses brand has not been established yet.

Not only is this a time waster, but it can be very costly to have a logo developed. If you must have a logo for your new brand, simply go to www.hatchful.com. They have a free logo maker there, which you can get all of the proper files for your entire brand. But don’t spend more than 30 minutes designing your logo. At this point, no one cares, and you’ll likely be developing a better logo in the future once your business really gets going.

Creating a Business Plan

“If you fail to plan, you plan to fail”- Benjamin Franklin

It sure sounds nice, but that saying really only applies to plans in motion. Just because you haven’t written a formal plan doesn’t mean that you don’t have one. Your plan should be very simple at the start of your business. Find/create a product and then make a sale. That is really it. Pick a strategy, such as wholesale or buy and hold and then get started on the first step in that process. If you are unsure it is very helpful to get a book on the strategy or do some google research. You will be very successful following a plan laid out by others who have done this before.

If you really feel the need to create a written business plan, look one up on google and fill it in. This process shouldn’t take you longer than a couple of hours.

Setting Up an LLC

There are a ton of questions about whether or not you need an LLC to invest in real estate or to run a real estate investing business. I’m not a lawyer, and can’t give you legal or tax advice, but I will admit that there are huge advantages to having the proper business structure for things. The advantages are both financial, mostly from taxes, and reduced liability. Again the issue is that you don’t have a business, and so don’t have any liability in the first place to avoid. Nor do you have any money to worry about taxes.

My personal opinion is that setting up an LLC is just another distraction that prevents you from working on the actual work of running your business. Don’t even bother until you have done a deal or two. If you really want to have this in place for whatever reason, you can set this up in about an hour with $50 depending on your state. I’ve done this 2 times in both Colorado and Missouri and can accomplish the task very quickly. So don’t spend a ton of time here.

This BiggerPockets article discusses the issue in more detail.

Designing Business Cards

I’m not opposed to actually getting a business card, but spending a lot of time on the designing of the perfect card is a huge waste of time. Having a card makes introductions very easy, and is often the expectation at networking events. When you’re just getting started, go to www.Vistaprint.com and have a ton of cards printed for very cheap.

Setting Up a Business Checking and Cards

This process takes quite a bit longer than the others. When you do eventually set up your business banking, you have to go through an actual interview over the phone. The banks are required to ask questions directly for these types of accounts due to anti-money laundering laws. And this is all bad news for your productivity.

Furthermore, separate business banking is meant as a means to keep personal and business finances separate. But this assumes that you actually have a business. Since you skipped the LLC set up for the time being, you can also skip this step. As with the other points, wait until you have done a deal or two, and can actually start generating revenue before you worry about where to put it.

Lastly, General Reading and Education

This one is perhaps the most insidious of them all. You need to ensure that you have a sufficient amount of knowledge, especially if you’re chasing a strategy with a lot of money at stake. Traditional buy and holds fit that mold. But there comes a point at which you know more than enough to get started on the main business drivers of getting property deals, and executing on those deals.

You will be well served to never stop educating yourself and seeking out new sources of knowledge. But if you’re not currently doing any deals, I would say to stop using any free time to learn more. After you’ve read 5-10 books on investing, and listened to quite a few podcasts, you have way more than enough information to get out there and make things happen.

The answers are not in a book or podcast. And you really don’t know what is needed until you get there. As the saying goes,

“If more knowledge was the answer, we would all be billionaires with six-pack abs.”

You should focus on massive action, and getting your first few deals done. Once you do, you’ll know what you need to move your business forward and can educate in a focused manner.

Take Massive Action

It is a cliche by now, but at a certain point, this becomes the dominant truth. Instead of focusing on creating or developing the above time wasters, the way to get ahead on your investing career is by taking massive action.

I’m not saying that the above things aren’t important. In fact, they are all extremely important for the effective, long-term success of your business. But if you aren’t doing any deals, you don’t have any business.

I know I keep harping on this point, but its the truth. It’s the classic wantrepreneur. You are the equivalent of the person who tells everyone they are a social media manager because they have 2000 friends on Facebook.

I’m not saying to not get educated or to not run your business with proper structures. Once you’ve done a few deals, you’ll want to get these things set up.

And if you’ve been making the same mistake as me, don’t be too discouraged either. The fact that you’re reading this article means that your still passionate, and committed to your real estate success. You’ve likely learned a lot in the process about business set-up and systems, which is valuable knowledge.

The time is now to stop playing small. Get out there. Find out where you’re stuck, and work on solving that problem. For me, it has been finding deals that fit my investing criteria. Therefore, I’m going to start doing some marketing directly to potential sellers in my target market.

Comment below on what is preventing you from moving your business past the inital stages, or where you were stuck in your early days so that others can learn from your struggles. Until next time….

To Your Success,

Tim