Three questions for the end of year review

Three questions for the end of year review

 

It’s that time of year again. It’s time to reflect on 2022 and then make new goals for 2023. What have you done to prepare for the coming year?

 

If you’re not sure what to do, I’ll tell you the strategy we use that I learned from Jocko Willink, author of “Extreme Ownership: How U.S. Navy Seals Lead and Win.” He called it an “After Action Review” in the book, and the Navy Seals do it after every mission. The format is pretty easy to follow and goes like this.

 

Ask three questions: What did you do? What went well? And what needs to improve?

 

Not only do we use these three questions to lead our end-of-year reviews for both our flip company and our rental company, but I also use this format when having end-of-year meetings with 1099-type employees like my lead contractor.

 

His name is Charles, and he is an awesome guy. Not only do I like him, but he is a hard worker who does amazing work. We had lunch yesterday to discuss 2022, and I brought a sheet with me that had these three questions on it. The first one was especially beneficial to him.

 

On the page, under “what did we do,” I listed all the properties we had completely rehabbed for resale and rental, and then gave him a rate of completion. We found out together that we were averaging a completed rehab every 5 weeks during 2022.

 

That is a really good rate, and it made both of us feel good to see on paper that we were being effective. Because let’s face it — it’s easy to be mired down in your work over the year and not really be able to see how far you have come. On the contrary, sometimes it’s hard to see how far backwards you have slide. By doing the year-end review, you can gain the perspective you need to move forward.

 

The “what went wells” were OK, but when we got to “how to improve,” I got some solid feedback from Charles that I believe will help us be even more effective in 2023. And what is awesome is that because of this feedback, we will be able to make some relativity small changes with things like communication habits, which will make a massive difference in the team’s effectiveness.

 

So, the end of year review works great on the individual level, but those three questions work on the company level, too.

 

On our flip company, for instance, we listed out all the houses we bought this year and which ones we sold. We looked at what our gross income goal was for 2022 and then what we actually brought in. We were excited to see that we did better than we had planned.

 

When we got to the “what went well” question, we looked at things like where our leads came from on houses purchased. This allowed us to evaluate our marketing strategy and also to see that there may be a change in what’s working best. We looked at our rehab cost per square foot and then evaluated it based off our four levels of rehab. Of course, that rate went up. But, without this information we would not be able to calculate solid offers on new acquisitions for 2023.

 

On the rental company, we looked at what our gross rent goal was for the year and compared it to our actual rents received to see how the company was doing overall. Once again, we exceeded our goal.

 

We looked at our vacancy rate which went from right at 3% last year to 4.2%. That’s well below industry standard, but we were able to look and see why we had an increase. You see, we had to go up on rents this year to offset our increasing costs. And we were afraid that change would make people move. As it turns out, no one moved because of the rent increase. Instead, every single move was due to a big life change like divorce.

 

When we asked how this rate could be improved, we started looking at our turnover rate (which we defined as time between an exiting tenant and a new tenant installed) and our turnover cost, and we brainstormed how to increase cashflow. This was exactly what we needed to get ready for our goal setting session.

 

Even though these three questions sound simple, they can guide you into some deep discussion that will give you the information you need to set goals for the coming year.

 

Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.

 

Add a Comment

Your email address will not be published. Required fields are marked *

Pin It on Pinterest