Mr. Collier,

Here is a question I’ve been pondering, would you mind answering it? Thank you so much for your time!

Have you ever written a business plan? What are your thoughts on them? Are they needed?

In my life, I tend to over prepare (Finance degree, MBA, CPA, Lawyer, RE Broker, Builder’s License, Harvard OPM Class of 25, YPO, voracious reader) at one level because I tend to be a bit of a gunslinger at another level i.e. I often respond to “targets of opportunity”, moving fast to take advantage of an opening in the market. I tend to be an obsessive thinker, my mind endlessly going down all the branches of various decision trees much like a chess player trying to think as many moves ahead as possible. I am also very risk adverse and I think about the downside, traps and pitfalls of every situation and how I can be prepared to deal with them. Indeed, in my chess playing days, I would always turn the board around in my mind and try to think of how I would attack my position or defend against my planned moves. When I worked as an auditor I would look for the weakness in any system, ask myself how I would commit fraud given the various checks and balances and then go look and see if anyone had had the same idea!

Notwithstanding all the above, I’ve never had a formal, written business plan. Well, once, I did call in that rarity, a good consultant and spend a few days with my senior team looking out into the murky future. It was an interesting exercise, a good bonding experience but I can’t say I ever paid much attention to it.

I don’t know that I would call it a business plan per se but I do have certain principles:

Stay Liquid: Always have a very strong balance sheet and plenty of liquidity.

– Avoid Interest Rate Risk: Lock in long term fixed rate financing.

Never Sell: Unusual in an industry that generally has 5 to 7, we tend to hold our real estate investments in perpetuity. I never like churning the portfolio: not good for your organization, Uncle Sam wants a 25% cut and then you have to find a new investment that makes 25% more just to break even!

Focus on Equity, not Fees.

Keep Control: We currently have partners (mainly institutions) in about 20% of our deals, 80% we are sole owners. I want to stay at or below that partner percentage, meaning we control our destiny to a much greater extent.

– Manage What You Own: We believe our management adds equity value. The only time we’ve managed 3rd party is when someone has knocked on our door and asked to do so; we do not seek it out and we certainly do not do it as a loss leader to get other business as some do.

– Art of the Long View/Grow Prosperous Slowly: I think in terms of decades, quite content to let the other guys eat the marshmallow, chase the quick buck. I’m harvesting rich crops from seeds I planted a long time ago.

– Stay Close to Home: Or at least have a very good reason to go far afield. Distance creates risk (of course, there is a lot to be said for diversification!). I like having roots; in the last half century, I’ve lived within a mile of the same location.

Short answer:

I’m ALWAYS planning and thinking forward but no, I do not write out a formal business plan. This works for me because I’m self-funded (don’t have external investors I have to answer to), I’m horribly over prepared/educated, incredibly driven, and a back of the envelope guy at heart. I do, however, heartily recommend the discipline of a written business plan to most.

Closing Quotes:

“Life is what happens to us while we are making other plans.” – Allen Saunders

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Abraham Lincoln

“The best laid schemes o’ mice an’ men gang aft agley.” – Robert Burns

As always, I share what I most want/need to learn. – Nathan S. Collier