For every successful company, there are in multiples of those, failures. Within those failed companies, there are numerous causes that contribute to their lack of success. Whether it be driven by a lack of communication, inadequate talent, inefficiencies or simply poor decision making, it becomes apparent after examining the successful ones, which root causes the failed companies have in common. Upon examination of successful companies, a significant portion possess a common set of processes and controls that aim to guide the company and its individuals to effectively communicate and seamlessly manage the daily operating activities in which most failed companies never implement.
Incorporated within a successful company’s numerous processes, are a set of explicit controls that are designed to ensure no stone is left unturned. Some example of these include, designated roles and responsibilities, segregation of duties, manager reviews, document version controls and checklists. Roles and responsibilities serve to ensure individuals are made clearly aware of what their expected to accomplish, while a proper segregation of duties aims to deter fraud. Manager reviews are designed to ensure the accuracy and appropriateness of significant documents by having a more experienced individual oversee or review the documents prepared by a lesser experienced individual. Document version controls ensure that the latest and greatest workpapers and documents are the versions being either reviewed or utilized for operations. An example of this would be a company’s use of a cloud based document sharing tool which enables only one user at any given time to have master control of the document. Lastly, the checklist is designed as a memory jogger for some of the more routine tasks in which key steps are easily forgotten due to their routine nature. It may seem as if the checklist is such an elementary concept, but it assists individuals within successful companies on a daily basis by ensuring efficiency and consistency.
At first glance, it may appear that most of these controls mentioned above are for your highly evolved and complex companies in which may not be practical to the novice real estate investor. While some of that may prove true, novice real estate investors would be wise to implement a few of those mentioned above within their company. We recommend every real estate investor incorporate document version controls through the use of cloud based sharing tools, coupled with the design and implementation of checklists into their company’s operating environment. The goal of these simple and easy to implement controls is to streamline some of the routine functions which will allow time to be reallocated towards revenue based activities which will accelerate revenue growth. For example, real estate investors are always refining and tweaking language within their standard lease agreements due to previous experiences or as a result of changing legislation. It is very easy to lose track of the most recent lease agreement templates when numerous employees are involved in the process. By designing a simple checklist for this process, which should outline the critical terms and conditions that need to be included, coupled with a document sharing site a company can easily alleviate some of these efficiencies.
In conclusion, there are a numerous amount of processes and controls that a company can implement to help streamline operations. Of those, none are more relevant and easily implemented then document version controls and checklists. If novice real estate investors take the initial time to introduce these two key concepts, they will save the company and more importantly themselves, an unlimited amount of hours and resources that can be appropriately redirected towards revenue based activities with the focus on growing the company. While it may seem like an upfront burden, the initial incurred time to implement these will be inconsequential as compared to time and effort that will be wasted due to the lack of implementing some of the most basic processes and controls there are.