Luck As a Business Model

No braking, a fast trip into business failure


After a long record of achievements in his regional sales roles, managing 10’s of sales team leaders in the construction supplies industry, our story’s entrepreneur started his first business, a real estate company offering properties for the above-middle earning population with contemporary architecture and ultimate space utilization designs, the first project was built fast on the land of one of the partners who inherited it from his late father with one of his friends' family-owned contracting company.



Following that astonishing success with 60% of properties were sold in the design stage, and in a celebration party held in a 5-star hotel with government officials, the CEO announced opening the window for buying shares in the company for invitees closed community who were handpicked and familiar with how fast properties were sold, the company could raise another 20 Millions USD of investments in one night, and that was the beginning, on the company website, the CEO announces several projects to drag real estate brokers in a fight for an exclusive deal.



After 3 years, “I want to sell my shares”, the board member and a shareholder Ms. Y announces in a board meeting her intentions to sell her equity as she sees that the company has a crucial problem in the land purchasing process, as most are built on lands that were inherited or owned by someone of the community which happened to be of the best locations in the city! but this is not the case for the upcoming projects.


With her limited knowledge of the target market's preferences being a financial expert, Ms. Y could sense a threat about to hit company’s investments with unplanned expansion, the location, which plays a major role for the target market population in property buying is being less important to be able to make projects feasible.


The company continues its projects with cameras flashing our entrepreneur’s face in front of real estate magazines photographers, but with hard to accomplish sales target, the entrepreneur started to feel panicked, as the stakes have become higher than ever with his personal image under the microscope.


Six months later, the company announces bankruptcy caused by several issues -which is the case almost always-, unsold properties worth 20 Million USD because of bad location compared to a market challenger company offering the same but in a better location with 10% higher prices but with extra facilities, company’s reputation strike after the pull of two major influential partners.


Luck, started with that inherited land, followed by the flashy fundraising event, through exclusive broker dealership, all ended because the company’s business model was built on luck, so, no matter how good we dress, what jewelry we wear, which pen we sign with, business models and markets have a strong relationship that overrides fake momentum, if we want to succeed, let’s start with a bullet-proof business model, that interests our competitors, not our bank loans sales manager!



By: Mohammad Dabbas

Managing Partner

Cenovity.com



#smallbusiness

#investment

#VC

#fund

#strategy

#realestate


17 views0 comments

Recent Posts

See All