What is the North Star Metric in your property investment business?

If you haven't already done so, it is well worth taking some time to identify the North Star Metric in your business. This is single most important metric in your business, against which you can measure your growth and success. It will also give you a clear sense of direction and purpose in everything you do.

On any given day, you will face a million different distractions and conflicting choices over how to invest your time. Considering that your time is the most valuable asset you have, it is essential that you invest it wisely and secure the maximum return on time invested. 

By having a crystal clear understanding of your North Star Metric, you will be able to prioritise effectively and ensure that your energies are constantly focussed on the highest value items. 

The primary function of any business is generate a profit. This seems such an obvious thing to say but an alarmingly high number of businesses fail to generate sufficient profits, to continue operating over any significant length of time. There are number of reasons why this happens but given all the external challenges you will need to contend with, it is very important that you make smart choices over the things that are within your control. 

When it comes to a property business - profit exists in two key forms:

• Capital
• Cash Flow

Ideally you should be consistently generating healthy profits in both forms, by adding value to properties in capital terms and also producing recurring profits (in the form of rent). You're in control over how you realise these capital profits, e.g. by refinancing or selling properties but it is essential that you're doing so consistently, as this will serve as rocket fuel for the growth of your business. 

Personally the North Star Metric in my property business has always been the monthly cash flow generated from my portfolio of rental properties. In his classic book Rich Dad Poor Dad, Robert Kiyosaki describes wealth in terms of how long you could survive if you were unable to work. If the amount of cash flow you generate each month, is greater than the sum total of your expenses, you're extremely wealthy on the basis that you could survive for an indefinite period of time without having to work. 

We all have different priorities and core values, so it is essential that you take the time to define your own North Star Metric. Failure to do so could be costing you dearly.