STRA Episode 11: How to Scale From 1 Unit to as Many as You Want Without Working Harder

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Episode11: How to Scale From 1 Unit to as Many as You Want Without Working Harder

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[00:00:05] Hey guys. Welcome back to the podcast. We are John n Wendy Williams from the Short Term Rental Authority, Your authority on all things short term rental related to help make you the best operator ever. And today's podcast we have massive, massive value for for you. Today we are going to be talking about how to get not just one short term rental, but.

[00:00:36] As many short term rentals as you want without creating more work for yourself, without working harder. Without that, the, That's the key, right? Without working harder. I like it. Yeah. Yes, I like it. Cause that tends to be, what happens is you get one and then you get two and it's twice as much work and you get three and it's twice as much.

[00:00:55] Worked is twice a word. I think it is. Once, twice. I don't know Anyway. But the idea is that you don't want that to be linear. Cause at some point you get burnout on it, and then you just can't scale anymore. Oh, the burnout is real. Or more often what happens is you're like, I'm done with this. Right. I don't wanna do this anymore.

[00:01:14] Yeah. So that's what happens. Sell it all good. Yeah. And you can sell it to us. So we're, we are going to cover four main components of this concept. First of all, we're gonna talk about the foundation that you're going to need because we liken it to building a house, sort of as the analogy. John likes analogies.

[00:01:36] So we're gonna be talking about the foundations of it, of your business first, and then we're going to be talking about marketing. . And then we're going to be talking about acquisitions, how to find it. And then lastly, we will be talking about cash flow management, how to fund it. So let's start at the beginning with the [00:02:00] foundations of it.

[00:02:01] Now the found, the foundations are. The, the basics, right? If you're, if you are thinking about building a house, you have to build a good foundation on which to build the walls and the roof, right? You don't build the roof first. You have to build the concrete slab first, right? So let's talk about what that means.

[00:02:26] And there's a couple of components about with the foundation that, that we thought were most important and they are automation. Documentation team members the tools that you're going to need, and bookkeeping and accounting, very, very important. So let's talk about automation first. . Yeah, so automation is probably one of the first things you're gonna do in your business.

[00:02:55] It's the, it's the, it's the one thing that you can do right up front. And a lot of these things we're talking about are truly, they're all foundation in a sense, meaning the. When you build a skyscraper, you need a deeper foundation. So the, the more you intend on having the more solid these things need to be.

[00:03:14] But yeah, automation is one of the very first things you can do, and it's one of the first things that we did. It's you can automate a good portion of your messages. You can automate a good portion of your pricing as far as that goes. Dynamic pricing. You can even automate your cleaners to a extent, meaning they're not robots, but at least they get scheduled automatically and there's, there's a tool for that.

[00:03:37] And all those kind of things. So that's, you know, when you're thinking about the operations part of this short-term rental business, that's where all the activity is. And as much of that as you can automate. Especially in the beginning, it's less that you have to do for one and two, it then offloads those tasks that truly need to be done by a human to the human [00:04:00] right.

[00:04:00] So automation is a big piece of a big, big piece of it. Right. And I like the, the automation aspect of the things that are repetitive, right? Like mm-hmm. , like the, there are, there's seven messages that go out to the guest. And that's not including if they ask you a question, Right? Right. That's just a standard reservation's.

[00:04:22] Just a standard reservation. Right. So automating those, those repetitive tasks and, and we automate anything that can be automated, we like to automate because it frees us up for doing things that, that, you know, bring in money. Right, Right. And while computers do, can make mistakes, they're not as error prone as humans.

[00:04:45] so they don't forget to send the message. Right. Or they don't Right. See the message come in and then they're sleeping. Right. You know, the, the computer's always awake. Yep. So even in the middle of the night when it's one in the morning and you, you don't have 24 7 coverage yet and you're asleep.

[00:05:02] you're still, your customer's still getting a response. Right? Right. And that's super important. Sure. Yeah. When they're in the checkout line, especially on the, the messaging side of it, that's a lot of the business, a lot of it. So the, the next a aspect is documentation. And here we're mostly talking about SOPs.

[00:05:22] And SOPs stands for standard operating Procedures. It's how you do the things in your business and when you're first getting started. And I wish that somebody had told us this Document, everything, whatever you are doing, write it down and we'll talk about some, some tools that you can use when you are documenting those, those systems and those processes.

[00:05:55] But, It doesn't matter. Write it [00:06:00] down however you are doing it. Write it down because it's going to be fluid anyway. Things are always changing. I feel like we are always. Updating our, our SOPs because we learn different things in our business. Mm-hmm. and we have to adapt and, and change in, in certain ways, but it's really great to have.

