In 2014, our companies revenues has dropped dramatically, but our overhead had stayed the same. House flipping companies face unique challenges. In order to buy, fix up, and sell houses on a large scale, the amount of people you need to help you is giant. You need people that drive and inspect houses all day, people who attend auction, people who check on your houses, people to list, market and sell the houses, etc. We even had guys whose full time job was nearly only to turn utilities on and off and make sure utility company bills were correct.
So when we started to have our inventory of houses build up and not sell, we still needed to manage all of these aspects, but we no longer had revenue to cover it. I had experienced downsizing when I worked for a homebuilder in the peak and market crash, and I thought I had learned a lot then, but I really hadn’t. I had seen what it was like to do massive layoffs, and I even had to communicate some of these layoffs, but what I didn’t experience in the crash of 07-08 was the decision making part. Every time I had to lay someone off, someone else had made the decision and told me to do it. This time around, I had to make the decision myself, and I wasn’t emotionally ready to do it properly.
I should have completed the layoffs much sooner in 2014, when company savings were high, but we knew revenue was not going to return to old levels. Instead, I waited and waited until most of the company savings had depleted and I had to finish the job.
Lesson #1 – If revenue starts decreasing, do the layoffs as quickly as possible, as large as you can possibly imagine cutting, in hopes that it will be a one time cut. Employees would rather get cut early, and get a small severance payment from company reserves, instead of trying to make up work and depleting the reserves slowly. I thought I was helping employees by waiting, but I wasn’t.
Lesson #2 – Get extra efficient with the resources you have left. Going from 20 employees to 4, and attempting to manage the same volume of work, is obviously a daunting task. 3 resources helped me dramatically in accomplishing this.
I read this article, and it summarizes some great ways to become efficient. By putting this one article into practice, I guarantee you can change your workload dramatically and start accomplishing the work of 2 or 3 people the first day:
That article turned me on to the work of Tim Ferriss, and his book “The Four Hour Work Week” – http://fourhourworkweek.com/blog/ I’ll summarize what I learned in future blogs, but by practicing just a few of his recommendations, my productivity increased again.
The next book I read was “The Miracle Morning” by Hal Elrod. http://miraclemorning.com/ It might sound simple, but the next step was waking up earlier.. Which led to waking up earlier, and earlier each week. Now I try to start my day at 3:30 am. It is amazing how much you can accomplish before the world wakes up and starts interrupting you, and practicing extreme focus.