My Biggest Competition

My Biggest Competition

I have been getting up earlier and earlier lately. Everyone is different and different things work for different people, but I’m actively discovering what works best for me in order to maximize my efficiency, productivity, and impact I have on the world around me. I’ve found that when I get up really early, I am extremely productive; more productive than I am late at night. So, I’ve decided to get up earlier and get more done.

One morning, I woke up in the pitch black darkness of the morning, collected my things, and headed to the gym. The roads were a ghost town.

Barreling down the barren highway, I felt like I was Will Smith in I Am Legend. I was only reminded of reality when a random pair of headlights would break the horizon. Then, in an instant, I would be alone on the road again. I got to the gym, organized my things, and hopped on the treadmill. I began my run and about 10 minutes in, I took a look around the gym that is part of my office building.

There was no one around.

The lights were only half on and I couldn’t figure out how to get them working, so I ran in dim light. Even the janitors had not yet arrived as far as I could tell. As I continued running, I looked at the treadmill to my left. There was no one running on it. The treadmill to my right? That one was empty too. I realized I’m not racing anyone on this perpetual hamster wheel except for myself.

In that moment I came to a realization:

  • I am my own worst enemy
  • I am my only competition
  • I am my limits

Replace “I” with “You” and you have a statement very relevant to your own situation. There’s no progress in comparing yourself to others. Everyone has their own limits and you don’t know any of your competition any more than you know yourself. If you take the time, you can get to know the ins and outs of yourself, but there comes a limit to how much you can know about your competition.

One important point is:

you don’t know what their limits are.

When you measure yourself to others, all you do is limit your progress. Who is to say their limit is your limit? When you compare yourself to your competition you accept their limit as your own. What about when you compete only with yourself? When you compete only with yourself, your limits disappear. I had been waking up before the sun even realized today was here. No one was on the road with me. No one was running next to me on the treadmill. I had no one to push me; no one to compare myself to.

I had to push myself. I was my only competition.

That’s when I realized something else:

That is how you stay miles ahead of your competition.

I’ve done more before my competition opened their eyes than they may do all morning. Now, I am sure there are plenty of people surpassing my own limits out there, but the point is, what would happen if I did gauge my limits by others? What if I did gauge my limits by someone who has yet to show up?

What if I waited to work out until they arrived?

Maybe they aren’t even pushing their limits. Or perhaps they think they’re already at their limits. You can’t know your limits until you push yourself. And that should be your biggest take away from this post:

YOU have to push your limits.

YOU have to drive you.

No one else will push you where you need to be. Stop letting everyone else’s limits limit yourself. Find your own limits…then push them…then break them…you’ll soon find that your potential is limitless, but only if you look past all the limits everyone else has built for you.

  • Define your own limits, then set out to prove them wrong. Let everyone else sleep on their dreams.
  • You go out there and make them happen.

