Owner Occupied Episode 4

Hey everyone, welcome back to Owner Occupied. I'm really excited for our show today. Uh, we've got some great topics lined up to discuss, uh, with myself and Russell. A little preview, we're going to be talking about early mistakes. I made some mistakes early starting my property management company. So we'll be chatting with Russell about those. Just a little preview here. One of them, we were too slow to operationalize the sales process. We're going to go into that. I spent a little bit too long talking about how I can get paid instead of how I can help add value to others. Not focusing on high-leverage, high-impact strategic moves, what I learned about that. And we're going to discuss trade groups, and we're going to talk about identifying your ideal customer. So stick around, we're going to get into detail on these things. I'm excited for today's show.

Peter, I am excited about talking about the 5 mistakes that you, you identified. I resonate with those. The first one is one that I'm still in the process of. My feeding my family is dependent on me closing a sale. And, and the, the idea of systematizing that is terrifying. Like, I own that completely. And I think it through and the, and the system is this makes sense to me. I know this person, let me call, I need to connect. With this person. And that's how we do— that's how we do sales around here. So I'm excited to learn from, from you about how you've made that transition and process, about how it might make my, my business better as well. So when you talk about systematizing sales, what do you mean by that?

Great question. So I think I really mean two things. One, and the first step in this is you really have to create a process for your sales funnel or for your sales process. So if you think about the people who you want to be your customers, you know, by some way they go from strangers to having heard of you, to having a discussion with you, to being interested in hiring you, to asking you a bunch of questions about your service or product, and then finally signing a contract or whatever actually signifies them becoming a customer. So there's usually, you know, 5 or 6 sort of concrete steps that people go through in that process. And really just the mechanism of writing that down and thinking about what to call each of those steps. If you can just do that, you're already halfway there. You know, it's the old thing about a problem well-defined is half solved or however that goes. Um, and you know, there's, you can get super fancy with CRM software and email marketing and drip campaigns. And, you know, you could spend almost an unlimited amount of time and money on this, but the first step is really just identifying your sales process. You know, what are the key conversations you need to be having at each step? What is, uh, some good ways of sort of summarizing and moving along somebody? Further down the funnel, so to speak. So that's step one. And you may end up with— yeah, go ahead.

When you talked about that, when you just went through those five different steps, mentally, I have that. So you're just talking about getting it out of my head onto paper. And that process of turning, of defining and systematizing it is— that's what you mean by developing a process.

Literally turning what's in your head into a document of some kind, uh, with defined and named stages for the sales process.

One of the, one of the tools I saw that describes some of what you're talking about is HubSpot. And they're, they teach an inbound marketing course. And, uh, I've had fits and starts with it. I'm on a free trial version now. I'm, I'm going on a more advanced version for one of my clients and we're working through that. It seems like there's so much work associated with that. It like that becomes a job or another client almost is how I, is how I think about it. And I'm, I'm scared to invest in it because I don't want to commit the several hours it seems like that I would have to commit to that is Yeah, yeah, and that's a common response.

And part of it might be that HubSpot, it may just be overkill for what you need. You know, keep it as simple as possible. Like, it might even just be an Excel spreadsheet to start, or a Google Drive sheet. Especially, you know, depending on the volume of your clients, you know, are you signing up 6 clients a year or 600? That's going to inform a little bit about how formalized this really needs to be. And there is a danger of getting too caught up in the tools. This goes from everything from sales to all areas of being an entrepreneur and trying to be productive. People get, you know, they obsess over the tools. I need exactly the right to-do list software. I need exactly the right CRM. I need exactly the right email newsletter software. And they're switching between them and everything. So trying to get caught up in that, but, you know, the idea is by documenting it, you're setting the stage for eventually being able to bring someone else in and run that process for you. And so for the first 7 years of this company, we had none of that. And I was just doing everything by myself. I didn't have any sort of stages or names or even CRM software for a lot of that. And then eventually we got some CRM software. We hired a sales consultant who brought us in and helped us define and streamline and improve the process itself. I was still doing it. And then the last step was hiring a salesperson. We call them a business development manager or BDM for short. And we did that about 9 months ago. And the same group that helped us define our sales process, they also specialize in helping property management companies recruit, hire, and train salespeople. And so they did that for us and it's been very successful. I mean, the gentleman who's doing it for us now is doing way better than I ever could or did because he's just literally thinking about it all day, every day. He's able to be really responsive when people call in. He's just in front of people constantly having those conversations. And he was able to close more clients in the 6 months he worked for us last year than I did like the entire year prior. I mean, it's just dramatic because, you know, after the 300th call with a prospective client, you just kind of get worn down and you're a little bit over it, right? Because it's the same questions and the same conversations over and over. And the energy was sort of— I was losing my enthusiasm for it. And I think that came through. You know, on the calls. And so having someone who it was fresh and exciting and they're getting some commission so that, you know, that adds a bit of an edge to it. And I think it really helped.

