Kaizen. According to dictionary.com, there are two definitions of this word:
- A business philosophy or system that is based on making positive changes on a regular basis, as to improve productivity.
- An approach to one’s personal or social life that focuses on continuous improvement.
Kaizen originated in Japan and the word translates to mean change (kai) for the good (zen).
Kaizen is based on the philosophical belief that everything can be improved. Kaizen was first implemented in several Japanese businesses after the 2nd World War. By improving standardized activities and processes, kaizen intends to eliminate waste.
Hi all, Liz is back this week! Happy New Year! I was first introduced to the concept of “Kaizen” from one of my favorite teachers, Anthony Robbins. I’ve honestly forgetten the book or program where I heard him talk about this concept; however, I remember him talking about the importance of “continuous improvement.” You can’t stay stagnant — something is either growing or dying. It can’t remain in the middle!
This idea of “kaizen” and continuous improvement is probably one of the most important concepts I apply to my life, both professionally and personally. Yes, it can be applied to manufacturing companies to ensure processes are running as efficiently as possible. However, I love the idea of “kaizen” to help me in my own life. I have spent a lot of time setting my intentions for 2015, and one important question I continue to ask myself is: “In the critical areas of our business, how can we improve?”
In other words how can we ensure “good change” happens in our business in 2015? I thought I would share how we answered this question in four critical areas of our business. I hope this inspires you to do the same!
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4 Areas of Your Business to Improve in 2015
1. Improvement of Financials
Like most investors and business owners, improving the financial health of any asset or business is critical for success. Managing your finances is probably the single most important task of a real estate investor. This can “make” or “break” you as an investor. I love this quote about measurement.
“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” — H. James Harrington
So what does this look like for us? Well, we have always kept an eye on how our properties were doing financially. However, this year we are making it a practice to go a bit deeper in reviewing our financial statements by company and by property. We have a goal to reduce our company’s (as well as our properties) expenses by 10%. We have a goal to pay off some loans through cash generating activity. We also have a goal to sell 50% of our properties in one of our portfolios. We have always set goals to improve our financial side of our business.
However, this year, we have set more specific goals and also discussed “how” we are going to set ourselves up for success to achieve these goals. I can’t stress how important it is to review the financial health of your business and your properties on a monthly basis. We are instituting a financial meeting once a month to discuss our progress and actions needed to achieve our financial goals and to review the financial statements of each and every part of our business (by property and overall).
2. Improvement of Team
Real estate investing is a “team” sport — not an “individual” sport. A successful real estate investor should always be improving the relationships they have with others, as well as determining the gaps in their team to achieve their goals. My husband shared some goals he and his partner have for their fix and flip business. My first question after learning about the goals was, what processes and people are you going to need to achieve these goals?
We have a small construction team to handle some of the work but we do not have enough of the staff internally to achieve the goals they have set out to achieve. I know most people say, “Find the deal and the money (and resources) will follow.” I would disagree. I would say “Before you find the deal, begin the process of lining up the money, resources and team that will be needed for the types of deals you are going after.”
For example, we know to achieve our goals, we are going to need more GCs (general contractors) to partner with and more sub-contractors. We have not had the best luck with GCs. However, that just means we have not found the right ones! There are great people out there; we just need to find them and partner with them!
Where are the “gaps” on your team to achieve your 2015 goals?
3. Improvement of Property Management
Over the past year, I have been leading a project to better organize our systems and processes for the property management side of our business. While I have made some progress, I have a lot more to do. I not only have to finish creating the process and forms for each step of property management, but also train our staff on the process; that way, everyone is on the same page and follows it – no matter what!
I have allowed other projects to distract me and take me off course unfortunately. Well, one of my intentions for 2015 is to be “gentle” with myself — so I can’t beat myself up too much! My new intention is to be complete with creating the process and forms by January 31st. And then my follow up goal is to have everyone trained and familiar with the process and forms by February 15th. This is ambitious, but realistic.
What areas of property management do you need to improve?
4. Improvement of Knowledge, Skills & Talent
This is a personal one. I am always asking the questions, in order to achieve the goals I have set out – who do I need to become? What new knowledge and/or skills will help us achieve our goals?
One of the areas that I am committed to learning more about and becoming more educated in is online marketing. We have a lot of projects we are working on where it is going to become important to be more familiar with best practices when it comes to online marketing. I am not intending to be the “be all and end all” guru in this area. I just want to become more educated in this area. Whenever fear or procrastination begins to creep into my mind, I say something like, if other people can learn this information, so can I!
Additionally, I want to utilize more of my talent this year in both my personal and professional life. We all have talents and strengths. However, if we are not using them, then they have become dormant and do not help anyone or anything. I am committed to constantly finding the opportunities in my life to utilize and unleash my talent to help and inspire others.
What knowledge and skills will you need to learn to achieve your goals? What talents do you have that you can unleash more this year?
In closing, Matt and I wish you nothing but the absolute best for an amazing 2015. Would love to hear feedback and comments – as always!
What areas of your real estate business are you committed to applying Kaizen to?
Don’t forget to leave a comment below!