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Struggling. Am I creating myself a job? (service business/should I end it?)

Anything considered a "hustle" and not necessarily a CENTS-based Fastlane

Feuertaufe

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Oct 26, 2021
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Hi guys!

Im struggling at the moment and need a bit of advice if i should end my business service (property management firm). Therefore i like to share something

I am a property manager (fulltime job) and started my own firm at the beginning of 2021. Here I like to refer to my intro-post and my first attemps to start a business. I have a real estate background.

First some numbers:

- 27 Offers to building owners
- 2 customers since January 2022 (2 buildings á 6 units)
- Revenue: ~ 290€/mtl
- Costs: ~ 150€/mtl.
- Initital investments for permits & further training etc. ~ 2.500 €

At the moment im struggling at scaling it up, and i cant get rid of the thoughts that i am wasting my time because of the following reasons:

Cons

- Little chance to scale it. (i used the online tool to grade my idea here: It was a C- or D) lack of time, scale, need, part of control.
- I think it is not fast enough to get a business to live off, because i can manage almost 400 units alone. Depends on the clientel inside the building. (owners or tenants) A regular price in my area for managing a property is 20€/unit which would make 8.000€/mtl.
So they are two types of customers. 1 Owner who rents the building or Many owners who live in it or rent, but share a piece of the property, which means a lot of regulations to pay attention to. For example they decide once a year what things should be done in the owner company. e.g. changing the property manager. Later is more work, more profitable, but slow decision making.

- i looked at two companies to buy, but i recognized that after running the numbers, it would be in one case 2.000€ net/mtl. and the other case 3.000€ net/mtl. profit. Which i turned down because:

a.) i think it was not enough profit. As a employee im earning 2300€/mtl.
b.) since 2021 you can fire the property manager within six months regardless, if the contract term is longer.
c.) reward risk ratio is to low, that means in this sector there a lot of lawsuits and very often owners sue their property manager, if they do a bad job. One of them did.

- Exchanging time vs. money
- in the hard to get employees
- Some years ago it was more fun to work as property manager, but this is fading at the moment.
- feeling stuck in my job and in my business

Some pros:

- recurring cashflow, it´s a cashflow business
- im good at it
- im my own boss, sounds stupid yeah, but i like it to make decisions alone and talk one on one with the customers
- helping customers with their real estate, inspite often they can be very shitty (negative environment)
- i learn a lot of doing business especially sales, which i think is one of the most important skills if you have a service business
- treat customers well, usually it should be ovious, but there a lof of black sheep in this sector
- new regulations force some people to close their business because they dont have the requirements
- a lot of business owner retire soon
- many people dont want to work as a property manager (to stressful xD)

Now my question, if any of you was or is in a simular situation and at which point do you say, thats not worth my time/effort and i going to end this? How long would you stick to it?

What would be a total red flag? I mean i run the idea through CENTS, wasnt that good, but i did it anyhow. I think there is huge need for execution and making decisions, which yeah honestly, i kind of lack at the moment.

And assume your helping customers, providing value etc. what would be a number to say: OK i go for it? 10k a month, 5k a month, 20k a month?

Greetings and thanks for reading.
 
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MJ DeMarco

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You've only acquired 2 customers in 1 full year of operation? Sounds like there are other issues here than just scaling.
 

Feuertaufe

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Oct 26, 2021
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You've only acquired 2 customers in 1 full year of operation? Sounds like there are other issues here than just scaling.
Hi MJ! Thanks for the reply. Yes, that´s right.

Unfortunatley sometimes it tooks very long time, until owners decide to, because they have to vote collectively if they want to change something with their building or onging contracts. In most cases 50% majority is necessary and the votes takes only once a year place. You want to change your window? Need permission and wait until the yearly owner meeting. Change your gardener or your house cleaner wait until the yearly owner meeting and convince them.

Hopefully you get the point. Yeah and there definitley others points which i need to improve.
 