[00:06:27] Something to start with. Right. Especially if you are going to be turning it over to somebody else to do eventually, then they have to know how to do what you're asking them to do. Yeah, and I wanna say that's the easiest part to skip because it doesn't feel like your customer's asking for it. So it's not like messaging you can't skip, you have to answer the customer.

[00:06:54] But documentation you can kind of let slide. and you'll say, Well, I'll do it later. I'll document it later. So, and later never comes. Yeah. So, so quick tip, you were going give a tool and tip, Quick tip. When you're doing something, get yourself a screen recorder. That's a really great tip. There are free ones.

[00:07:14] There's Loo is a popular one. Vimeo has one. Beyo has one that there's, there's, I think we've mentioned this before, but screen records yourself doing the things, even if it's something. And make it easy for you to do so. So that all you have to do really is click a button and then go do what you're gonna do, and then click stop and you've got your video.

[00:07:32] At least it's videoed, and now you can take that later and have it written out. Mm-hmm. , which it should be at some point, very detailed. Extremely detailed so the six year old can do it. But at least now you started the process of documentation. Yeah. So that's one of those things you can do right in the beginning too.

[00:07:50] Mm-hmm. , when you're building that first listing on Airbnb, document, record it so that you can then later pass that along to someone else and then over time you'll [00:08:00] refine, Okay, this is really how I want that done. Right. Right. You alluded to that as well. Right. But that those, that documentation and those SOPs become the procedures.

[00:08:10] That then lead to the next thing in the foundation, which is turning it over to somebody else. Yeah. Your team members. Yes. Right. So, So it's not necessarily that you are going to be documenting all these things. You will in the beginning, but after a while. You're going to be bringing on some, some people to help you, and that's one thing that they can do.

[00:08:36] If you record how you want things done, then all you have to do is give that video to the, your, your team member that you have, that you have hired and say, I want you to write an so P for this document, this procedure, so that. Anybody can, can follow that procedure. So having, having that first step done makes it so much easier when you have to give it away, right?

[00:09:11] Yeah. And we, and if you get in the habit of doing that, it becomes a habit, right? It just happens. And eventually you wanna make that the culture of your company so that you're not the only person producing these video. . So a lot of times, you know, we have this thing in our business where if something comes up that's gonna come up again, which most things do, assuming it's not a one off thing, then whoever does that job, it's their responsibility to then document it.

[00:09:39] Right? And so these SSPs grow over time, and in the beginning you may dece it and set the example, but later on you're not actually even the one creating the videos. Right? Right. You're the. has just set the, You have an SOP for how to create sop? Yes. Actually, we have an SOP on how to create an [00:10:00] sop. Yes, yes.

[00:10:01] That detailed. But that is, that is in essence what your business is, is how you do your business, and that's the procedures. All has to be documented somewhere and. So we talked about team members. So let's talk about some, some things that, some tools that you're gonna need to do your job. So for example, you need somewhere to collect all of those SOPs, some.

[00:10:31] some, some program to, to compile all those SOPs into. So you just have one place that your SOPs live. Yeah. And you want them electronic, You want them in the cloud somewhere? They, Yes. They don't need to be handwritten on your desk. Yeah. We, Oh, it's better than not having it. But a lot of the team members that we talk about tend to be virtual.

[00:10:53] Yes. Right, Right. And hardly anybody, Well, we don't have an office, so nobody comes into the office. Right. . So you, you want these virtual, We, we started out using Trello. It's a, it's a place to start. Notion is another one of those notion. Mm-hmm. notion.io. I like a lot. You like Asana? Asana is for project management.

[00:11:12] It's not for documentation. Gotcha. So you wouldn't use that for your documentation. So that's one thing is use the right tool for the right thing. Mm. . Right. So Asana would be an example of a tool you would use to schedule tasks for your team members to do. Mm-hmm. . So one of those tasks might be go create this, so P, but then the SOP lives in.

[00:11:32] You know, a Google Drive or something, or you know, somewhere online, Trello or someplace like that. Yeah. So, so having a place to to house your SOPs is, is a great place to start. Got you have to start somewhere, right? Yeah. And then you need a way to communicate right. With it your, with your team members.

[00:11:50] Right? So, So you want to get part of that, not working as hard as getting the stuff off your phone. Yeah. Maybe that is huge. So text messaging, you don't want to, you don't want to be [00:12:00] text messaging cleaners and have that be the procedure. You want a centralized communication that everyone has access to.