10 Things Successful Entrepreneurs Say

10 Things Successful Entrepreneurs Say
10 Things Successful Entrepreneurs Say
To be a successful entrepreneur, we must think like the successful entrepreneur. There are specific characteristics that the successful entrepreneur tends to have and many entrepreneurs struggle to build their business in their early stages because they fail to hone in on these characteristics. Some entrepreneurs fail and never try again; others understand where they failed, and begin changing their behavior to make things work the second time around. Whether your business is thriving or barely making it from client to client, you may want to consider reciting some of these phrases in the mirror. Or you may already be the perfect candidate for a successful entrepreneur and not even realize it!
Here are 10 things that Successful Entrepreneurs say:
1. “My Bad.”
The Successful Entrepreneur knows how to swallow her pride and take accountability (Even when it may not be exclusively because of her).  When a business fails, or an initiative bombs, or a sale doesn’t close, there are always so many variables involved that it is easy to put the blame on any number of other factors. If you’re not comfortable with failure, it may feel uncomfortable to admit you were wrong. To avoid feeling bad, you may search for reasons why something went wrong, but the fact is that pointing fingers only slows you down!
When it comes down to it, if you had a goal in mind and that goal was not reached or has become farther out of reach than when you began, then you have failed at attaining that goal. Whether it was because of unforeseen circumstances or someone else’s shortfall doesn’t matter in the long run of making it happen. When you make yourself accountable as the entrepreneur, and take on all the responsibility of success and failure, two things happen:
  • You become even more motivated to succeed
  • You learn from your past mistakes and use them to foresee future mistakes
It’s okay to fail and mistakes are going to be made, but without accountability, we may repeat the same mistakes over and over again. It’s easy to make excuses. It takes a real leader to ignore excuses and let everyone point their fingers at them.
2. “Let’s Make It Happen.”
The successful Entrepreneur has made a life decision to pursue something important to himself and pursue it blindly. Failure can be a very strong motivator to stop what you’re doing and never try to do it again, but the most successful entrepreneurs are the ones that fail to see failure as failure. The most successful entrepreneurs have failed so many times that success was simply inevitable. We can find successful people in all walks of life, but no matter how different their industries, one of the characteristics that binds these souls are their ability to persevere through their failures. You can search Google and find endless lists of successful entrepreneurs that failed at first. Here’s one of those lists right here.
Some of the names on this list include Henry Ford, Bill Gates, Walt Disney, Isaac Newton, Thomas Edison, Abraham Lincoln, Oprah Winfrey, Marilyn Monroe, Harrison Ford;
I could go on for days.
Fail to see failure as failure. Strive to see the big picture and your desired end result. When someone says you have failed, correct them and say, “Actually, it’s just another speed bump on my road to success.” It may sound too cliché for them to accept. They’ll probably just laugh you off. Be okay with being the cliché that happened and you’ll be laughing all the way to the bank.
3. “I Love My Job.”
The life of an entrepreneur is an unconventional one. Often times instead of a 9-5 work day, you might work until 3 am only to get up for a 6 am meeting. You may encounter rough patches where you are pulling out your hair just to make things work. Some days, you might even wish you had some stability and a boss that knows exactly what the next move is, but most successful entrepreneurs push through all of these things because they enjoy the ride.
Passion is a very strong motivator and if you’ve found a way to make a living doing something you’re passionate about, you will work through the night, you will sacrifice what you have to in order to make it work, and you will love every minute of it. If you don’t have a passion, begin to define it. It won’t find you. Decide where you want to put your focus and then FOCUS!
4. “How Can We Move Forward?”
As an entrepreneur, you are selling a product or service to your clients. Unless you have a unique product (hard to establish) with no competition (virtually never going to happen) and can make a decent profit margin off of a cheap retail price, your products will not sell themselves. Not all salespeople are entrepreneurs, but all entrepreneurs have to know how to be salespeople.
You have to ask for the sale! You can spend your life savings on marketing, advertising, and promotions, but all of these initiatives will be pointless if you do not ask people to buy your product or service. You cannot assume that everyone who needs your product is going to realize it and come running for your business. Find the people who need your product, make them understand why, and then ask for the business. It sounds simple, but simple is not always as easy as it is straightforward.
5. “I Thought this Might Happen.”
Successful entrepreneurs have done enough market research, planning, and analysis to understand the risk involved. Most successful entrepreneurs have already foreseen possible shortfalls and have planned appropriately. Have you ever heard of having a back-up plan to your back-up plan to back up your back-up plan? That’s what I’m talking about.
It doesn’t hurt to know what can go wrong and how you will react in such a situation. A good plan beats blind luck any day of the week.
6. “Let’s go at this Together.”
Successful entrepreneurs understand the value of building a strong team. Some of the most successful entrepreneurs were not experts in anything, but instead are average in many realms, but have found a way to recruit a strong team of experts that know how to communicate and collaborate. As a business owner, you may feel like you have to do it all because when you accept accountability like mentioned above, you feel that you are responsible for getting the job done. Life will be much easier if you can recruit a team you trust to have your back and get the job done in the same manner you would. Successful entrepreneurs build a culture around their team based on individual strengths, but allowing those strengths to work together as one cohesive unit. I just thought of another cliché!
Two heads are better than one!
The catch is finding two, three, or five heads that work as one; think as one. That’s when a strong team and support system fosters business success. Henry Ford said it best, “Coming together is a beginning. Keeping together is progress. Working together is success”.
7. “We Have What They Don’t.”
If your business isn’t different than Joe Blow next door, why buy from you? I’m Sorry Joe Blow, but the truth is, you’re not cutting it. Successful entrepreneurs know how to differentiate themselves from the competition. Without a unique selling proposition, a business can easily become lost in the sea of other businesses out there. This is probably one of the biggest reasons why 50% of small businesses fail.  This goes back to planning and analysis. Do a competitive analysis. Know your competition. Look at what your competition is doing and then be different. Get creative. Find a way to be different. Change your business model. Don’t just sell a product. Find a way to give your customers an experience. Successful entrepreneurs have learned that people will buy an experience that comes with a free product more often than they will just buy the product. Successful Entrepreneurs don’t live inside the box given to them. There are no rules. If you want to be a successful entrepreneur, start breaking and bending some rules and create your own box.
8. “Let’s Put it Back into the Business”
Successful Entrepreneurs keep a strong eye towards the big picture. They want their business to succeed more than they want the luxuries of a status driven life. They bootstrap their way through the first couple years of business growth giving up some of life’s little luxuries and finding ways to save pennies here and there. The big picture is not passing up a penny on the ground because it’s only 1/100 of a dollar. The big picture is picking up that penny on the ground because 999 more of them and that’s ten dollars that only cost you 1,000 squats to pick it up! Get paid while you work out! Of course we want to make money and be paid for our hard work, but just like how they say to pay yourself first when saving for retirement, successful entrepreneurs consider their business before they consider themselves. Pay your business first. Reinvest in the business and it is bound to succeed. You can take a hefty salary later on down the road when cash flow is growing on the trees in your spacious back yard.
9. “Oh! I Know a Guy!”
Successful entrepreneurs are essentially successful networkers. In hard economic times, your network will keep your business alive. Successful Entrepreneurs make friends easily, go to networking events and exchange contact information. They find ways to connect the dots and help people succeed even if it does not directly benefit themselves. Successful entrepreneurs maintain contact with a strong network of friends and business partners. They follow up with lunch; follow up with a card; follow up with an email; follow up with a phone call; follow up with another lunch. Did I mention that successful entrepreneurs follow up? Who you know is always more important than what you know and sometimes the most important things you know will come only from who you know. Don’t underestimate the power of networking!
10. “You Can Sleep When you’re Dead”
Here’s another cliché that deserves a second look. Dreams are certainly a fantastic mystery, but successful entrepreneurs would rather be making their dreams happen than to have to wake up from them only to realize they haven’t happened. It’s not that successful entrepreneurs don’t like sleep, but instead they have found something they want so badly that they are energized more by what they are working towards than by the sleep they can get at night. It is said that 8-9 hours of sleep is a good nightly goal, but that’s like an entire workday! A business article in the Times interviewed some of the top CEOs around the country and found that one thing they all had in common was that they didn’t get more than 4 ½ to 5 hours of sleep every night. Most of them were going to bed at 11 PM and waking up at 4 AM. If you really want to beat your competition, you will wake up earlier than they do and go to sleep after they’re already dreaming. I am by no means advocating the sacrifice of your health for your business, but successful entrepreneurs find a happy medium between the sleep they need and putting in the work to make a business successful. See power naps.
Maybe you’ve already failed a few times as an entrepreneur. Maybe you haven’t yet started your entrepreneurial adventure. Or perhaps you just want to rock the boat within the company you’re already working for. In any case, thinking like an entrepreneur can only do you good. Successful entrepreneurs create opportunities, meet new and interesting people, are happy about the life they are pursuing, and know what it takes to make it work. By shifting your perspective and adopting these phrases into your daily conversations, you may just take your business to the next level.
Go out there and Make it happen! No Excuses!