Feuertaufe

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Oct 26, 2021
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Little update:

Still 2 buildings under management. Revenue 313€/mtl. Last months i was looking to buy a company. Checked 2 different companies.

1.) sole propietor
- ~ 400 units,
- 70k revenue p.a.,
- 50k-70k purchasing price

Didnt work out because of some legal stuff and restructuring client contracts. Clients had the right to vote me out after buying, because the sole propietor was the initial contractor not me. Business wasnt a corporation (like llc where you just buy the shares). Furthermore her net income was like my corporate job income. So, way to risky for me.


2.) Corp.
- ~ 430 Units
- 100k Revenue
- 95k Purchasing price
- 2 part time employees

Didnt work out too. Because i hesitated and was to afraid to do it. I didnt wanted the headache with employees in the beginning and At that moment, i was applying for a new and more secure job (Government). I want to build it slowly and steadily next to my job. One more reason is that i am becoming a father in september.

I think i will be still looking for a opportunity to buy a business, because thats the fastest way to accelate growth in this sector. I talked to an ex collegue. He build his own company. he´s making 10k/mtl and build it for six years.. In my opinion its better than a job, but not enough though.

Well i will see what the next weeks will bring. Maybe i close more contacts or try to buy something until end of the year. If it doesnt work out, i end this chapter. Current contracts are running until end of 2023.
 
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Parks

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As a service business your #1 priority should be sales.

27 Offers to building owners
- 2 customers since January 2022

2 customers from 27 leads? That's good. What would be the #1 way for people looking for a property management company to find you? I'd think probably the internet or referrals.

If like you say there is black sheep, then you can have a value skew and win over customers by cold calling. You are creating a job for yourself if you do not push yourself to see how many actual customers you can get.

I have plenty of 1m+ property management companies near me. The model has already been done. You got this.
 

Feuertaufe

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Oct 26, 2021
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As a service business your #1 priority should be sales.



2 customers from 27 leads? That's good. What would be the #1 way for people looking for a property management company to find you? I'd think probably the internet or referrals.

If like you say there is black sheep, then you can have a value skew and win over customers by cold calling. You are creating a job for yourself if you do not push yourself to see how many actual customers you can get.

I have plenty of 1m+ property management companies near me. The model has already been done. You got this.
Thank you for responding. Yeah your right, internet and referrals are the way to go.

At the moment customers find me, because of my website and i use a company which sells leads per building. But i think in the midterm i should do it myself.

Yeah i was/am afraid of creating a job, because my growth is not fast enough and at the beginning i am doing this all myself. I think its a time and a motivation issue next to my job.
 

Feuertaufe

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Oct 26, 2021
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Germany
Short Update:

New Clientel

Got a new house with 3 units under management. Monthly revenue: ~ 400€.

Buying opportunity

Looked at a small company to buy. 75k, 170 units, Income loss 15k, with an employee...
The owner is a tax accountant who runs this property firm next to his consulting firm. The employee thing, the asking price and the loss of 20% off his units till end of this year got me headache. I passed the deal. Furthermore i earn more with my job and extra income than he with his side hustle. I think he runs it because of tax reduction and a acquistion tool for his consulting firm which is a nice idea. Yeah and probably i am not so sure, if i should buy. I think i am sometimes to afraid of it.

New job

Further got a new job with more income and better work conditions, but the colleagues are full of sh** and at the job interview they told me that i could work remote at least two days a week. But after beginning, i found out that this is not the case. I have to work for a year there and then i am allowed to work remotley, but just one day a week.

Personal

i am getting a parent end of month, which is pretty cool and i am really happy for it. Further i am going into paid parental leave at the first of october (for 4 months). Yeah im bit concerned of inflation / energy crisis, less income and watching my savings meltdown, but i think i can handle it.
And i started a coding bootcamp for my parental leave time thingy. I think its a nice skill to learn. Friend of mine recommended it. Well i will see if its for me and if i could change carreer path/job.


Anyway, thanks for reading and bless you. See you around.
 
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