[00:12:06] Slack is a really good tool for that. Yep. So central communications, and then occasionally you need to make phone calls. Still get that off your phone. Use a, a voice of IP type service. We use Dialpad. There are others. RingCentral, there's all sorts of solutions for. . But it, it basically, now you've got a business that has a phone number and an internal phone system, and you have your internal communication system with Slack and you have your place to put your SOPs with Trello and your documentation or maybe Notion or wherever, all that, all those things are.

[00:12:38] Your employee handbook, all all of those kind of things, these are tools that your team needs to do their job. Yep. Right. All right. And then the other thing about of in the foundation section is, and this is just basic, laying the foundation so that you can, you know, build onto it later, is somebody has to do the books.

[00:13:03] And hopefully, even if you know how to do the books, getting that off your plate is so critical. I cannot tell you what a great feeling it is to not have to do the books anymore. Yeah. And it's not only not having to do them, but it's, Do you have good numbers? because you're, you're, you're counting in your bookkeeping.

[00:13:29] When I was doing it, we did not have good numbers. Yeah. Because you'd wait like three months and then catch it up. Right. And in this business you need, It's terrible. Our bookkeeper now, it's reconciled weekly and monthly. All right. So each week we know where we stand. You know, what expenses are out there, What's coming in income wise, You know, are we meeting our numbers?

[00:13:49] Those types of things, because it's from that knowledge that then you can make business decisions. Mm-hmm. , right? You need somebody basically that turns data. , which is [00:14:00] what the books are, data into information, which are reports that you can run and say, What's my profit and loss? What's, you know, what, what do we have as far as inventory goes, You know, what, what's on our balance sheet?

[00:14:13] It's, it's those types of things. And that's foundational for any business really. Yeah. But accounting and bookkeeping in this business is not simple. it is not. And so you need somebody that understands it's complex how to turn that data into information. Just a quick example. You may get a $3,000 payout from Airbnb that hits your bank account, but in that $3,000 or four different reservations, four different cleaning fees, whatever other numerous fees are in.

[00:14:47] Right. And, and somebody has to break that all out and categorize it so that you know where the money went and where it's, where it's coming to. Yeah. Right. So it's it's it's work. It's work It, Sure. I wanna say the bookkeeper was our first hire. Yeah. I wanna say that's, that's the first person one of the, that we first people we brought on.

[00:15:07] That we brought on, Yeah. Yeah. So for sure, Oh boy. It is just so crucial so that you can make those, those really good businesses business decisions. And I cannot, I can't even, It, it makes me want have heart palpitations. Just thinking about having to do those books again. Yeah. Right. And it's just not Yeah, me too.

[00:15:29] You were horrible at it. Not I was horrible. I mean, no offense, but No, it's not like I was doing it. I can't complain . Right. But yeah, that's true. You can't complain. You weren't doing it. So the the next thing, now that you have a really great foundation, you've got all, all those things taken care of, now we can start building.

[00:15:49] The, the walls, so to speak, right? If you were using the building the house analogy, now we can start building the walls and, and [00:16:00] one wall that's gonna be important is going to be how are you going to be doing your marketing? What? OTAs are you going to be using? And OTA stands for online travel agencies and we use OTAs like Airbnb, vrbo.

[00:16:18] booking.com, booking.com. There, there's many out there now that you know what they are. 40 plus, right? So, yeah, so, and more than that actually. And, and you're, you may not start off having your own direct booking website, but that's definitely a goal right? Is to, is to get those, get those direct bookings, cuz.

[00:16:42] Very profitable, but anything else you wanna say about marketing? Other than the, the, the platforms are doing the marketing for you in a, in a, in a big sense. So that is a, you know, that's why you tend to see people lean on them early on, especially because that's a whole thing, like getting yourself in front of customers, running ads.

[00:17:03] PE do people know you exist even? And so being there is what, what they're actually doing for you. Now, they're taking a piece of it, a percentage to do it. So you gotta consider that. But it's even on the platforms, there are ways to market. You know, it's, it's how, what pitchers do you have? It's what title is in there?

[00:17:23] What does your description look like? Mm-hmm. , right? Yeah. So even when you have a listing on an ota, Yes, they are advertising you in a pool, but how do you stand out of that pool? And so now that you've gotten this other stuff out of the way, you've got your documentation and your automation and your team members and your bookkeepings being done and all those kind of things, now you can start focusing on things like marketing.

[00:17:46] And then eventually when you have repeat guests, now we can take them direct. Yep. And save them money and make more money in our. And start building up that. So it is kind of, see how it's kind of freeing you to actually do the things Oh, working on your [00:18:00] business. Yes. Not in your business. Yes, yes. Right.

[00:18:04] So the next thing is acquisitions. And this is. How to find business, right? Cause we said one is how many as you want, right? Right, right. So how do, how you gonna get the next one? How you gonna get the next one? Right? So now you can start focusing on, okay, well I've got this one. How did I find this one?

