10 Apr Brant Phillips Show 32: Flipping with The Franchise Model
Welcome my friends to the Brant Phillips show. The show that is all about results, and you know that already my friends so let’s just dive right into this thing.
So look, the other day I got a call from a friend of mine. A friend from way back. And he was telling me about his new job. He got a job, letting me know what he was doing, in case I was interested in his services. It was kind of like a sales job. Semi-related to what we do where we could maybe be a client. But also you know, he asked if I could put his name out there to people I know and have a lot of connections and things like that. Of course, I told him, “Yeah sure buddy, you know be glad to do that, glad to do that. It was good talking to you again man. Wish you the best in your new career and hopefully we’ll connect pretty soon, man.”
And that was it, you know we hadn’t really talked in many, many years. But here’s the thing, my friend, he didn’t sound too happy. He didn’t sound too happy and see my friend was an entrepreneur, and an entrepreneur at heart, but he fell victim to one of the most vicious statistics of business. One of the most vicious statistics of business is this, is what, nine out of ten businesses fail. Like think about that for a minute, especially if you’re a beginning entrepreneur, you’re a beginning real estate investor. You need to think about this statistic, and you need to understand it. Because when you begin to understand something, then you can begin to overcome it if it’s a negative factor like this is.
But nine out of ten businesses fail, so this has always jumped out at me because it’s such an incredibly high failure rate. Now, yeah I get it, like you can have this mindset that, “Well I’ll just fail nine times until I make it or whatever.” I’ve heard that said, some mindset training, and that’s cool. That’s cool if you make it to number ten, and you succeed, and I get it, like there’s a lot of failure that comes in business. But when you fail in business, when you fail at a venture, when you have an investment property that goes sideways and you take a loss on it, it’s a punch in the gut, you know, honestly. And that’s why most entrepreneurs don’t make it back, especially when they’re just starting out.
I’ve seen a lot of real estate investors come into the market, and they’re just starting out, and they don’t know what they’re doing, and the don’t have proven systems. And they go into a deal and they use their you know what, and it’s incredibly painful for them. It’s sad to watch, and it can be devastating, right? And that’s where they kind of unfortunately have to go back to get a job, go to a career, kind of settle. Settle, and that’s what it is. That’s what my friend was doing I suspect, ’cause that’s not what he wanted to be doing, he didn’t sound happy and it didn’t sound like a very fun item that he was selling to be quite honest with you.
But anyway, so my friends, here’s the question that I’m gonna pose to you. What if there was a way to reverse that statistic, about nine out of ten businesses fail? And completely switch around to where nine out of ten businesses succeed. Would you be in? If nine out of ten businesses succeed, then everybody would be an entrepreneur. So here’s where I’m going with this. So I was rereading The E Myth by Michael Gerber recently, and I think like the third or fourth, maybe the fourth time. And something I heard over and over again jumped out at me that I’ve heard a dozen times before at least.
But it was a little bit differently, heard a little bit differently, and I applied it with the lens of real estate investing instead of just general entrepreneurship, which you know Michael Gerber’s E Myth book is really about general entrepreneurship. But I started looking and kind of taking in what I was reading through the lens of being a real estate investor, and about our business model and how we do real estate with our companies. So you know, you see in The E Myth, Michael Gerber explains that the franchises, and I’m talking about your bit franchises, they have a model and they have a success rate of somewhere, you know I’ve read statistics that say, franchises have a success rate of around 90%. Around 90% compared to only about 15% of businesses that are started from the ground up. Maybe 10%.
So this is that statistic reversed. Instead of nine out of ten businesses fail, some studies show that franchises have a success rate of approximately 90%. This is the McDonald’s model. This is the franchise model, and I get it, like I’m using the word McDonald’s and I know not everyone loves McDonald’s but no one can argue with their success. With their system that they’ve built that has stood the test of time. And this concept has been proven over, and over, and over again, and quite frankly, it’s ran by a bunch of teenage pimple face kids, right? And McDonald’s is the epitome of this system, right? Of the franchise system with, they’ve got restaurants in, I don’t know, a hundred and something countries, and they serve 50 or 60 million hamburgers or customers a day or whatever it is. So it’s crazy, like 30 to 40,000 restaurants.
And my point here is that they’ve proven this system, this franchise model. If you go out and just start your own hamburger stand, or hamburger restaurant, compared to a McDonald’s, that McDonald’s is gonna beat you. Like 99% of the time, that McDonald’s is gonna be more successful than any of these other mom and pop little hamburger restaurants that pop up. So that is the franchise model. So my question to you today is, what if you applied a franchise model to your flipping or your investing business? What if you applied a franchise model to your flipping or investing business? And first let me break down why flipping.
