As an owner of a family business, you’ve probably heard all sorts of pessimistic predictions. Some say that most small businesses never reach $1 million in sales. Others will tell you that 70% of family businesses fail. But if you’re going to succeed, you have to block out the noise. And if you want to turn your family business into a billion dollar enterprise, you will need more than your ambition or the luck of your family name to keep you afloat.
Here are four pillars of business growth that I used to catapult my family business into a real estate empire:
1 - Stop Saving, Start Buying
No one becomes a billionaire cutting coupons. When my grandfather founded our family business after the Great Depression, it was a risk, but one that worked out well.
Though the business was successful, my grandfather, father, aunt and uncle were all conservative business owners. The business model changed very little even after ownership changed hands among them, throughout all those years. They made investments almost exclusively in the Bronx because that’s where my grandfather grew up, they almost always purchased 100-unit buildings, they refused to take on any debt, and they very rarely took any risks. They kept their business ‘niche’ aka, the same place, the same way, at the same pace. But when I took over, all of that changed.
A motto I like to live by is “Do the opposite of what everyone else is doing.” So, instead of saving, I began buying properties that had potential outside of the family’s comfort zone, flipping the properties, then selling them for huge profits. When the markets looked gloomy in 2008 and 2009, I bought up as much property and real estate as I could -- even ones that weren’t 100-unit buildings. I cared about location and ownership, and still do.
For me, the best way to save is to buy.
2 - Don’t Expect Opportunities - Create Them
The business of real estate is a lot like photography in that you have to have a great eye. In other words: you’ll never look at a property and see green arrows pointing at it telling you it’s a sure thing. You have to be able to see the potential. I was able to do that by buying housing and buildings close to hospitals, arenas, and anywhere else there was potential for future growth; then I waited.
Buying, flipping, and creating neighborhoods that are appealing creates places for people to live, play, and spend.
Unlike my family, I bought various sized residential and commercial properties in areas I imagined would expand. Instead of buying properties that were already popular, I helped carve out new neighborhoods for people -- people who would later to buy that same real estate from us -- but at a profit for our company.
3 - Disrupt Your Family Business Model
By the time my father, aunt and uncle were in their mid-60s, they were looking forward to passing me the reigns, and I was happy to run with it. As I mentioned earlier, my family weren’t big risk-takers, but I am. I knew I wanted to grow the business big-time. And in order for me to do that, I had to disrupt our current business model which was: buy in one area, only buy 100-unit buildings, and take on zero debt.
From the beginning, my vision was to diversify our business. I knew we couldn’t grow if we weren’t willing to buy elsewhere, buy different types of properties (like multifamily & fixer-uppers for instance). Buying properties in growing neighborhoods outright, renovating them, then using that money to flip the next property and leverage it ad infinitum, started a trajectory for a new business model that I still use to this day.
It was an exciting time as I moved outside the Bronx into Westchester, the Hamptons, and different areas all around Manhattan. That being said, disruption is often a loaded and overused buzzword. You don’t have to venture into new sectors to be disruptive. You just need to start thinking about how you can disrupt your local competition. Sometimes, you need to disrupt yourself.
4 - Scaling Growth Quickly By Scaling Slowly
My involvement in the family business began from the time I was 5-years old, tagging along with my grandfather as he made the rounds, meeting with the supers and tenants of his real estate properties. Even at that age, I was fascinated by what my grandfather did and the stories he’d tell me. I was inspired and those stories, as well as his work ethic; those were things I took with me to scale my business.
In high school, I would work for my father in the summers answering phones, meeting with tenants, and eventually joining investment meetings with my family. I began scaling the business by slowly scaling my knowledge of the business itself. In order for me to grow the family business into the billion dollar enterprise it is today, I learned it from the inside out.
If you ask most billionaires who’ve grown (and kept) their businesses, getting rich overnight doesn’t exist - at least in my opinion.
At the beginning, I said that it takes more than ambition and luck to build a family business into a billion dollar industry, and that is true. That is not to say that luck and ambition don’t help a great deal. I will always be thankful to my family for showing me the lay of the land and entrusting me with the legacy of the business. The best advice I can give anyone who is looking to create an empire from a small family business is to make it your own. You should think of a family business like a seed that needs to be cultivated in order to grow. Though your family built it, you have to grow it.