Are you thinking about your goals this time of year?
I am. I do every year. In fact I start getting obsessed with my year end numbers and goals for the upcoming year as soon as we get past Thanksgiving. Maybe you do too.
I made a recent discovery that has really driven home the almost unbelievable power of written goals and I’ll share that here.
This year I’ve decided to do a 2013 goal setting series here on the blog.
If you haven’t ever (really) set goals then I hope by the end of this you’ll have a framework you can use to set, and reach, your goals.
If you’re in the habit of setting (and achieving) goals already then I hope we can give you some tips and insight into how to improve your process.
Goals aren’t for everybody. They’re only for people who have things they want to achieve. If you’re 100% satisfied with your station in life, this isn’t for you.
Goal Setting Basics
If you’ve read any success literature you know that there are some
rules guidelines for setting goals properly.
But, before you begin setting goals you need to identify your reasons for even setting a goal to achieve something.
You need to identify your WHY.
Your goal setting has to start here. It’s necessary because if you’re setting goals that are worth achieving then you are probably going to have to stretch as a person.
Stretching is hard.
I’ve heard people say “I don’t want to have to be a slave to structure enforced by goals” … “I like to be more spontaneous”… “writing goals doesn’t really work”…
Formulating Then Writing Your Goals Works
I recently found one of those black and white composition notebooks that you’re no doubt familiar with while I was de-cluttering my office. When I first opened it I was a bit confused because it was dated one month earlier… but it didn’t look familiar… even though it was in my handwriting.
As I read on I realized that what I was looking at was a list of “long term” 5-year goals that I had written 5-years earlier but dated in a proper present tense fashion.
As I read through I realized that 90% of the goals I had written on that list I had achieved in one way or another… and the other 10% were things I didn’t want anymore or weren’t important because I had changed course due to evolving priorities.
I didn’t read these obsessively. I didn’t have them posted on a wall. I didn’t share them with the world. I simply thought long and hard about them, wrote them down, and let it work.
Writing down goals works.
But First You Need a WHY
Your WHY is what is going to help carry you through and make you push on when you might rather fold, or more commonly, when you simply keep doing what you’re doing (the rut) and keep getting what you’ve always got.
Simply saying “I want more money” is a weak why.
Why do you want more money? What will you do with it? Why is that important to you? How will that change your life?
Your why needs to be a big enough motivator that you will break through inertia and take action in order to move towards (or away) from something.
The Negative Why
You might be more driven by fear than opportunity. If your circumstances are such that failing to act boldly could bring dire consequences to you and your family (ex., if I don’t close a deal by next month then I’ll go into foreclosure… ) then feed off that, that ought to be enough.
There are few things more motivating than a continuous personal fiscal cliff
‘Doing alright’ is Where Dreams and Goals Go to Die…
Demographic insight from my site says that you’re probably doing alright. You might even be doing pretty good compared to most. Chances are if you’re reading this you probably make more than average, you own a decent home a couple of cars…
The problem is that pretty good is the enemy of great.
If you’re sitting behind your desk surfing aimlessly and you know that you can do this for 80% of your week and you’ll still get an OK paycheck every two weeks, then you’re too comfortable. You’ll keep sitting there, you’ll keep getting paid just enough, keep surfing, playing Words With Friends or whatever and nothing will change.
Get uncomfortable. Decide that a meaningless grind of an existence is intolerable. Loathe it.
Does this mean that you should quit your comfy job and go pursue something high risk – high return just to get moving? Could be… but you’ll have to decide if you have the stomach and the resources for it.
The Positive Why AKA Get a Big Hairy Audacious Goal (Dream)
The opposite of the negative motivator is the Big Hairy Audacious Goal.
This is the personal long term vision that you set for yourself that you can just get obsessed with, that you think about night and day, that is worth pursuing no matter the cost.
This can include a vision for your family and living arrangements, for your professional status, for your health, for those key factors that make your life more full and more enjoyable.
If you don’t have a vision for this right now then think about what that looks like for you. I bet you have pieces of it that have been bouncing around in your head for a long time.
You might want a bigger/better/different place to live, a car, maybe you’ve got a bucket list, maybe you want to put your kids through private school, maybe you want to travel, live on a boat, I don’t know.