I'm going to contact you, uh, for your sales consultant, uh, contact after this. I've— every kind— every one of my clients is somebody I've known for years. It's okay.

Yeah.

And so, um, I haven't been interested in, in sort of a broad sales funnel approach. It's, it's people I know that know I know what I'm talking about. And I, I enter into their process and we have a conversation and I figure out what the charge is.

And that, that may still make sense for you. I mean, depending on the volume, you know, that could be your highest and best use within your firm is still being that, you know, heavy hitter sales guy bringing in, you know, the clients. But for me, it wasn't right. I mean, we bring on, we bring on about somewhere between 30 and 75 clients a year. And so I just, I don't have— and these people, these are people I've never met. And, you know, they're just calling, they're calling in for the first time. So it's, it gets old, you quite frankly.

Well, that's an interesting dynamic. What I find and where I think I might take from what you've said about operationalizing it is I bump into people, or at least we used to pre-COVID, and I'm really anxious to get back to that. But I bump into people all the time who have no idea what I do. They know that I'm out here, but they don't— what exactly role do you play? And so, using a process to stay in front of people I know already, but explain what I do and what value I might add, that kind of leads me to the second point that you brought up on your list. And I think it's probably the reason we're working together today, but your mindset shift about about adding value. That was the second thing. What, how did, what, how did you make this mistake early?

Yeah, so early on, you know, I started this company when I was 27, 28. And I was still very much in that kind of gimme, gimme, gimme thought process, you know, and, and as I mentioned, the last time we talked about this, I think some of that's almost inevitable if you're a young and ambitious guy. And you have a little bit of success. Now you're like, you read about successful business leaders and founders and you want a piece of that. I mean, who wouldn't want to own a yacht and drive a Ferrari, right? But it's one of those old paradoxes where the more you want that and the more you make that the center of your whole thinking and your whole mindset, the further and further you're going to be from it. There is a little bit of like, you know, what's that thing like The Secret where it's all about visualization and stuff that does play a part. You need to believe that you have the ability to be successful and to go after the things that you want in life. But I think you're going to get there faster if it's not your primary purpose. I think your primary purpose needs to be, who do I want to serve? You know, that was a great question that a friend of mine posed to me a few years ago. And if you, if you can find your people that you really like helping and enjoy making them be successful and find ways, find ways to add value, that's actually going to get you where you're trying to go almost paradoxically. But so if I had had that mindset shift earlier, you know, I had this mindset, mindset shift really in 2020 is when it, I think, crystallized for me. If I'd had that in 2015 instead, you know, I kind of wonder where I would be today because it really, it puts you in the, it puts you in the way of thinking where everyone you talk to and every email you read and every customer complaint that you have, instead of being defensive or being greedy, you're thinking, okay, that's interesting. And you sort of add it to your databank. Of is there a way that I can do this better? Is there a way I can help this person? Is there a way that we can adjust what we're doing to help to just be a better resource? And there's opportunities that come out of that. There's— and business opportunities can come out of that way of thinking as well.

