William Edwards Deming the American professor, author, and consultant who revolutionized post-war Japan by introducing the Japanese to the ideas of quality control and systematic improvement, is an interesting figure for any investor to study. The cornerstone of Deming's beliefs can be summed up in 14 ideas, which are traditionally known as Deming's 14 points. These fourteen key principles can transform the way you approach flipping houses:
1. Create constancy of purpose for improving and develop a plan to become competitive and remain in business. Also, determine to whom you are responsible.
In other words, if you want your business to flourish, you need to determine why you are interested in reselling properties for a profit. You also need to determine how you can improve your strategies for doing so and you must develop a step-by-step plan to resell properties at their profits and other investors. Obviously, you will be responsible to yourself and your buyer.
2. Adopt the philosophy of an economic age. Refuse to accept or offer delays, mistakes, defective materials, and defective workmanship.
In other words, your business is a competitive one. You must provide excellent quality consistently.
3. Stop dependence on mass inspection. Instead, develop a way to prevent defects rather than detect problems.
You should have an automated system that allows you to quickly pinpoint and avoid potential pitfalls. This may mean a basic checklist that lets you evaluate properties fast or an agreement with a lender that lets you secure financing on the fly.
4. Do not award business on the basis of price tag
You need to up your team based on quality results. Work with the best and make sure that you compensate them well.
5. Uncover Problems.
Do not flinch from potential problems and issues. Rather, focus on finding them first so that you know how to respond to them. For example, if you are looking at a home and just see its possible profitability, don't forget to look for possible problems.
6. Use modern methods of training on the job.
Technology can help you. Keep in mind that the person being trained on the job is you. Use modern ideas -- such as mentorship, information products, CDs, online courses, and every other means at your disposal -- to learn as much as you can.
7. Move the focus from sheer numbers to quality.
You may be thinking that you can be flipping houses at the rate of one a week, making $10,000 or more per week. However, making lots of deals with little profit is not as effective as making one deal with lots of profit attached to it. Focus on quality deals, not on throwing together any deal possible.
8. Eliminate fear.
If you're afraid of losing your money or making a bad investment, you are more likely to fail. Instead, focus on prosperity and learn the tools you need to avoid common mistakes.
9. Remove barriers between teams.
As you build up your team, make sure that you all work together. This means that your real estate attorney should know what the contractor has said about possible problems, and your lender needs to know what the assessor said about possible necessary renovations.
10. Eliminate numerical goals that ask for productivity without providing methods.
It is not enough to say “I want to earn more money.” You also need to have a systematic plan in place for making more profit.
11. Get rid of work standards that revolve around numerical quotas.
You will want some numbers. However, it is useful to consider that you will get much further if you don't focus on numbers alone. If you focus on providing the best quality for your buyers, for example, you will find that they are naturally more willing to provide you with more profit on properties. Do not put numbers first, but rather focus on the quality of deal you're able to offer to investors and buyers.
12. Get rid of barriers that do not let your team enjoy pride of workmanship.
Since you are building a team in order to make your real estate empire dreams come true, you should make sure that each member of your team feels productive, motivated, and happy to be on your team. Anything that gets in the way of this -- including low wages, an unfriendly attitude from you, or unreasonable expectations -- should be eliminated. You will find that your team is far more willing to work hard for you.
13. Engage in a massive program of education and training.