It’s your vision.
Once you’ve laid out your vision you have to make an honest accounting of what it is going to take to get there.
Realistically how much money, or time off, do you need to achieve your dream? What other resources do you need to get there?
Do the Math
What is it going to take to get what you want?
Let’s suppose you there’s a particular neighborhood or area that you want to live and you don’t live there now.
What does the kind of home that you want in that location cost?
What does that mean you’ll need for a downpayment?
What would you need on a recurring monthly basis to pay for it all?
Do the math.
Suppose you want to travel to Europe to ski for a month.
What is the actual air fare? Resort rates?
How much cash would you need to have in reserves to be comfortable with your financial obligations back home while you’re there?
What would your employment situation or business have to look like for you to take that much time?
Now you have some numbers. Now you have reality.
There are a basically 2 reactions you could have to the reality of what it’s going to take to achieve what you’ve just laid out for yourself.
- I can’t afford this.
- How can I afford this?
- answering the question that you should be asking yourself
- how to write your goals so they work
- reserve engineering a plan to achieve your goals
In the mean time if you’re going to follow along with me then I’m going to ask you to do 2 things.
- Write down, work on, your big hairy audacious vision, at least on part of it.
- If you’re in a position where you might be in some financial trouble and you’re looking more at survival than vision then get real clear on how much trouble you’re in and what it’s going to take to get out of it. Even beyond that get real with yourself about what your life is going to look like if you don’t… and make sure you “own” that. Hopefully that’s ugly enough that its motivating.
- Analyze and quantify with real numbers what resources are going to be necessary to get what you want.
For example, if you want to live in a place where homes that you like are going to cost you $500,000 what’s it going to take to get there?
Well in this case its going to take about $100K down, then you’ll need to furnish it, and then you’ll need to be able to make a PITI payment reliably so go ahead and follow it through.
If the housing-payment/income ratio today is 28% then you need to show $130k-ish income for a couple of years, etc… or you can pay cash.
Whatever your future holds, you decide, and make an honest accounting of it now.
Do you have your numbers together from Part 1?
Did you figure out what it’s going to take, financially, to get what you want?
We talked about that just ‘wanting money’ isn’t enough… the desire for cash won’t pull you through when the going gets rough and it’s time to stretch. But let’s face facts: life costs money.
How much money you have is going to a huge extent determine what you can do, where you can live and what you can afford to experience.
I asked you to define your vision and put a price tag on it because now we’re going to make a plan to get you what you want.
But first… did you write down your number? If not do it now and write it like this:
I earn $X in 2013
Using whatever your number is. You should be writing down your other goals for the year at the same time and in the fashion. You’re going to write them in the positive, personal, present tense.
That means that if you want to quit smoking you’re going to say “I am smoke free in 2013” you’re not going to say “I quit smoking in 2013”. If you’re trying to lose weight you’re not going to say “I don’t over eat” or “I don’t drink soda”. You’re going to say “I weigh X and feel great”. Got it?
So this website isn’t about your gut it’s about your bank account so lets get into it.
“What gets measured, gets managed.” – Peter Drucker
There are numbers in your business that are going to dictate what you have to do to get what you want. If you don’t have any historical numbers to work from (you’re just getting started) then you’re going to have to rely on numbers from your peers and mentors and you’re probably going to have to make some assumptions which you’ll no doubt adjust along the way.
What Is Your Average Deal Size?
A lot of my readers and subscribers are brokers of one sort or another. If they’re not note brokers or REO brokers then they’re flipping deals. So the formulas that I’m going to work with are mostly for transactionally derived income – that is to say, you get paid when you close a deal and you’re off to the next one.
If you’re buying and holding then how you figure your numbers is going to be a little bit different.
What was your average transaction size last year, or more to the point, what was your average take?
Was it $10k per deal? $50k? $5k?
Don’t cop out and say “I don’t have an average”. You do have an average.
What was your average split?
You’re probably getting either points or a spread/margin on your deals. What was it? Was it 1 point? 10 points? A flat amount? There’s an average and you need to figure it out.
You moved some dollar volume of product, you earned some amount of money, divide what you earned by what you moved and that’s your rate.
Where Did Your Deals Come From?
