As many of you may know, I have been slacking on this blog for a bit because I was busy buying and moving into my first home. Since this was my first rodeo, so to speak, I don’t know if my experience was totally normal or totally abnormal, but I do know that I saw many similarities between the experience of buying your first home and the experience of building a business, and that’s what I want to talk to you about today.
There are a few lessons that you’ll need to learn, whether you’re buying your first place or building your first business:
First up, it will always take longer than you think it will. Ryan and I actually lucked out and were able to get from starting to look to moving into our new home within about 4 or 5 months, but it still took a lot longer than we anticipated. I absolutely love the place we ended up in, but it was the third home we put an offer in on and then we had to negotiate and wait weeks for closing. It worked well for us, but we definitely underestimated the amount of time we’d need from the point when we started to really search to when the whole thing was done.
Second, it will always cost more than you think. Not only does it take a lot more time than anticipated to build a business or buy a home, it generally takes a lot more money than anticipated as well. Whether it’s your company or your condo, there are always going to be things that will pop up that you didn’t expect and things that will cost way more than they should in any reasonable world. Closing costs are a bitch and so are many of the crazy things you have to do to build your business, especially in Illinois where an LLC will set you back $600.
At an angel investor training that I held a couple of months ago, the lead instructor, who is a serial investor, said that he always estimates it will take twice as much money and four times as much time as the business plan states to get where you want to go with the business; or was it twice as much time and four times as much money?Anywho – whether you’re buying a home or building a company, it’s always going to take longer and cost more than you anticipate.
Third, you have to know the market. As I mentioned, Ryan and I put in two offers that were rejected before we finally won the bidding war for the condo that we ended up buying. The neighborhood we purchased in has a hot condo market right now and we simply weren’t well versed enough in the beginning to make compelling offers. Once we got a little more experience under our belts and found the condo that we fell in love with, we asked our agent what she was seeing in terms of winning bids and she said most offers that were being accepted for 2/2 condos in our neighborhood were going for $5K-$6K over asking, so we offered $7 grand over asking, plus a little bit extra, because we didn’t want anyone else to get it and we were comfortable paying that much. Thankfully we did because they got multiple offers over asking. Knowing the market really helped us.
Fourth, you have to be ready to negotiate, and negotiate some more, and negotiate some more. When I went into the home buying process I was utterly naive about all of the negotiation that was involved. You negotiate upfront, yes, but then when your offer is accepted you have an inspection and negotiate again, and then you have an appraisal and may negotiate again, and then you have a final walkthrough and negotiate again…we were literally sitting at the closing and still negotiating. It was exhausting, but now I know to be prepared for it if I ever buy again in the future and the same thing happens in business – constant negotiation with vendors, clients, partners, employees….everything needs to get negotiated and much of it will be negotiated numerous times, so you have to be prepared for it.
Fifth, it’s never going to be perfect. While we all have these images in our heads of what our businesses will be or what our homes will look like, at the end of the day, there are always going to be compromises made. You have to be willing to be happy with the best fit for you or your business and not be unhappy if everything isn’t exactly as you’d envisioned it would be.
And finally, you have to be able to separate your emotions from the deal. As I mentioned, we negotiated at several stages of the process and, quite frankly, the sellers we bought from are damn sure never getting a Christmas card from me. However, I got some good advice from our lawyer at closing and he said: “You have to separate how you feel about the home from how you feel about the sellers. You have to deal with the sellers for just a short period of time but you’ll get to stay in the home for as long as you want to, so make sure you’re making decisions based on what you’re comfortable with spending for the home, not on what you think of the sellers and who’s difficult or not or deserves this or that.” It wasn’t an easy pill to swallow on the day of closing, but he was right; and the same holds true in the business world. At some point, you’re going to have to deal with people you don’t like in order to build a successful business and you need to just keep your eye on the prize, do what’s right for you and your company, and not worry about the fact that there may be some jerks that get lucky enough to benefit along the way.