Planning Your Exit Strategy

Planning Your Exit Strategy

 

Most times, when we determine the best property for our clients to purchase, we emphasize the importance of not only the entry strategy, but also, just as important, is the exit strategy. Normally, when an investor purchases a NNN restaurant property, the most important focus is how to get in the deal and how much will it cost. We ask you to take a half step back, just momentarily, to look at how we position our clients for long term success.

We believe that the Exit Strategy is just as important as the entry strategy and here’s why:

At Marcus & Millichap, we do two things and we do them more effectively than any CRE firm in the nation. We build and preserve our client’s wealth. While it is imperative to thoroughly examine each property’s worth for our investors based on their acquisition criteria and coupled this with the dozen or so variables that are factors in the overall value equation, it is also crucial to be able to measure what the property will be worth in the future.

Because of our extensive restaurant brand and tenant knowledge, we are privy to certain information that most brokers don’t have access to. If we know that a certain restaurant franchisee has a pattern of dividing their portfolio into subsidiaries and smaller lease guarantees and the language in the lease is ambiguous and provides them this option, we will factor this into the future value of the property’s worth. Simply put, when a lease guarantee is reduced from a massive franchisee guarantee to a smaller regional subsidiary guarantee, the restaurant’s lease and real estate value is negatively altered. We often advise our clients away from this type of scenario. Conversely, we have also experienced the opposite trend. Our experience has shown us that certain restaurant corporations are reducing the amount of total franchisees they communicate and do business with. As a result, they offer financial incentive for the smaller Mom & Pop franchisee to sell their business operation to a larger regional franchisee. They also offer financial incentives for the larger company to purchase those businesses such as extensions of the franchisee agreements for a reduced cost. This play increases the value of a Restaurant Property as the larger restaurant guarantee increases stability and worth due to the size and history of the larger company.  These are just two examples of what we commonly experience and are able to steer and advise our clients accordingly.