How did you find your deals? Did you network? Cold call? Did you send out marketing pieces? Did you do all of that? Have you got a couple of banks that just call you or send you tapes to look at?
The most dangerous answer you can have to this question is “I don’t know” or “referrals” but you have no idea what drove those referrals.
You Must Understand Where Your Funnel is Working (or Not)
Your funnel looks like this
Marketing » Leads » Opportunities » Deals
- Marketing can be direct mail, email, cold calls, networking, website traffic etc.
- Leads are people who raise their hands and say there may be a need.
- Opportunities move from having expressed a need to talking about/working on a specific deal with you.
- Deals you closed.
There are numbers associated with each of these. Do you know what yours are?
What Marketing Did You Do Last Year?
What marketing that you did resulted in leads? How many of those leads turned into opportunities? How many of those opportunities did you close?
I realize that I’m asking you to do a lot of work and you don’t have to do all this but then you have to ask yourself how important those goals you said you have really are.
If you went to REIA, ABI, TMA meetings, how many? What leads came of it? How much direct response mail did you send? How many calls did you make?
If you’re going to be serious about achieving something you have to know the numbers that go into it.
If you didn’t do a good job keeping track of this last year then all is not lost because you probably know at least where your deals came from, you probably know the meetings you attended, etc. Reconstruct this as best you can.
After you’ve got your numbers you need to look at your ratios.
What marketing brought you the most leads? How many leads did you convert to opportunities? How many of those opportunities turned into deals?
How to Increase Your Numbers and Hit Your Goals This Year: Do More, Do Better, or Do Both
Put another way, “work smarter”, “work harder”, or do a combination of the two.
Here’s where your numbers become important.
The most simplistic example… The dreaded cold call.
If you know that you made 50 calls per week last year, every week, then you made 2,500 calls.
Let’s pretend that you did 10 deals last year and you made $100k (yes, I’m just keeping the math easy for myself)
If this was the ONLY marketing you did then here are the numbers.
2500 calls » 125 leads » 25 opportunities » 10 deals = $100,000
So the ratios are:
- 5% of calls turned to leads (this is a realistic number for cold calls, maybe even high today).
- 20% leads turned into opportunities
- 40% opportunities closed
- $40 is how much each call you made is worth
If this was your business and you want to get to $250,000 this year how are you going to do it?
- You can increase your call volume by 2.5X and make 6,250 calls…
- You can increase your revenue per deal 2.5X and do $25,000 deals
These are the obvious answers.
What if you could increase your calls to leads ratio to 10% instead? This single change would take you from from $100,000 to $200,000 and bridge the gap between your goal and last year by 67%. Think about that. If your calls could yield leads at a rate of 1 in 10 instead of 1 in 20 you’ll double your income without making a single additional call.
In Part 3 I’m going to talk about how you can increase your numbers. For now, if you haven’t done the exercise from Part 1 already, do that.
Right now you should pull together your numbers from last year so you can understand what you did to get what you got vs what you’ll have to do to get where you’re going.
It’s time to get together some results and activities that you can work from.
Goals aren’t simply wishes. If you’re going to bother setting a goal you need to make a plan to to achieve it.
There are 2 kinds of goals:
- Results goals
- Activity goals
Results are what you want, activities are what you’re willing to do to get the results. We’re going to set goals for each.
Go now and quantify your 2012. How many deals did you do, how many opportunities did you have, how many leads, how did you get the leads.
If you focus on this now and for the next few days then by the end of next week you’re going to be up and running with goals and a plan to achieve them. I promise.
Keep Yourself Honest
Here’s one thing I did this year that helped me to be more productive and more honest with myself about my productivity. I bought a large self-stick Post-It Easel Pad and a wall mount for it and stuck it to my wall.
Each week I list what I’m going to do that week, in order of priority, and I’d check it off as I go.
This year I’m also posting my 2013 goals on a single sheet so I can see them in my office every day. Think about doing something like this yourself.
The increase in focus and productivity for me was astounding. I can go into more specifics on how I used this process for weekly productivity in another installment.
Let me know in the comments if you want more of this so I know I’m not talking into a vacuum. Even better would be if you’d share something about your goals.
Feel free to ask questions also.