Stay Grounded in the Numbers
by Barry Lenson

“Should” is a dangerous word. If you use it in sentences like these, it could be doing you a lot of harm:

“The house I’m renovating should sell for $450,000.”
“My new product should make me $50 million a year after I bring it to market.”
When you start to use “should” that way, you’ve probably fallen victim to false optimism. It’s highly seductive. You want so much for that house to sell for $450,000 that you start to believe it really will. Or you want your new company to generate $50 million in annual sales, so you start to count on that happening.

It’s the kind of thinking that leads you to you overspend. You spend too much money to buy a property, then you spend too much money to fix it up - and you never get your money back. Or you pour too much money into your business start-up and never get off the ground.

What can you do to cure “should” thinking if it has lured you in? The first step is to admit that you have been counting on an unproven outcome. The second step is to get anchored in real numbers. What are houses really selling for in the town where you are investing, for example? Know that figure and work back from it. Or if you are starting a company, what are realistic income estimates for your first year, your second year, and beyond? Ride herd on the numbers and don’t let your heart get ahead of your head.

As our Chairman Donald J. Trump observes, cautious optimism is the key to success. You have to dream big, but verify your expectations against real-world facts and figures.

So work the figures without letting your emotions get in the way. You can get very excited later on when the money starts to pour in. But in the early stages, make sure the numbers work. If you do that, you not only “should” be a success. It’s really going to happen for you.

Editor’s note: To make sure the numbers work on your real estate investments, you might need the skills that our students learn in The Real Estate Investor Training Program. To learn more, click here.

This entry was posted on Saturday, March 31st, 2007 at 3:47 am and is filed under Real Estate, Millionaire Mindset, Business, Entreprenuership. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.