So how do you balance— when I hear that, I, I know I have the prospect of how do I add value? Top of mind all the time. That one, that hasn't been a challenge. But I found myself in the book you recommended in your last episode that I've been digesting, that you have to pay yourself. Because what I wound up doing was spending a lot of money servicing the clients and adding a consultant because I knew this person who could do this thing really great. And I, and I spent, I spent more than I would have when I looked at the end of the year, I made sure I had enough, but I looked back at all of the expenditures that I had and said, if I had plotted all of this out strategically and purposefully, I would have never spent the money that way. It just, it was more haphazard. What's the balance between the adding value and not throwing money at a customer complaint or problem?

Absolutely.

How do you, what's the thought there? How do you think about that?

That is a really big challenge. And I, by no means have solved this problem. I think, I think you're, it's one of those things where you're probably going to end up kind of bouncing between the bumper lane, the bumpers and the bowling lane, where you kind of go a little bit too far of adding value to everyone. And now you're, you know, there's no money left at the end of the month. And then maybe you go the other way and you're like, You get a little bit too greedy and you sort of find that happy medium. I think part of it is the ways that you're adding value. So let me give you an example. I try to add value in my Twitter feed. And so people constantly DM me with questions and it ends up after a while, you start to see patterns. You're like, "Okay, I'm constantly getting this question about how did I get started in property management?" Okay. It's actually a much better use of my time and provides more value for everyone who's asking that question. If I take 2 hours and write a comprehensive blog post on that, and then whenever someone asks me that, now I can just link them to the blog post and say, hey, I actually just wrote a huge blog post about it. Here it is. Read that. And then let me know if you have any questions. And now you're like, you're doing both. You're adding value and you're You know, you kind of get something in theory out of them going and reading your blog and sharing it and maybe subscribing and everything else. So you got to look for those kind of like win-wins. And I also think working with maybe like a CFO or someone who can— not even a CFO, but like someone on your leadership team at your company who basically acts as like a gatekeeper before you just roll something out. Right, because business owners and entrepreneurs have a million ideas a day about how to grow the business and help their customers and, you know, do all kinds of things. And you really need someone who can kind of be like the countervailing force to that, someone who can be like, hey, remember what you said last week about all those other things? We're actually still working on those. So could you just take what you just said and add it to a list? And then maybe once a quarter we review the list and we pick out 2 or 3 of the highest priority or most important items. And there's frameworks you can use for this, like EOS, if you've ever heard of that, with the book Traction. Those can be really good. And that way you're not getting too far off the beaten path in terms of, you know, helping adding value in ways that, that because the thing is, if you get too scattered and you're getting pulled in a million different directions trying to help everyone under the sun, you're not actually providing value because you're kind of doing everything poorly, right? You'd be much better off saying, hey, actually, that's not something that we do. I'm really sorry. Maybe refer them out. And now you're able to provide much more value for the people who are your customers, right?

That's— that leads to what you're talking about strategically. Where do you want to be? Where can you add the most value? And when I think through that, I'm an expert in the legislative and the political process. If somebody needs something to happen in Sacramento, I don't— it could be a tinge of arrogance, but I just don't think there's anybody that knows it better than I do. There's a lot of levers you can pull, a lot of ways to skin the cat, and I can guide people through that. One of my challenges is that everybody who watches, you know, a political talk show thinks they understand how politics works.

Yeah.

And I, instead of beating my head against the wall, I developed a suite of different products, whether that was making videos or, or products and pamphlets and different tools that people could use. And once I put a product associated with that knowledge, then I had a package of stuff that I could sell to people that they would, they would pay for. And so my perception of what I think, based on my knowledge of the legislative process, is most valuable is a little different than some of what my initial customers— what's their pain point that they're willing to pay for. So I'm constantly balancing that. That. So I had to think about strategically in the sales process, but then what did I need to add? So I wasn't vending that out. When you talk about focusing on high priority, strategically important things for the property management business, what do you have in mind?