As restaurant specialists, we know this category more precisely than “Catch All” brokers that not only handle other retail categories, but also other completely different product types.

Let’s talk about lease length:

There is definitely a “Best” time to purchase a restaurant asset. We know that there are lease trigger value reduction times. These are defined as increments of time in which the lease reduces from a “5” number to below. Please allow me to explain. When a lease term reduces from 20 to 19 years, 15 to 14 years, 10 to 9 years and 5 to 4 years, the value perception dramatically alters the worth. We have seen properties lose over 50 basis points literally overnight and 35 to 45 basis points is typical. This is why we target properties that have just come out of one of those value reductions for client acquisitions. If we can pursue and secure a property with 18 or 19 years remaining on an original 20 year lease, that is the best scenario. It is exactly like driving a brand new car off of the lot. You know the saying, “That car just lost 10% of its value without traveling one block.” Why do many savvy investors buy cars with one or two years on them with ultra-low mileage? It’s because they allowed the original owner to take that loss and they purchase the car, virtually new, but at a discounted price.

SMART!!!

The same theory applies with NNN Restaurant Properties.

Now that we covered entry strategy, let’s talk about exit strategy:

The same property that you purchased with 19 years on the lease, we will recommend that you hold and cash flow for 8 ½ years, until the lease term has 10 ½ years remaining. Then, as your broker, we can list and transact this property at the absolute highest price by promoting the fact that there is an impending rent increase (which is most often the case every five years), and the perception will be a secure lengthy 10+ year term. With this strategy, you are on the positive side of the “5” number and transact the property before it loses significant value.

When we secure your property acquisition, we always provide the best-case scenario as to when to sell and exit that same property you are buying to maximize its value and your equity. Most brokers do not employ a long-term approach with their clients and are simply focused on the single transaction. Many of our most successful NNN restaurant property clients execute this strategy over and over. It truly assists them in “Climbing the Ladder” one rung at a time and has proven to be extremely effective. In fact, many have shared with us that this one strategy is responsible for much of their wealth.

Because we have the largest inventory of properties and buyers in the nation, our ability to access and secure a property for you with the right “formula” is compounded and multiplied. This fact coupled with our specialization of restaurant properties allow us to guide our clients like no other broker can. We always joke that we are the brain surgeons of restaurant and it really is true!

We build long term relationships with our clients. We are not simply seeking to secure one transaction, but instead take the time to learn about our clients and their goals and long-term objectives. We enjoy investing our time in our clients to learn as much as possible, so we can most effectively guide them to successfully reach their destination.

Above outlines just a few strategies and perspectives that we wanted to share with you. It’s no mystery that the majority of our 30 almost thirty property closings last year were multiple transactions for the same client. We either executed dispositions or acquisitions for our client for multiple properties. Or, we handled the disposition of their property (known as down-leg) and also represented them in their acquisition of their next property (called up-leg) in a 1031 Exchange.

There is a definitive reason for this. Our clients know that they are in the best hands possible. We leave no stone unturned on our mission to provide the absolute best brokerage services for our clients. Our resources coupled with our unwavering commitment we make to our clients is truly second to none and we demonstrate this each and every week. We have the bundle of letters of recommendation to prove it! Ask to see them or a phone number for one of our many satisfied long-term clients who would be happy to share their experience.

 

The Power of Will

The Power of Will

“Where there’s a will, there’s a way.”

This phrase, although some would call it cliché, points out that there is always a way, but you often times won’t find it without first having the will to find it.

Out of all the skills you can master, all the talents you can hone, and all of the muscles you can strengthen, your will power muscle is probably the most important. Without a strong will power muscle, all of your other skills or talents become mildly useless.

In order to make sure we are all on the same page, let’s define what will power is.

Will:

1. the faculty by which a person decides on and initiates action.

2. More control deliberately exerted to do something or to restrain one’s own impulses.

Ultimately, it is the actions we take that define the life in which we lead. It’s those actions that we will, which ultimately create our environment, our reality, and the core driving forces of our destiny.

We often forget, however, the other side of things. It’s also the actions we do not take which define our lives. It’s also the actions we don’t take that will create our reality and change the course of our destiny.

