In seven years of being in business, it feels like we’ve gathered 20 years of experience. That’s partly due to the ups, downs, complications, and challenges that everyone faces in our industry, and partly because we’ve worked so hard building and scaling multiple businesses.
Fast forward seven years from when we started, and we now have a group of five property-related companies, each one playing a vital role in helping us grow our portfolio through our development business, XP Property.
This is how we created an ecosystem of businesses that act as our suppliers and customers, and how you can use this same strategy to have more control over your investments.
Seven years ago, myself (Ben Richards) and my business partner, Jack Jiggens, were both mentored by the same person, and both our evening hobbies consisted of networking events.
Since we were both trying to achieve the same thing in the same area, our mutual mentor recommended that we meet for a coffee. It was a good recommendation because it sparked a business partnership that is still strong seven years later!
Before we met, Jack was completing his own flips, putting in sweat equity as a builder and using a dusty car bonnet as a deal calculator (I’m not joking). I was designing and delivering my own new-build, two-bed property alongside my full-time job as a Technical Manager for Berkeley Group.
Jack and I work well together because we both have different skill sets that complement each other. Jack is much better at sales and negotiating, while I’m better at design, delivery, and project management.
The other reason we work well together is that we didn’t set out to be friends. Most business partnerships are formed by two people who have been friends for most of their lives, so they assume that means they’ll work well together in business.
Our sole goal was to build a commercial enterprise. Friendship wasn’t the priority, results were. Thankfully, over the past seven years, a solid friendship has been built, but our focus has always been on our goals.
With our history out of the way, let’s dive into the main topic: building your business ecosystem.
A business ecosystem is when you own businesses that are your suppliers. For example, if you owned a construction company that you used on your own refurbishments. In essence, it means you become your own customer, paying yourself rather than someone else.
We have five businesses that sit within our group: XP Surveys, Aura Architecture & Interiors, XP Property, Central Suites, and Oparo Social.
To give you an idea of where each business is at:
XP Property is delivering £40m+ in development sites, producing over 65 award-winning flats and houses.
XP Surveys is providing a fast, accurate, and reliable service for over 20 clients per month, and growing.
Central Suites is an award-winning co-living portfolio with over 120 units.
Oparo Social has over 140 social housing studios built from repurposing dwellings.
When we take on a development project, the process might look something like this: XP Property finds a site and passes it to XP Surveys, who will draw up the maps and deal with the front end.
The project is then passed to Aura Architecture, who act as our architects on the deal and design the site. The project is built and delivered by XP Property, and any units we retain are passed to Central Suites—our property management business—or to Oparo Social, a business that deals directly with social housing providers.
We could write an entire article on this subject alone, so instead, we’ll give you a brief overview of the main benefits:
Increased control over the speed and efficiency of a service.
When you pay a supplier, you pay one of your own businesses.
Better control over quality.
Control over the price you pay for products or services.
Ensuring the best interests of your company are always the sole focus.
For example, on the last point, if you owned a letting agency, you could ensure they push for the best room rates for your houses in multiple occupations (HMOs).
The problem with developments is that the income you receive is lumpy. You’re receiving big pots of cash at the end of a development, but up until completion, cash flow is tight. This desire for consistent cash flow is what inspired me to start Aura Architecture. XP Surveys was built out of sheer frustration at the service (or lack of it) measured survey companies were giving us.
The point is, every business has a purpose. We don’t start businesses just because we like the idea of them. Each one must fit into the ecosystem in its own way.
As entrepreneurs, we have a hundred ideas a day. The trick is to pick the ones that will bring you closer to your goals, either by reducing costs or giving you more control over your portfolio.
Our golden rule is that we only set up a new business when we have a team to manage our existing one. Realistically, you want to give it two years from the launch of one business before you open another.
Finally, think about how much time you’ll need to run your new business, double it, and if you can spare that time, then go for it. It’s better to do one or two things with excellence (or run one business well) than to do ten things averagely.
How do you pick between a shiny penny and a good idea? There are some indicators that will tell you whether setting up a business is a benefit over a distraction.
For example, in Aura Architecture, we were paying so much money to measured surveying companies—for a bad service, no less—that it was the equivalent of someone’s wage.
We figured that we might as well hire someone for the same cost, and at least that way, we could control the process. We had so much work coming through Aura that we were instantly able to pass ten measured surveys a month to the new business. Even if we had no new clients, we could sustain ourselves.
If you’re spending a lot of money on one product or service, or increased control of that product/service would improve your business, then that’s a positive indicator.
Any business you start must be one that you’re passionate about. You can have the best work ethic and all the knowledge under the sun, but if you’re not interested in what you do, you’re going to hit a roadblock.
Passion kicks in when times get hard. If you don’t have passion, then you’ll crumble at the first hurdle.
Finally, don’t start a business without doing a low-cost analysis of the market. You don’t want to spend thousands of pounds launching a business just to discover there’s no demand for it.
Before starting a business, you need a clear growth plan. For example, XP Surveys made a profit in year one, but in years two and three, we lost money.
Without a plan, that would have been disheartening. But because we knew we wanted to grow, we expected this to happen.
As you scale, costs rise. You must pay for more staff, newer systems, and sometimes, bigger office space. They call this phase ‘going through Death Valley’.
Create a plan and account for growth, then things like this won’t come as a nasty shock!
One of our main pieces of advice is from James Sinclair: E+M=S. That stands for Entrepreneurship plus Management equals Success!
If you want to grow, then the only way to do that is by having the right people in the right places. Build a team that can manage your property business so you can focus on growing it.
You can be a limitation or an asset to your business. If you can find someone better at a task than you, like sales, then step out of the way and let them take the reins.
Finally, be resilient. To be in business or property, you need a resilient mindset. This is a difficult industry, and problems get thrown at you every day.
It’s like the analogy of the swan: you need to remain smooth and composed on the surface, but underneath, your legs will be paddling like crazy.
If you’d like to learn more about what we do, then follow us on the social media channels below, or tune into our podcast, Property XPerts.
Instagram: @xpproperty
Facebook: XP Property
Podcast: Property XPerts
