Lessons from It's a Wonderful Life This classic Christmas movie from decades ago is FULL of POWERFUL lessons that are directly applicable to real estate investors TODAY. Set in mythical Bedford Falls circa World War II, the story centers around the life of George Bailey (played by Jimmy Stewart). George has big dreams, but his devotion to his family and community keeps him trapped in tiny Bedford Falls...where he ends up running his family's community bank, The Bailey Building & Loan. George's nemesis is the cold-hearted mega-banker, Mr. Potter. Potter views George's Building & Loan as an irritating competitor and wants to wipe it out. George foolishly entrusts an important financial transaction to his incompetent Uncle Billy and the result is a disastrous loss of a whopping $8,000...a sizable chunk of change in the 1940's. Facing a run on his bank, regulatory scrutiny and financial ruin, George decides to kill himself so his life insurance proceeds can be used to solve the problem. But an angel intervenes and shows George how valuable his life has been in spite of the current setback. In the end, all the good will George had sown throughout his life came back when his friends all rallied to raise the money he needed to save the bank...and his reputation. If you've never seen it, you should watch it today...and ANY time you feel distraught about any financial setback. For now, here are just a few of the many lessons from It's a Wonderful Life... The purpose of business is to serve the community, not vice-versa. Potter was greedy, selfish, profiteering and opportunistic. Potter's operation certainly benefited the community, but it wasn't his reason for operating. He was willing to harm others if it was profitable. But profits shouldn't be the goal...they're the by-product of a sound business that is successfully serving the community. Only entrust important items to competent people. George's love of people and his trusting nature caused him to overlook the danger of trusting Uncle Billy with an important responsibility. Trust is great, but there's TWO parts. You must trust BOTH ethics and ability. A well-meaning incompetent person like Uncle Billy would never purposely do harm...and they'll feel TERRIBLE when they do. But that won't save the day. Just ask George. An unethical, but competent person might do the job well, but given the opportunity to take from you unfairly, they will...just like Potter did to George. Scarcity thinking is a symptom of greed. Potter saw the market as limited and he wanted it all and felt George was in his way. When George was desperate, Potter tried to hire George, but it wasn't an act of kindness. Potter knew if George joined him there would be no fight. Then he could dispose of George later. When George refused, Potter's true colors came out and he turned adversarial. Stay away from greedy people. Even when they appear to be helping, they'll stab you in the back at the first opportunity. Abundance thinking views the market as expandable. If you think about it, Bailey and Potter were both in the same business. They ostensibly had the same mission... to serve the financial needs of Bedford Falls. So they weren't really competitors. They were allies. If the community prospered with access to affordable financing, jobs would be created, more people would move there, and there would be more customers for both Potter and Bailey. Everyone wins. The community has more services at better pricing. Potter and Bailey both have growing businesses. But Potter didn't see it that way because he was greedy. And George's only problem with Potter was Potter's greed. So George refused the job offer even though he desperately needed the money. George knew without the Building & Loan to provide Bedford falls citizens a choice, Potter would use his monopoly to gouge the community. Once again George set aside his own self-interest for the sake of the community he served. You must take care of yourself. After the last comments, this may seem contradictory...but it's not. Just as Potter's dealings always favored Potter, George's dealing always short-changed George. It's noble, but unsustainable. Your responsibility is to run a profitable business. If you give everything away and go out of business, then you can't serve anyone. Good customers will understand this and won't ask you to work for free...and you shouldn't ask this of your suppliers either. Make sure your business relationships are equitable or they won't last. Good will is your MOST important asset. Stay conscious of this truth every day you're conducting business...with customers, employees, vendors, tenants...even regulators. Sometimes it FEELS really good to give someone a piece of your mind. And it can be very tempting to grab a quick profit or competitive edge by betraying someone's trust, or not honoring a commitment. But as George found out, at the end of the day...or in this case, at the end of the movie...the person who has friends has access to substantial resources. So, as we teach at our Secrets of Successful Syndication seminar, it's mission critical to focus on building a brand people like and trust. Because when you do, when you have either a problem (like George did) or an opportunity (like that great property you just don't have the funds to buy alone)...the size of your network (friends) and the strength of your brand (reputation) can get the job done. BONUS LESSON... Buy real assets. Think about the $8,000 that nearly ruined the Building & Loan. Or the super generous $20,000 a year salary Potter offered George Bailey. Or what all those little Bedford Falls houses cost when built and what they're worth today. Those properties didn't go UP in value. The value is in the utility, which hasn't changed. A 3 bedroom house in 1945 will still only sleep 3 people in 2014. BUT...the dollar went DOWN. So it takes a LOT more of them to buy the same value. Those little $5000 houses now cost $200,000. Don't use real estate to collect dollars. Use dollars to collect real estate. Call David Medendorp @city2shore 318 Houston Muskegon, Mi 49441 231-2063367
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