What sits at the crux of all action or inaction?

Will power.

Your life is going to happen whether you craft it yourself or just let it happen for you, but in order to craft it, you must have the will to change the future path you’re headed to the future path you envision. Then, you must use that will power to change your future possibilities through action in the present.

Will power must be used for action as well as inaction, whereby inaction ultimately means restraint. When you choose to go for a run when you’d rather sit around and eat junk food, you are using your willpower for action. When you refrain from indulging in your favorite kind of cookie offered for free, you are using your willpower for inaction.

With those thoughts in mind, I think a very simple way to view will power then is the ability to hold opposites.

When you have a certain goal in mind or a vision for the future, it can be clear the things you need to do or refrain from doing in order to attain that future, but for instant gratification purposes and the present moment, you may very likely desire to do the opposite.

Will power then is the art of holding opposites. The ability to feel a craving, desire, or pang in the present moment, but at the very same time, holding your commitment to make a different choice. Will power is your ability to make and keep promises to yourself.

Will power is that conversation you have with yourself when you set out to do something and you get to the hard part where you want to quit. Part of you says to just stop. Part of you rejects the changes you’re making and wants you to stay the same or slip back to the comfortable. The other part believes in your goal you set for yourself. The other part has a clear vision for the future possibility and wants you to attain it.

The question is:

Who is going to win?

The perpetual battle of your opposites.

Which part of you are you going to follow? The easier option is rarely the option that will yield your changed future.

You have to keep in mind that you are changing your destiny. You are changing the course of your life. It is not a single action that will change things. It’s instead the accumulation of many actions over a long period of time that will manifest that destiny. It’s forcing an action until it, not only becomes a habit that you do regularly, but also becomes part of the very essence that is you.

Do you think that happens overnight? Do you think it takes a single act of will power?

Will power, like many things, is developed through practice. Practice your will power and you will find that attaining your goals is much easier. You’ll find yourself manifesting the destiny you envision for your future.

And so I urge you to become comfortable with holding your opposites. Be aware of your opposites because they are your destiny changing in front of your eyes. Follow your opposites and make the choices that will lead you to the future possibility you wish to attain.

Strengthen your will power and you will strengthen your soul.

5 Important Characteristics of a Leader

5 Important Characteristics of a Leader

Outside of our investments, we all should dedicate some time to self-improvement. This article serves to help you grow in your leadership, whether that means with your investment portfolio, your new business initiative, or among your family and friends. Whether you’ve been elected to take the lead on a new project or you’re setting out to start an initiative of your own, you need to build a loyal team that will help you attain your goals.

Where do you start?

It doesn’t have to be complicated. Here are 5 simple words to help remind you how to build a culture, organize a system, and lead effectively:

Equalize

We all want to feel like we’re on a level playing field. That’s why dictatorships don’t work. Empower your team members to contribute in whichever way they can. This will give them a sense of ownership of the project and they will be more invested in its success. They will feel like part of a team as opposed to part of the work. Being the leader doesn’t mean giving orders, it means organizing action amongst the team that will yield the most efficient and desired results. It means showing; not telling. More specifically, showing someone a solution that they may not have seen for themselves, which isn’t necessarily unique to yourself as the leader. By empowering your team, you’re empowering them to lead. Eventually, they will likely show you a solution you would not have considered for yourself. When that happens, you know you’ve equalized.

Familiarize

Get to know your team on all levels. The more you and your team understand each other, the stronger your relationship, the better your communication, and the more cohesive you will work together. Understand each person’s personality; their strengths and weaknesses. Learn how different personalities can enhance one another and build a strong team. Understand your team from a work and efficiency stand point, then also implement fun team building activities so that you can also understand each person on a more personal level. Know their likes and dislikes, hobbies, habits, wants and needs. This is how you can come to understand their underlying motivations, justification for their actions, and how to appeal to them during project management. This is also how you build the personal relationship and turn colleagues into friends. In fact, while you’re familiarizing yourself with your team, also take the time to familiarize yourself with…yourself.

Through all of this familiarizing, you will create a strong, unified, and complimentary team ready to take on any project.

 

Organize

Systems can only work efficiently with organization. Most people work best in an organized environment. In an unorganized environment, no one has a clear idea of what’s getting done or how it’s getting done. Chaos ensues and business likely suffers. Put systems in place that organize processes and paint a clear picture for how to repeat desired results. These systems and processes don’t need to be rigid, but they must exist. Allow for criticism or constructive feedback on how to improve the processes or systems, but before that can happen, you must implement. Without systems, you will never scale. Without process, you might strike gold here or there, but you will never remain consistent.

