2001 – The best worst experience of my life
During what I call the ‘best worst experience of my life’, I’d gone from being an international entrepreneur, to seeing almost all of my assets vanish in less than three months! My bubble had well and truly burst!
Here is a summary of the key lessons that I learnt as a result of being almost totally wiped out:
1. Follow a tried, tested and proven system in business.
My business partner and I did not do this. We had an idea, worked hard and tried to create something unique. Whilst it was highly rewarding when things were going well, the lack of a proven system proved to be devastating when factors outside of our control went against us.
2. Build your business with underlying and appreciating assets.
The businesses that we had built always rented the premises and offices where we had worked. The irony is that if we had bought these premises, which would have cost almost the same as we were paying in rent, then the value of the underlying properties would have given us a much better financial cushion when we hit hard times.
3. Stand on the shoulders of giants.
I made the mistake the first time round of learning from my own mistakes. A good friend of mine likes to say: “You are going to have pay for your education whether you like it or not; either by making expensive mistakes or by investing in learning to avoid mistakes from others who have paid the price already.”
4. Make sure your business is both profitable and sustainable.
The major flaw in our business (apart from those mentioned above) was that we did not have a sustainable income stream. We would build a high ropes course, get paid for it and then have no real way of earning any more money from the same customer - a flawed strategy that made us only as good as the next deal we were able to land. The property equivalent of having a sustainable income stream is buy-to-let. And if you can do buy-to-let and make a significant trading profit from each property, then this is a very robust way to build a business.
So there I found myself, early in 2002, sitting in a rented bungalow with a leaking roof (we had to sell our home to avoid bankruptcy) with no business, a new baby and very large whiff of uncertainty in the air!
However, I had learnt some very valuable lessons and I decided that I would get back on the entrepreneurial horse with one phrase ringing in my ears: ‘90% of all millionaires become so through owning real estate’.
In the next instalment, I'll be talking about how I came up with the tried and tested property investment strategy that led me to founding PPP.
Read the first instalment here.
