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11 Questions that Will Help You Master the Decision Making Process

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Decision Making Tips | The Use of Filters

Warren Buffet said, “We really can say no in 10 seconds or so to 90%+ of all the things that come along simply because we have filters.”

Filters minimize risk

Filters are guidelines whether it is deciding on a new business idea or investing. Many ideas initially sound great, however, there are always unexpected things that surface when you are entering into something brand new. 

The goal is to MINIMIZE the number of items that “surface” through properly thinking before acting. 

Keep in mind, whatever you choose to focus on it will take up years of your life. So, it is better to have a process in place, so when you do decide on a business, project, or investment, the risk has partially been mitigated. This way you can lower the chances of getting into a bad, time-consuming situation.

The better and more precise the filters, the better decisions we are likely to make. It may sound simple, but for investment filters to be effective you have to know the critical success factors of your business or deal.  

If you understand what is truly important AND what you absolutely need to avoid, then the filters will be easy to create. Once they are in place, you are on your way to better and faster decision making.

Filters increase the speed of decisions

Without filters, people can waste incredible amounts of time. Time is everyone’s most valuable resource.  

In today’s information revolution, everyone and everything is competing for our time. It has become easier to reach us and it is expected that we all stay as “connected” as possible.  

Filters help you weed out what you don’t need to focus on. They also help you quickly identify where your focus is needed.  

Analyzing deals is an important part of what we do, but it’s better to spend a few minutes on each deal versus a few hours.

Here are some filters for analyzing a real estate deal, which helps to speed up decisions when sifting through opportunities on apartment complexes.

  • Property Type – B property in an A area; C property in a B area
  • Unit Count – 19 – 60 units
  • Price – One to six million dollars
  • Cap Rate – must be a 9 CAP or higher at the above price
  • Upside Potential – Must have a problem that we can remedy to improve the financials without speculation. Examples of this are higher than average expenses, lower than average market rents, or higher than average vacancy due to mismanagement.

If it doesn’t meet the criteria above, it’s not a deal. Thanks to these filters, you can determine this very quickly and move on.

Creating your own filters

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Small Business Tips | Filtering Through Questions

At first, creating filters can be confusing, but with some practice, it becomes easier and over time even an enjoyable exercise. Here are some questions that will help you create your own filters:

  1. What is really important?
  2. Is the price you are paying fair?
  3. What items, if not focused on, could make this fail?
  4. What do you absolutely need to avoid?
  5. What range of returns are you looking to achieve?
  6. What time frames are you comfortable with for this type of venture?
  7. What is the best-case scenario?
  8. What is the worst-case scenario?
  9. Are you making this decision free from speculation?
  10. What about this transaction, will allow you to create immediate value?
  11. What resources do you need to have in place to take advantage of this value?

Filters are powerful decision-making tools

Filters are some of the most powerful tools to enable efficient and effective decision making.  

If you have ever felt like you need help making better decisions when it comes to your new project, business, or investing, try making use of the strategy of creating filters. 

 At the very least, it will help you understand your project, business, or investments better.

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