 

Energize

Energy and emotions are contagious. Your employees will adopt whatever mood their peers are in and if you are going to be their leader, that will likely mean they will adopt whatever mood you are in. You have to become the source of positive energy everyone can feed off of. If you get excited about a new product launch, project, or initiative, so will your team members. Like Gretchen Rubin says: Act the way you want to feel. Even if you’re in a sour mood, put a smile on and walk confidently with purpose! Before you know it, everyone around you will be doing the same and you may even find your sour mood has dissipated.

 

Utilize

Don’t forget about the team you’ve built. You’ve built a great team, now release them onto the project! You may be the leader, but you’re only one person. Without delegation, you will become encumbered and overworked. Delegate the necessary work to the appropriate team members and let the systems you put in place do their jobs. You should contribute where necessary and step in as the leader when issues arise, but let the project take a life of its own so that you can focus on the bigger picture and organizing the next project.

 

Keep these few simple action items in the back of your mind and you will continue to be a successful leader. You will increase member engagement. You will increase efficiency. You will increase synergy. You will increase member satisfaction and loyalty. Most importantly, you and your team will accomplish whatever goals you set out to accomplish.

Why Invest in Restaurant Net-Leased Assets

Why Invest in Restaurant Net-Leased Assets

There are plenty of investment options to choose from in the single-tenant net-leased sector and they all come with their own pros and cons. Drug Stores tend to be on high traffic hard corners backed by solid credit, but house a large box with a cash flow stream to match that may be difficult to replace if it ever became vacant. Dollar Stores come with great credit, but often times in tertiary markets. The auto sector can provide higher returns and high rents for specialty buildings, but can also be on odd shaped parcels with their own potential environmental concerns, while banks can provide the same high rents for a specialty building backed by excellent credit, but tout the same replace-ability issue if they ever became vacant.

So Why Invest in Restaurant Net-Leased Assets?

The variety of price points paired with long-term leases, rental increases, and well-known popular brand name concepts make the restaurant sector especially attractive to investors. Many 1031 exchange buyers look to the sector for a passive place to park their money because many of the factors just named provide a certain sense of security and perceived safety in an investment world riddled with risk. A few years ago the market was labeled one of the biggest peak markets we have seen in the past 10 years, which rang true. Since 2015, cap rates for restaurant net-leased properties have continued to compress, further than most other net-leased sectors, stabilizing on average somewhere between 50-65 basis points lower than other similar net-leased assets. Because of the high demand and increased equity in these types of investments, corporations and franchisees operating business on these parcels of real estate have been actively taking advantage of the market by accessing the built up equity under their operations through sale-leasebacks and using the proceeds to grow into more units, remodel existing units, and pay down debt among other things. In an environment where investment supply is limited, the additional deal inventory is driving transactional velocity even further for the many selling investors who then become 1031 exchange buyers.

Investors also choose to place their money in the restaurant sector because it has been perceived to be somewhat recession proof. “Recession-proof” is stated with a grain of salt as the more high-end casual dining segment may take a hit when the economy is down and consumers have less money in discretionary spending, but ultimately people need to eat. While some casual dining concepts are recently struggling, due to changing consumer preferences, they are working to increase their sales by changing up business models, implementing new technologies, and utilizing delivery and online ordering services. The overall sentiment in the marketplace is that “most of them will figure it out”. The casual dining segment provides some benefits over the QSR segment in that the price points tend to be higher since the footprints are larger and rent per square foot remains fairly the same. However, the segment provides risk in that lower discretionary spending could hurt a higher end casual concept during a downturn. That is why many investors look to the quick service restaurant segment as a hedge against the inherent risk of recession. Many QSR concepts have a focus on a cheap and fast food offering that can feed an entire family for a very reasonable price. Even concepts with middle of the road average ticket prices ebb and flow through the ups and downs of the market. In addition, the industry as a whole provides jobs at fairly cheap labor, which remain a necessity in a downed economy.

Then there are the core aspects of real estate to consider. Most restaurant sites provide the benefit of adhering to many of the core retail necessities when it comes to desirable core real estate. Restaurants tend to be located on hard corners with frontage on high traffic corridors. They tend to have strong parking ratios in high density metro markets on parcels with great ingress/egress. Restaurants simply tend to be on good core real estate sites. If the restaurant were ever to leave, these aspects of the remaining real estate could provide you with more options to redevelop the property than a small specialty building such as a quick lube oil change facility might provide.

