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How to write a business plan – Airbnb business model

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SUMMARY:

One important step for any new business owner is a business plan.  Find out how to create one for your Airbnb business. 

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I want to break down how to create a business plan for your Airbnb business so that you know how to get your Airbnb business off the ground. 

In my opinion, having started a number of different businesses, having a business plan is not necessary in most situations.  Most people starting a small business are not going to require a business plan unless you are planning on raising investor capital.  

Really, what you need more is action. That is not to say that you shouldn’t do any planning or forecasting, but we are talking about a formal business plan for entrepreneurship.  In most cases, it really is not going to be useful to you and will be an academic exercise. 

What you need to focus on is the practical and actionable things you can do to start getting clients and building your business.  I do recommend doing some planning, forecasting and goal setting.  I bundle those because really you just want to look at the opportunities in your market and then what some forecasts are going to be. 

In the case of an Airbnb management business, you want to break down exactly how many properties it will take for you to reach your income goal and then make sure you’re forecasting that out so you can be realistic.

How much you need to plan will depend on the business model that you choose.  If you choose a rental arbitrage model, you will need to set aside capital and forecast a lot better because you’re investing with your own money. You also need to budget for first and last month’s rent, security deposit, furniture, etc.  

If you’re starting a rental arbitrage business and want to grow quickly, you will likely need some outside capital.  So you also need to factor in any returns you may be paying.  

If you look at the other model, it is a lot easier to get started and requires barely any capital at all.  If you’re using that model, you do not need as much forecasting because 1) you will not be working with investors, and 2) you are not making a substantial investment.  

There is still one level of forecasting you need to do and that’s forecasting for your property owners.  They are going to want to know what kind of results you can get them and what kind of results they will get from their property.  They are going to expect some forecasts from you.  You will want to use a tool like the profitability projection tool that is linked above.  It’s a great tool for being able to analyze different properties and figure out exactly what the earning potential is going to be.  

The profit projection tool will break down exactly how much money you should be earning each month in management fees on a given property. You can reverse engineer your goals and figure out how many properties and what types of properties you’re gonna want to match in order to hit your goal as efficiently as possible. 

The other thing that I strongly recommend in any business is finding a mentor.  One of the hardest things about running your own business is that you are figuring out all of these different moving pieces.  As an entrepreneur, you’re managing every department, you’re managing marketing and sales, etc. 

It is really challenging to figure out those things from scratch.  That’s why many businesses fail.  Because entrepreneurs spread themselves too thin and you are not able to focus on the high leverage activities that will grow your business.  Also, you are bound to make many mistakes. Find someone that has succeeded and learn from them.  

Finally, you need to take action and build momentum. Then you will see your business grow quickly. So if you take those three steps, you will almost guarantee yourself results.  If you’re interested in starting an Airbnb business, check out the links to the training above. 

VIDEO TRANSCRIPT:

What's up guys? It's James here and in today's video, I want to talk to you about a question that comes up pretty often for people who are just starting a business. When you're starting a new business, you'll probably be familiar with a business plan, you probably will have heard of this in school, have you studied anything to do with business. And if you look online quickly for how to start a business, then that's kind of going to be one of the first steps a lot of your different resources that you've come across are going to tell you to take and so in this video, I really want to break down how to start a business plan and create a business plan for your Airbnb business.

I want to walk you through that step by step so that hopefully at the end of the video, you'll know all of the steps that you need to take to really start getting your Airbnb business off of the ground. So to get started and dive right into it, let's talk about the basics. You know, what are the first steps that you really do need to take is creating a business plan, really the appropriate first step if you're looking to start, you know, an Airbnb business or really any business business out there. And in my opinion, having started a number of different businesses, having a business plan is necessary in some situations, but not most.

And I say that because most people who are starting a small size business are not really going to require a business plan. Unless you're planning on raising investor capital, and you're planning on really investing heavily into the business. Really, what you need to do more than anything is just take action. Now, that's not to say that you shouldn't do any kind of planning or any kind of forecasting, but a formal business plan for entrepreneurship. If you're looking to start a business and you're looking to make some extra money, that really is pretty archaic.

It's not something that's actually going to be useful for you. It's a lot more academic than anything else. And so what you really want to focus on when you're starting is the practical, the actionable, really getting out there and taking action and taking steps to actually start getting clients and building your business. Now, before you do that, there is one step that I do do highly recommend, and that's to do some planning, some forecasting and some goal setting.

