Wealth Principle #6 Your Business Must Solve A Problem

in LeoFinance9 months ago

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Why Must Your Business Solve A Problem?

It seems like an obvious statement at first glance that a business makes a profit from solving problems, but this principle represents much more. The world is full of problems, but the ones that pay the most are not always obvious to us.

In real estate for example it seems like the problem we are solving is that a person wants to live somewhere else, but in truth, the deals that are done are usually solving much more complex problems.

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Some Examples Of Problems Real Estate Investors Are Asked To solve
Behind the desire to relocate is usually a deeper need for security, self-worth or a sense of identity. People buy or sell real estate because where they live says a lot about a person. How they live decides their quality of life.

Real Estate investing hinges on being able to buy a property for less than the property could sell for on the open market. This is usually done by addressing one of the above deeper needs.

Below are the 5 D's that can lead a homeowner to sell at a discount:
Death - The loss of a loved one can create cause a family to no longer see the value in a property if it is bringing up painful memories or is no longer affordable without the lost family member's income. In some case the deceased was the person who maintained the property and as time passes the house can eventually become unsafe or require a high level of upkeep.

Divorce - This can be a very painful experience for 2 people who no longer see eye to eye and due to the nature of a divorce may be interested in taking less for the house in order to expedite the separation of their finances and assets.

Disease - There are many illnesses that can create disabilities that make an existing homeless desirable for the owners. The financial burden of a house or the nature of the disease may require access to capital that is currently locked up in the form of equity in the property. A quick sale is sometimes the only viable solution.

Drugs - It is all too common that a person's use of drugs will lead them into a downward spiral that can lead to the loss of employment, or desire to maintain their property. After some time the property becomes more of a burden than an asset and selling at a discount to get quick access to cash often becomes a desirable way to solve their financial problems. Remaining in the house can also be the cause of their triggers to use drugs, so relocation is sometimes a part of their recovery. In these instances, a quick sale is often preferable if it means being able to get back on the road to recovery.

Denial - This one is the most difficult to explain, but I can't tell you the number of times I've met homeowners that were simply in complete denial of their present situation. This can continue all the way through the foreclosure and into the eviction. I have even heard a story of one couple moving back into the house in the night after the Sheriff had physically removed them earlier in the day. When the Sheriff came back the next day, they calmly explained they would continue moving back into "their" house and there was nothing anyone could do about it. Spending a night in a holding cell and some family intervention finally resolved it, though they likely still believe it is their house.

Contemplations For This Week

  • Your business must add value
  • It’s not about how hard you work, it’s about how much value you deliver to the marketplace.-Working hard is only for your mind/mindset-If you solve the problems of the people who have the most money, you will make more money.-
  • The person who actually writes your check is the priority, although you may not be servicing them directly (e.g. doctor paid by financial services, real estate agent paid by seller).
  • If you are not servicing that person directly, move over to them
  • The shorter the path to the money, the quicker it will get to you.
  • In real estate, you’re serving the tenants - they are the end-users and those with the biggest problem. They need a place to live or they will be out in the cold.
  • The more problems you solve, the richer you get
  • The better quality problem, the more pain there is, the richer you get
  • Think of the problems people you’re servicing are having, think about what they’re going through, why they’re having issues
  • Look at your market for a big vacuum of quality whatever you do-Solve bigger problems, make bigger money
  • Solve lots of small problems more often, you’ll make big money.

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One of the things I've learned through 30+ years of self-employment is that focusing on creating happy customers/users is far more important than focusing on "making money." Happy customers make you money.

Remember attending a lecture by the late Stanley Marcus (one time president and CEO of the Neiman-Marcus luxury retail chain) who pointed out that Neiman-Marcus owed their success to being in the "happy customer business" rather than the "luxury product business."

I imagine that applies in real estate, as well.

=^..^=

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Powerful 5Ds to go home with and all are very important as you've explained but I think the denial aspect caught my attention more.

I have even heard a story of one couple moving back into the house in the night after the Sheriff had physically removed them earlier in the day. When the Sheriff came back the next day, they calmly explained they would continue moving back into "their" house and there was nothing anyone could do about it. Spending a night in a holding cell and some family intervention finally resolved it, though they likely still believe it is their house.

I think sometimes families sell their Real Estate out of pressure of the unknown and at the end feels as if they were denied of their property. Sometimes this unknown incidents comes in an emergency form and couples don't know what to do, only to resort in selling their Real Estate. Remember, it can happen to anyone, but planning ahead can reduce the ripple effects.

Apart from the above points, I think businesses that are created with solving problems last longer than others, while businesses with human capital development in mind will stand the test of time. And you're creating values by teaching and encouraging others to become better people. That's a sign that you're solving real problems.

Thanks for sharing this masterpiece of work. I'm already figuring to create a post in this direction but from another angle.

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