There is also the tenant base and the market for restaurants in general. Although investment supply in general is lacking compared to the large pool of buyers out there, compared to other sectors, restaurant inventory is in plenty supply and has transactional velocity over most other triple net property segments. Restaurants tend to be a high demand asset sector, which bodes well for owners when it comes time to exit or exchange their investment. Why is the restaurant sector in such high demand? Well when it comes to restaurants, you have a plethora of well established strong credit tenants. You also have two sub-segments of QSR and Casual Dining, which together provide a very wide range of price points, business models, and rent structures. An investor choosing an investment in the restaurant segment is like throwing a kid into a candy store full of different gum ball machines and saying,

“Which type of gum ball would you like to receive every month?”

You can also find a wide range of risk and return. You have corporate credit grade investments that could trade for as low as 3% or 4% cap rates, while also having the upside of taking on smaller operators or franchisees with similar lease terms but at double the returns or higher. With these smaller operators and franchisees comes the opportunity for even an unsophisticated landlord to structure a blend and extend for added value. Smaller operators have the flexibility to get creative in their holdings, operations, and business growth opposed to some of the larger corporate structures that stick by strict policies and standards. There are numerous reasons to invest in the restaurant sector and any investor building a diversified portfolio of net-leased investments would be wise to include a healthy number of restaurant assets into their mix.

The downsides? The downsides include all the many risks associated with any real estate investment. Each tenant, lease, property, and market has its own inherent risks, challenges, and pressure points to watch out for. I would encourage you to use the information you gather here to your advantage, but also seek advice from your trusted real estate advisor to ensure you understand the intricacies of each deal, how they might affect your investment decisions, and to gain a comprehensive understanding of all your options when it comes to your long-term investment strategy.

If you have any specific questions regarding an asset, a concept, or your current investment situation, feel free to reach out to me directly at 813-387-4796 as I welcome the opportunity to help you in any way that makes sense for you.

 

Management VS. Leadership

Management VS. Leadership

Management versus leadership has been a long time battle between efficiency/status quo and growth/forward motion. There are many blogs and gurus out there that dive deep into the battle and define the differences to each, but I think there are two key differences that inherently separate the leaders from the managers.

To explain more about what I mean above, let me say that Management is simply about maintaining the status quo. If a process works, don’t change it. Instead, you strive to keep it working like an oiled machine and that means managing the process to limit as much change as you can. The thing is, change is the nemesis of management. Seeing as change is inevitable, management becomes this reactive decision to revert any change back to the state of the oiled machine.

An employee leaves; find a replacement. A machine breaks down; fix it as soon as possible. If someone disrupts the status quo by doing something different, you have to get rid of them. You don’t want different; you want normal. You want consistent production and you’ve found a proven process. The problem with this is that a proven process has been proven for that point in time, but over time, change will be inevitable, and that proven process can very well turn into a proven disaster. This kind of management mindset simply halts any and all growth, making the process a ticking time bomb for failure.

Now management is also inevitable. We have to manage processes and businesses for them to maintain a state that will launch them into further success, but my point is that it is things that need to be managed; not people.

Things should be managed…People should be led.

There are many aspects to leadership, but I believe that the two staples of leadership are Culture and Empowerment:

Culture

Culture is a large part of job satisfaction and employee retention. Imagine you’re in a workplace where you are yelled at all day for everything you’re doing wrong and never praised for the things you do right. Imagine you’re working day to day in fear that you may lose your job, watching the seconds hand on the clock tick by waiting to clock out and go home, and you’re forced to put your hand up in the air so your manager can come by and give you permission to use the restroom.

Now imagine you’re praised for the things you do well and given constructive criticism on what you can do better. You’re not yelled at, but instead you brainstorm together about how we all could improve the process. You work day to day towards a long-term goal you resonate with and you know as long as you resonate with that goal, there’s a spot for you in the organization. You don’t need to clock in or clock out because you’re motivated to be there every day. You get there early and leave late because you want to; not because you have to. And you don’t need permission to use the bathroom, leave to pick up your kids, or take a Friday off while family is in town because you’re trusted to get your job done and you will work on a Sunday evening if you have to because you realize trust is a two way street.

That’s the difference culture can make in an environment. Although possible, it’s extremely difficult for leadership to persevere through a managing culture. Future leaders become stifled, agitated, are not fulfilled, and leave. The work environment becomes stagnate and stale, employee retention becomes a struggle, and no one leaves work with a smile. The root of most organizational issues begin in culture (which is strongly related to communication and vice versa). Create a leadership friendly culture and your organization will not only maintain it’s successful status quo, but also jump on any growth opportunities that become available.