And so I kind of bundle those all into one because really what you want to look at is look at the opportunity in your market. And then look at what some forecasts are going to be and set goals for yourself of what you want to achieve with the business and be realistic about how you're going to go about achieving those goals. If your goal is to get to $20,000 a month in income, then it might not be realistic to expect that in the first couple months, depending on the business that you're starting up.

You want to really break down exactly how many properties in the case of an Airbnb management business, it's going to take to reach that goal and make sure that you're forecasting that out so you can be realistic. Now, it's going to vary how much planning and forecasting you really need to do based on the model that you choose for your business even within the domain of an Airbnb business.

For example, if you choose a rental arbitrage model, then you're going to have to set aside some capital and so you're gonna want to forecast a lot better because the You are going to be investing into this business with your hard earned money. And you want to make sure that that investment yields the greatest possible return. And so if you're going to be getting into rental arbitrage, you want to make sure that you do some budgeting and some forecasting for your first and last month's rent on the property, a security deposit your furniture, your decorations, all that stuff, and make sure that you don't have a failure to launch because you run out of money too early.

Now, with that being said, if you're starting rental arbitrage and you want to grow quickly, you're also likely going to look for some outside capital, some outside investors to come in and help you by investing into your business early on. So you're gonna have to factor in any returns, you might be paying up to them if you're not using your own money to finance the rental of these properties and the furnishing of them. Now, if you're looking at the other model, that's a lot easier to get started and requires a lot less capital really very much, very much, almost no capital at all.

Then you're looking at that Airbnb management model where you're actually collecting a percentage management fee on The properties that you manage, rather than renting them and then flipping them onto Airbnb. Now, if you're doing that it doesn't require as bulletproof of a business plan or quite as much forecasting, because you're not going to be working with investors, number one, and number two, you're not going to be making a substantial financial investment into getting your business off the ground.

So there's not quite as much forecasting you'd be done. However, there is still one really, really important level of forecasting you have to do. And that's forecasting for your property owners, the property owners that you're going to work with that you're going to proposition to have them allow you to manage their property, they're gonna want to know what kind of results you can get them, they're gonna want to know what kind of results they're gonna get from their property because they've purchased that property is an investment of theirs.

And so they're gonna want some forecasts from you, and they're gonna expect that so when you're first getting started, you're gonna want to use a tool like the profitably projection tool, which is linked for free down below. That's a tool that we built for our business to allow us to do some of these initial projections, we continue to use it ongoingly in the business, it's a really great tool for being able to analyze different properties and figure out exactly what the earning potential of that property is going to be.

Now, number one, this helps you, like I mentioned with the property owner, so you can forecast for them. But number two is it also helps you to like I mentioned earlier in the video, set realistic goals for what you're going to achieve and how you're going to achieve it. Because the profit projection tool will break down for you exactly how much money you should be earning each month in management fees on a given property.

You then can reverse engineer your goals and figure out how many properties and what types of properties you're gonna want to match in order to hit your goal as efficiently as possible. So that really is step number one, I don't recommend setting up a whole formal business plan. In my opinion, that's a lot more academic than practical. So if you're starting a larger business or you're dealing with venture capital, then a business plan can be useful for the average person looking to start their own small to medium sized business. Then a business plan just isn't really that necessary. And quite frankly, it's going to be a pretty big waste of time.

However, you do want to do some initial planning, goal setting and forecasting and the degree to which you do that. And the method that you go about doing that is going to largely depend on the business model and the amount of investment that's going to be needed. Now, from there, the next best thing I can recommend, no matter what business you're starting, whether you're starting Airbnb management, or any other business is to find a mentor.

One of the hardest things about running your own business is the fact that you're trying to figure out all these different moving pieces. You know, if you're an employee, you might be working in one single department. Now, when you're an entrepreneur, when you're running your own business, you're managing every department, you're managing marketing, you're managing sales, you're managing, recruiting, you're managing fulfillment, you're managing customer service, all those different areas of the business.

And so what makes it even more challenging than doing all those things is trying to figure out every single one of those things from scratch. Imagine trying to figure out marketing and sales and recruiting and human resources, and customer service all at the same time for in brand new business, it's virtually impossible. And that's a large part of the reason why so many businesses fail. Because when you're doing all that you're spread really thin, you're not able to focus on the high leverage activities that are really going to grow your business.