Let’s talk about flipping for a minute. Let’s talk about why is it is an ideal business model and how could we, how could there be like a franchise model to it? So let’s talk about something I like to talk about with my students, about when it comes to real estate investing, we aren’t looking for just any average little deal. We’re looking to take, we’re looking to take and create an unfair advantage in the market place with each and every deal. I’ll say that again, we’re looking to take advantage and take an unfair advantage in the marketplace with each and every deal. So how is this possible?
Hey this is Brant and I hope you’re enjoying today’s show. If you’re at a place in your life or your business where you just feel stuck, or you just don’t know what actions to take to help you get unstuck or onto the path to creating the results you truly desire, please take a few minutes and go to my website, brantphillips.com. There’s some really valuable resources and information that may be able to help you out. And if you’re interested in really speeding up results with the help of a coach and a mentor, and adding true accountability and guidance to your life and business, please reach out to me from my website as well at brantphillips.com or going directly to www.brantphillips.com/coaching. Now let’s get back to the show.
So let’s take a look at our competition. When we go into a subdivision to buy a home, our competition are homes that are owned by families, right, so they’re occupying these homes. So you know there’s gonna be little Johnny has took the crayons, or the marker, or the sharpie and wrote on the wall, while they’re trying to list and sell the home, or you know the little dog Fido’s got pee stains on the carpet. And there’s just deferred maintenance, and there’s all these things, and most likely this family, maybe they lived in the home for a long time, maybe they only been there a few years. They most likely paid full price, and they’re most likely trying to squeak every single dollar they can out of that home for their next home, for their next purchase for their move.
So that’s our competition, right? So when we go into a marketplace, we’re never paying full price. The day that we buy, we have equity. We have substantial amounts of equity. So that’s the first thing. Number two, with our business model, with our business model we can leverage private money. We can leverage financing to finance a hundred percent of our costs. Show me some other start up business model or franchise where you can finance a hundred percent of the money required to go into business. It doesn’t exist. And then so we do the repairs, we do renovations, we do all that kind of stuff. And oh by the way, a hundred percent of this business is outsourceable, like you can train and delegate everything, so you’re just the business owner from day one. Tell me what other business you can do that in. I’d love to hear that.
But so then we get to the listing part, right? So it’s time to list our property to sell, maybe it’s time to rent a property, whatever it may be. But when it comes time to list, we are the best product at the best price on the market. We are the best product at the best price on the market. So we have an unfair advantage in the marketplace. We’re literally, and I’ll use a little air asterisks, competing against inferior products, right. But we’re really not competing, because our home is better. It’s completely renovated and updated. There’s none of the crayola writing on the wall or pee stains on the carpet, or any of that kind of stuff. Our house is nice. I can’t say that it’s new but it’s like new. It’s freshly painted, it’s got new flooring, it’s got new countertops. Everything a potential buyer wants and most likely, we’re priced equally and a lot of times slightly less than our competition. Why? Because we want to sell our houses fast.
So that is the unfair advantage in the marketplace, and so I want you thinking about your business like that. Are you a part of the statistic where nine out of ten businesses fail because you don’t have a proven model and you’re just trying things out? Or do you have proven fundamentals? And I’m not trying to say that I and my company are the McDonald’s of house flipping, ’cause we’re certainly not. But we’ve done several hundred deals using our particular system and it’s based on proven fundamentals and we know that it works. And my students who’ve gone out and executed know that it works, and knows there’s a lot of good systems out there. We know ours works. It’s like a franchise model, ’cause after doing it hundreds and hundreds of deals, it works.
So my friend, let me ask you this. Especially if you are an aspiring real estate entrepreneur and you’re going out there, are you trying to reinvent the wheel? So because if you are, think about what you’re doing right now because most likely you may be on that path to becoming a fail statistic. Are you using a franchise model? A proven system. Seven fundamentals. Are you taking advantage of the unfair advantage that exists in your marketplace? It’s afforded to you, it’s given to you. You just have to know what to do and take advantage of it.
My friend, I always encourage my listeners to go out and take action, but I wanna clarify that today and I wanna say, that I want you to go out and take the right actions, the appropriate actions, that have been proven to be successful, over and over again, and use a franchise model to flip houses, right? So our system is based on seven fundamentals. We actually have a new training program coming out soon. It’s not ready yet. It’s called Flip Fundamentals. It’s coming out really soon, but regardless of that, make sure you get, you know you understand this concept that I’m sharing with you, and you take it to heart to base your business, your investing business, on a franchise model. To flip, to invest, to do whatever you do, use a proven formula. Use a proven formula to flip houses, and that will be your formula to freedom.
You can build it to succeed from the very first day, and when you do that you can build it to last. And you build it to create, not just making money, but your ideal lifestyle, ’cause that’s what this is all about. So my friends, I appreciate each and every one of you. I really appreciate those of you who give us a five star rating on iTunes. We love you guys. I thank you for listening to the show, and until next time, I look forward to helping you create results in your life and in your business.