[00:18:26] And you've documented how you found it. Now you can go out and maybe refine that process a little bit. Now, now we can start talking about all sorts of acquisition strategies, right? Are you gonna be doing the rental arbitrage model? Are you going to be purchasing the property? Those kinds of things.

[00:18:50] Yeah. And how are you gonna, you know, Fund it is part of it. Well, that's the next thing because that's what you gotta start thinking about is, okay, if I'm a hundred sounds great, but what, what are my capital requirements for that? And like you, like you said, part of that comes into strategy. It's much lower barrier entry for your rental arbitrage if you're gonna be buying it.

[00:19:10] Now you've got the real estate component as well. And so you start, you know, kind of planning out, okay, what is our strategy? How many per month? What does that look. Is, is it the business is gonna be self-funding this, because after a while it does, it becomes kind of a snowball mm-hmm. to where, you know, you get 10, 12 of these, all of a sudden it's, you start picking them up quicker because the, the cash flow from the business is actually generating that.

[00:19:35] Those, or it could be generating your down payments is too as well, right? Yes, for sure. Yeah. So that, that's, but it's, it's something you wanna start thinking about and have an active pipeline of. Acquisitions not only customer side, because if you're doing a good job in the previous step in marketing, all of a sudden you're gonna have this inventory problem where there's way more demand for your product than you have.

[00:19:57] And so the next step is let's acquire [00:20:00] more of them. Yes. Right? And so that, that's what we're talking about in, in the acquisitions process. Right? And, and then in the, in the cash flow management part is how do you fund it? How are you going to go from one to the, how are you going to get the next one?

[00:20:18] Right? So now that you know how much it costs you to. To, to get that one. Now you have a baseline almost of, of what it's gonna cost you to get the next one. And then, then the next one. And the next one. And we use a a cash flow management called Profit First. Mm-hmm. , It's based on a book by Michael Michael Witz called Prophet First.

[00:20:43] I think it's Malowitz Miit. But even he says, nobody can pronounce my name, so I believe his website, if you go to Michael Motorbike, it actually like motorbike. That's right. He'll actually go to his right website. Yeah, right, right. So whatever his last name is, it's a really great book, but it's called Profit First and it's a.

[00:21:00] It's kind of like the, the envelope system for your business. So every dollar has a purpose and you, and you, you almost spend it on paper first, right? So it's, it's, okay, well this much money is coming in though, now I can allocate it to all these different things. And we have different, different. Accounts that we send that money to, right?

[00:21:29] In certain times of the month. But we could do a whole podcast on that . And one of those is acquisitions. But that's what happens, right? So you've built the foundation again, right? You've got your team, you've got the, the machine. You've started your marketing, now you've got acquisitions coming in, you, you're generating more properties.

[00:21:48] Inevitably, now you have more cash. And managing that cash flow is what you're talking about. Yeah. And that's unique. That's a big piece in and of itself, just to make sure that well during high season when you're [00:22:00] your hand over fist in it, that when you get the low season, you have some to get through the low season.

[00:22:05] Right. , Right? And then you, you need to divide that up and say, Okay, what part of that is going to pay, you know, your owner? What part of that is going to, for acquisitions perhaps, what part of that is going to you know, just operations in general, and then what part of that is maybe in reserve? And then we gotta set aside some for taxes.

[00:22:23] There's always taxes. Always taxes. Although in the beginning, kind of void that. Another, another podcast episode. But it's that that cash flow management then becomes something that really requires your attention. Right? And it's a good thing that you're not stuck messaging guests. I, I was just about to say that.

[00:22:41] Doing your own bookkeeping and right. Worried about marketing and all these other things because now cashflow management becomes the thing that can get overlooked if you haven't set those other things in place, right? Because, and it's a huge piece. Now you're working on your business, not in your business, and now that you're not doing all those foundational things, now you have time and your time is freed up to, to work on those.

[00:23:10] important things of getting more units, right? Right. So, well, we hope that you have found some value in this. Now, if you want to know exactly how to do all of these things, we can help you. And here's what you do. You're gonna text S T R A, that's S t r A to this phone number nine, eight, zero. 8, 8, 8, 8, 5, 4, 1.

[00:23:45] Again, text, s t r a to 9 8 0 8 8 8 8 5 4 1 and we can, What we're gonna do is we're going to send you an [00:24:00] E. It's the three things that you need to know when you're first getting started in short term rentals, but it'll get you in the system and we can we can help you out and we can teach you how to do all of these things and even more to help make you the best operator ever.

[00:24:21] Onto the next, onto the next.

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