Yeah, so just to give some context, I think I'm reading off a list here of the top 5 mistakes I made. Number 3 here not, not enough focus on high leverage, high impact strategic moves. So I have, I have almost like a disease where if I make myself a list, you know, there's this problem with to-do lists where say you sit down at the beginning of the day and you write down 12 things you need to do that day. When you write them out on a piece of paper or you write them in a note, a note-taking app, all the, all the items have the same font size. And because of that, it kind of tricks your brain into thinking they all have equal importance. But they don't. I guarantee there's probably 2 items on that list that are very important and have the possibility, the potential to move your business forward in a way that could resonate for years. There's probably 3 items on that list that are urgent, you know, the old urgent but not important, you know, that you kind of need to take care of them, but they're not really going to do anything other than prevent a problem. And then there's probably a few items on that list that if you literally never did, nothing would happen. You're just kind of doing them out of habit or because it makes you feel good or because you think you should. And, you know, I'm not I'm not covering— I'm not coming up with any original ideas here. I mean, that urgent, important quadrant, if you've ever seen or heard of that, is, is pretty much what this is. But you really have to think carefully about your to-do lists and the items that you've agreed to do in your schedule and really give priority to items that are high leverage, high impact, strategic type moves that are going to resonate and move things forward. Right. I mean, like, so for example, I'm looking at a stack of papers in my office that really needs to get filed in my filing cabinet. We're mostly paperless, but we still have some written stuff. And that's the type of thing where if I wrote on a to-do list, I would probably go and do that rather than cold call a list of 10 prospective clients, each of whom owns a 50-unit apartment building. You know, those things are so vastly different in terms of their importance and leverage and ability to change my life and my client's life that they wouldn't even appear on the same scale if you graph them. And yet, just because they're right next to each other on the to-do list, your brain kind of equates them as like, well, those are 2 out of the 5 things I need to do today.

So my little— I, I do what you're talking about right here. If, if, if I took my day and said people would be flattered if you're on my calendar before 10 AM. You, you occupy an important role in my life. If I, before 10 o'clock, I get done what I need to get done or what I've said or commitment I do, I can take care of. I include on that list some things that might be lower priority. But if I've said I will do or I'll get to it externally, that's a high priority for me. It may not matter in the big scheme of things, but ultimately for what I do, that people know that I've said that, that's important for me. But otherwise, it's strategic things. I think back on my morning today and I made calls, I sent emails, I wrote something. And I got out the door what I said I would do in order to do. Theoretically, I know that my business would, would fail if I didn't do before the 10 o'clock. And then everything after 10 o'clock is that lower. Yeah, that's great. I don't— I haven't used different fonts, but I use the time on my calendar to kind of balance that out.

Yeah. And a lot of people say, if you read some of the literature on this, you'll see people saying things like to-do lists are worthless. Like, you have to put it on your calendar if you want to get— if you want it to get done. And I guess for some people that works. Maybe it depends on the line of work that you're in or how your brain works. But for me, that really doesn't work. I can put something on the calendar all day long. But if it's just me, like, if it's a meeting with someone else, of course, I'm never going to You know, not do that, but if I just write, like, say I write in my calendar for tomorrow, brainstorm 10 ideas for blog posts, 2:00 PM. 2:00 PM comes, I'm like, ah, you know, it's kind of whatever. Your brain knows that you did that. And so it doesn't carry. And maybe some people have figured out a way to make that work for them, but it just does not work for me. I'm 10 times more likely to get something done if I write it on a Post-it. You know, and it's right in front of my keyboard. Like, here are the top 3 things I'm going to get done today rather than scheduling. So you got to find what works for you, I think is important there.

Were there any other tools that you went through, a strategic process or something where you identified what those high priority, strategically important things were, or is it, uh, nothing comes to mind.