And you're liable to make a lot of mistakes as most entrepreneurs do, myself included when you're getting started without a formally laid out set of systems. So myself personally, what I highly recommend is that whatever business you're starting, you go and look for someone who's already achieved those results, who you can learn from. Now, it's not to say that you're necessarily just going to copy and paste their business, it's not going to be that easy, you are going to have to put work in and you're still going to want to make that business your own.

However, what they've likely done is figured out a lot of the tips and tricks for marketing and for sales and for customer service. So you don't have to go and reinvent the wheel. And so what you can then do is take their systems that are already built Start working on those systems, applying those systems. And then as your business grows, you can enhance those systems and make them more personalized to your business and really make them work for you. Now, from there, the next thing you're gonna want to do is really just start taking action.

You don't want to spend a whole ton of time doing your goal setting your forecasting, it is important to lay that foundation. But what's more important than anything, when you're first getting start is getting some early momentum. A lot of people get caught up when they're starting their business in this feedback loop where they're constantly going and putting in energy, and then they're stopping and starting, and they're not really building up any momentum. And what that does mentally is it just deters them from continuing on.

That's why a lot of business owners quit. A lot of people never get results in their business because they just stopped short of the goal. That's why I highly recommend again, working with a mentor so you can focus on the things that are going to get your results and get results really quickly. Because that's one of the magical things when you're starting your own business is that first client that first big win Big tangible success that you get, that's really going to be a big source of motivation. And it's going to teach you more than anything because you're going to learn exactly what works and what has been working as well.

And you'll be able to start replicating those results. Once you do that the sky really is the limit. You know, you probably seen these hockey stick growth curves that so many businesses go through. And it's no surprise because a lot of the challenge in running a business is really just getting off the ground. That's the hardest part by far for most businesses, is just getting the business off the ground to a point where you actually have things figured out once you figured out the systems at work, replicating those results and dialing them up.

And really scaling is often not as challenging as figuring out the system in the first place. So really, what I can boil this down to to kind of summarize what we've gone through in the video here so far is step number one when you're starting your business is not necessarily to put together a formal business plan, but more so just do the goal setting the forecast and the projections that you ultimately need to From there, the next step I'd recommend is to get yourself a mentor, find someone who has the systems already built for your business that you can then plug and play and start implementing on those and taking action.

Not step number three is to start really taking action on the things that are going to move the needle forward, and actually really grow your business substantially and get you some of those early wins to give you the motivation, and the feedback to really keep going and an effective way. From there. stemmer four is really just scaling it up. Now I know this is very dumbed down, there's going to be a lot of other things you'll figure out. But I'm confident that you take those three steps. If you just commit to those first three steps, then you'll be able to figure out everything else as you go.

With the absence of any one of those three steps if you don't have goals, or if you don't have a mentor, or if you don't take action, you're not going to get anywhere. If you take those three steps. There are going to be other challenges. It's not going to be just easy peasy, breezy, beautiful. If it was everyone in the world would do it. But if you do take those three steps, you will almost guarantee yourself results. And so when you get those results, you'll be able to replicate them and really scale a business.

I hope this video has been really helpful for you if you're looking to start a business if you're interested, we've got some free trainings down below the link to a training one of them on how to start and scale a property management business managing other people's properties on Airbnb using that model that I mentioned where you're managing for a percentage management fee. So you don't have to invest a whole bunch of your own money into buying, renting or furnishing any properties whatsoever.

So if you want to get your hands on that training, like I said, the link down in the description below, it's completely free, so you can register for that training. And if you got value from this video, then I highly highly recommend and I would absolutely love it it means the world to me. If you click the little like button down below, clicking that like button does a tremendous amount to really just help me out in working with YouTube's algorithm helping to get these videos out to more people. So it means a lot to me if you did get value from this video.

If you enjoyed it, just click that little like button down below and if you want more content like this, we post two new videos every single week. So now as we post a bonus third video in a week, and you can get access to all of those and stay up to date with the channel by just clicking that SUBSCRIBE button down below as well and subscribing to the channel so that you'll get notified when we post new content. Thanks so much for sticking around with me. I hope you enjoy this video and I'll see you in the next one.

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