Empowerment

You have to empower your employees or your partners to be leaders themselves. You have to trust that they are aligned with your mission (which starts with a culture), because if they are aligned with your mission, they will make the moves to keep you going in the right direction. They may not do everything exactly as you would have done, but there are a million ways to get from one place to another. When you empower your employees, you give them a sense of ownership. This isn’t simply your project that they are working on…Now it becomes their project as well. Not everyone likes to be a leader or lead others, but everyone likes to be empowered to bring creative ideas to the table. This empowerment, in turn, will likely inspire the future leaders of your organization to take a leadership role by instinct; by necessity. They will catapult themselves into it because that’s their calling and that’s what’s necessary for the group to attain it’s goals.

Maybe I will get into management versus leadership more in depth in future posts, but to keep it simple, we have to start by implementing these two things before we can even begin to think about shifting from a management focused organization to a leadership focused organization. Create a culture that empowers your employees to be leaders because they will start to empower their subordinates to be leaders in their own way. An organization of leaders will always accomplish more than an organization of employees.

I encourage anyone interested in learning more about culture to read Tribes by Seth Godin. It’s a very simple and easy read, but it packs in a lot of great information about culture and the implications of managing versus leading.

If nothing else, just remember:

Things should be managed. People should be led.

A Few Quick Thoughts on Good & Bad Habits

A Few Quick Thoughts on Good & Bad Habits

Just a few quick thoughts on self-development. Outside of investments, we can all strive to be better, do better, and grow further. This is meant to be a very short read aimed at helping get outside of your day to day grind to identify a few ways you might be able to help yourself grow, improve, or expand your horizons.

2 Excuses for Failing to Change our Habits:

1. We Are Creatures of Habit

Let’s get serious. We’re only human. And as we travel through this journey of life, we become comfortable in the consistent. We come to know what we can expect from things that never change. We don’t inherently like change. Breaking a habit doesn’t just mean a temporary change, it means a life-style change. If you’re not ready to make the change for life, you’ll likely fall back into the habit. Although, this is the nature of humans, it’s also an excuse to stay in the habit. If you want to change, don’t let this excuse hold you back. Your mind is stronger than the human creature that you are. Break it!

2. We Are Motivated by Instant Gratification…and Demotivated by Lack of Instant Gratification

When we want things to change, we want them to change now. We don’t want them to change later. That’s why the world is filled with get rich quick schemes, diets that claim you’ll lose 50 pounds in a week, and pipe dream infomercials that seem too good to be true, but still somehow leave you wanting to order them. At the end of the day, for real results, you’ll have to put in real work. Many times when we don’t get that instant gratification, we lose our motivation to go on…so we fall back into the same habits that yield that instant gratification. When you work at something and it doesn’t happen right away, don’t use that as an excuse to fall back into your old pattern. Find little “wins” along the way and keep pushing. Eventually that instant gratification will be replaced by the ebb and flow of your new established habit!

Reasons Changing Habits is so Damn Hard:

1.     You Want Someone To Do It For You

Habits were built by no one except for ourselves. You created this habit; you alone will break this habit. Others may give you tools that can help, but if you don’t do it, no one will. No one can break your habit for you and that’s why sometimes habits are so hard to break. It would be great if we really could sit back on the couch, eating a bag of potato chips and watching cartoons riddled with adult humor, while a vibrating belt melted away all of our body fat. That sounds easy, right!? That’s false hope. If you want something, go get it. If you don’t go get it, you don’t really want it.

2. You Want To Do It For Someone Else

A lot of times we want to change a habit because others are pressuring us to change. It becomes much harder to change for someone else because the motivation pushing us is based in a negative sense. We feel that if we do not change, negative things will happen. A much more energizing approach that creates a more sustainable motivation is the vision for how things will be better when you finally do change. You have to want to do it for yourself before you can make a lasting change. Many habit changes must become lifestyle changes. We must commit to change for a lifetime. There is no end goal of “I did it”, and that’s hard for us to grasp. Without that sustainable positive motivation pushing us for ourselves, we won’t last without a finish line in sight.

At the end of the day, habits are difficult to break and difficult to sustain. It’s hard work, but worth it if you’re changing negative habits into positive ones. Put in the work. Make the commitment. Dedicate your mind and time to building a better life for yourself.