The commercial real estate market is a competitive industry, but those who succeed at it can truly build a thriving enterprise. Unfortunately, statistics show that more than 80% of businesses that are started today fail within the first two years. While these numbers might sound impossible, the reality is that individuals who understand the common roadblocks to success are much more likely to avoid failure. For professionals looking to succeed in the commercial real estate markets today, this article will outline what it takes to achieve success.
Conduct Market Research
Before launching a business, prospective entrepreneurs should know exactly what they plan to do in order to achieve success. Businesses should conduct sound market research in order to learn about opportunities and educate themselves on threats that could cripple the enterprise. Prospective business owners should make this market research a priority and a prerequisite to getting started. Business owners should possess a firm understanding of market leaders, their positions, and how they impact the competitive environment. Success factors within the industry should also be understood before making a significant investment. Through this process, opportunities can be uncovered that can be much more profitable than the original idea. Further, prospective business owners may realize that their business plan simply is unlikely to succeed and isn’t worth pursuing further.
Partner with Others
Since business is a human enterprise, going it alone can make success much more difficult. Individuals looking to get into commercial real estate should work with professionals that possess expertise that can add value to the company’s founding team. This can lead to improved management and more rational decision-making that helps businesses maintain a competitive advantage. While many new business owners shy away from the concept of giving away equity, it is better to have 50% of something than 0% of nothing. Success will be much more likely with the help of others, and this will more than cover the cost of giving away fractional ownership.
Have Work Experience
Before launching a commercial real estate enterprise, prospective entrepreneurs should have solid experience in the industry. Taking up a short-term real estate job can educate potential business owners on the best strategies available in the marketplace to achieve success. This can also help with developing a relationship with potential mentors that can provide advice for critical issues. For those that are absolutely unable to get a job in the industry, they should at least consider partnering with someone that does have experience.
Raising the capital necessary to start the business can be a challenging proposition, especially for first time commercial real estate entrepreneurs. Many banks and venture capitalists will want to see that the individual has succeeded in putting together a good founding team that is backed by experience. Individuals that plan to start their own company without the help of others may find raising capital to be very difficult. Especially for commercial real estate enterprises that plan to engage in new construction, specialized financing is critical. Entrepreneurs unable to raise finances will be unable to start. For this reason, a solid business plan, team, and experience are necessary to succeed in commercial real estate today.