I think it was just a process. I did a lot of reading. I did a lot of thinking. And you, you almost have to get to a point where you start to recognize the value of your own time and, and real. And you also have to get busy. Once you're busy enough that you can't do everything, that's when you really can be impactful by picking and choosing. I have a really high capacity in terms of tasks. And so I can, I can burn through tasks. I can get a lot of tasks done in one day. So it took me a long time before I was kind of hitting my limits on that stuff. And then I was like, oh wow, I really need to like come up with a logical way to prioritize these things because I can't get it all done every day. And you start outsourcing stuff and hiring people and moving your way sort of up the value chain in terms of using your time and energy for your highest and best use, kind of getting back to that sales discussion. And then Everything that's not as important or can be done just as well by others, you, you get that off your plate.

And maybe that's tied to the fourth thing on your list, cheat codes and best practices from trade groups. How do you use that in the property management world?

Yeah. So I was late to the party on trade groups, but if you're an entrepreneur and you're just starting out in an industry that you don't have experience, immediately go sign up for the top trade group, you know, that's relevant for your industry. Like, for example, in my world, it's the National Association of Residential Property Managers, or NARPM for short. And that group, it's just a bunch of other people just like me who have all, you know, done what I'm trying to do and have collectively figured out some best practices. Some standards and some ways of handling things that, yeah, I could probably figure it out the hard way, but why bother? Just go and chat with them and, you know, they made all the mistakes already so you don't have to make them again. So go to those groups, go to the conferences, get on the mailing lists, get on the forums, build a few. You know, you don't need to build 100 one-on-one connections, but I would say try and build 5 or 10 one-on-one connections with other people who are like either geographically near you or kind of your age, but ideally have more experience than you. And maybe you have some value you can offer them in some way, or, you know, you can create a little mastermind from folks you meet and those types of things. So yeah, that was something I wish I would have done right from the start. Again, I think it would have shaved off a year or two of just kind of chasing, chasing down things that ended up not working out or learning the hard way about various edge cases and details about property management.

So, so the final mistake that you identified was not identifying your ideal customer. You didn't— you're marketing broadly to different, different types. What was the impact of that on your business?

Yeah, I mean, just, just as a quick example here, I mean, imagine getting 2 pieces of direct mail And one of them says, "We manage properties." And the other one says, "We specialize in residential rental multifamily properties between 5 and 19 units in nice neighborhoods." Right? So, it's the old saying about there's riches in niches or niche down to scale up. There really is a power in getting specific about your ideal customer and who you want to work with. The more narrowly defined they are, the more value you can provide for them and the easier it is to articulate that value. You know, if someone says, how can you help me? I have a rental property. I'm going to speak in broad, you know, Like that. But if someone comes to me and says, "I have a 20-unit property located in XYZ neighborhood and it's 50% vacant," now we can have an interesting conversation. It's much easier to really have a productive conversation that's going to resonate with someone if you're talking about something specific. So for a long time, we took anyone, in any neighborhood in terms of property management. And now we're pretty narrow and we're pretty careful about the types of properties that we manage to make sure they fit within our specialty. And it just, it helps everything. It just makes everything easier. I mean, it makes your operations easier. It makes your marketing easier. It makes the sales process easier because you just, you can standardize everything that you're doing and you can speak your customer's language in a way that's just not possible to do if you're a very general practitioner. So I think figuring that out earlier, it's, it's, it's really hard to do when you're starting out because the last thing you want to do is turn away a customer, but you have to at a certain point if you want to grow and scale and be profitable and be efficient. So That's something I'm a big believer in.

This is great, Peter. I think these top 5 mistakes that you've made, they've been common to me, familiar. Nothing's unfamiliar. I'm anxious to see what your audience thinks. I hope they'll engage with you, whether that's Twitter, LinkedIn, or whatever medium. But I hope we get to hear from some of them on mistakes they made that help each other avoid some of these things and get some of those best practices. Look forward to the response from the audience on this one.

Yeah, absolutely. If you like the show, we'd love for you to subscribe. Just go to anchor.fm/owneroccupied. You can find us on all the major platforms there. Uh, you can find me, I have a website, peterlohmann.com, that kind of links out to all the other places that I'm active on the web. And, uh, Russell, you want to give your Twitter a shout out?

Russell Lowry 10. And look forward to connecting with the, with the audience online.

All right, great, great show today. Thank you.