I have studied hundreds of exceptional people in my Business-Money-Life Project. One of the most common habits of these exceptional entrepreneurs, investors, leaders, and visionaries is some sort of regular goal-setting process or annual review. Because this annual review process seemed so important, I adapted one for myself.
This guide shares the step-by-step process I personally use for an annual review at the end of each year. Enjoy!
Billionaires, Hall of Famers, & Entrepreneurs
Hall of fame football coach Bobby Bowden of Florida State University always held an annual “hideaway” 5-day retreat with his staff. In his book The Bowden Way, Coach Bowden called his hideaway “one of my most essential management tools.”
Warren Buffett does a yearly review of his company Berkshire Hathaway, and he then writes his thoughts in an annual letter to his shareholders.
Buffett’s annual letters give valuable nuggets of investing wisdom (free archive of letters here), but he also laments the “boneheaded mistakes” he made in the past year. Obviously he has made a lot of brilliant decisions as well!
Successful blogger and entrepreneur Chris Guillebeau performs his annual review each December and shares it online. In large part because of his annual review process, Chris achieved some amazing goals before his 35th birthday, like:
- Visiting every country in the world.
- Building an online blog called The Art of Non-Conformity with hundreds of thousands of followers (I am a loyal subscriber).
- Authoring several books, including the best-seller The $100 Startup.
I have taken ideas I liked from these exceptional people and others to create an annual review process of my own. That is what I’ll share with you in the rest of this article.
My annual review process is divided into 5 steps. I recommend you print this article out to serve as a checklist and comprehensive guide for your own annual review.
I am confident your annual review will be the foundation for a successful coming year no matter what your goals and ambitions may be.
Now, let’s get started!
Step #1 of the Annual Review: Preparation
We should remember that good fortune often happens when opportunity meets with preparation.”
Thomas A. Edison
The annual review is a brainstorming session. It’s very personal. Yours may look totally different from mine, but here are a few preparation guidelines I’ve found to be helpful.
Set aside specific times to work on your annual review.
You can’t just hope that free time will magically find its way into your schedule. Make the annual review project a priority and schedule it.
This is perhaps the most important thing you’ll do all year. Don’t let less important things get in the way.
I like to set aside at least a couple of mornings for the official process, but for several weeks ahead of time I let ideas simmer in my head. On the actual review days I let everyone around me know, “From 9am – 12pm today and tomorrow are my focus times. Please, no door knocking, no calling me, no interruptions.”
In December right before or after Christmas holiday is the typical annual review time for me. Work projects tend to slow down anyway, so I have more time for quiet and focus.
Do you think you’d get more done if you removed seemingly urgent but unimportant distractions? This annual review is not urgent (no one will yell at you to do it), but it’s extremely important.
If you can’t find a quiet place at home or the office, go to the local library. Shut the door and put a do not disturb sign on it.
Phone calls, text message, Tweets, email, Facebook messages, and any other form of digital distraction can wait. For your own good, just turn off the phone!
Ask yourself if 3-4 hours without being accessible will make the world stop turning.? Your success next year is worth it!
For me this one’s simple. I like to have:
- A large drawing pad (Here is my favorite)
- My portable planner (Here is mine. YES, I’m old school!)
- My goal spreadsheet from last year and a blank one for next year (here is the spreadsheet template I like. It’s from ChrisGuillebeau.com. More recently I’ve just created large mindmaps instead of a spreadsheet.)
- A few of my favorite pens
- A comfy and quiet place to sit
Leave the laptop at home, or if you just can’t stand it, completely turn off the internet. Did I mention no distractions?
At this point you’re ready to begin the Annual Review in earnest.
Step #2 of the Annual Review – Evaluate Last Year’s Performance
Knowing oneself is not so much a question of discovering what is present in one’s self, but rather the creation of who one wants to be.”
Mihaly Csikszentmihalyi, Good Business
Ancient Greek philosopher Socrates coined the powerful idea, “Know Thyself.”
That’s what this step is all about.
You want to study your own tendencies, and then adjust your future plans accordingly.
I used to watch game film EVERY day as a college football player, and the lessons I learned made me a much better player. The same concept works in life and business.
Here are some questions to get your evaluation started. This is where you lock yourself in a room, turn off the phone, and pull out your paper and pen.
First, ask yourself about the good results:
- What went well last year?
- What am I very happy about from last year?
- Which of last year’s goals did I meet? (You did set goals last year, didn’t you?;)
- What can I learn from the positive results?
- What good habits, practices, and actions should I repeat?
Here are some personal examples from my past year to the “what went well” questions:
- Traveled to Mexico with my family for 2.5 weeks
- Took several other family trips, including 2 beach trips, a camping trip to Smoky Mountain National Park, and a week at a lake house.
- Visited several friends out of town for long weekends
- Had a date with my wife at least once during 11 out of 12 months (not easy, as other parents of young kids know!)
- Sold 7 rental properties
- Bought 1 new long-term rental property, made offers on many more big projects
- Implemented two new systems in our property management business
- Nearing income goal for the year
- Completed 75% of savings goals (still 1 month left!)
- Wrote and shared 63 big ideas from my Business-Money-Life Project (as of 11/30/2015)
- Wrote 16 guest posts at BiggerPockets.com (as of 11/30/2015)
- Started co-writing a syndicated column in Charlotte’s Mecklenburg Times with friend Lou Gimbutis
- 12 speaking opportunities and interviews, including the BiggerPockets.com Podcast, the Joe Fairless Podcast, and Affordable Real Estate Podcast.
- Helped start a non-profit called the Friends of the Green Crescent, a greenway trail system in my home town
You get the idea. These should make you feel good. You should always be able to find something in the “what went well” category.
Second, ask yourself about the bad results:
- What didn’t go well last year?
- What results disappointed me from last year?
- Which of last year’s goals did I fail to achieve?
- What can I learn from the negative results?
- What bad habits, practices, and actions should I get rid of?
Answers to “What didn’t go well” are equally or more important.
Here are personal examples of my “what didn’t go well” answers in 2015:
- I experienced injuries (back and shoulder) that set back my exercise goals for the year
- A buyer for one of our multi-unit properties fell through. Now it’s still on the market
- I didn’t follow through 100% with all of my monthly daddy dates with my daughters
- My sleep and meditation practices fell far short of my norm in the 2nd half of the year
- Fell short on several big purchases of new properties (although the year isn’t done!)
- I did not offer any classes to my newsletter list
I will certainly have many more to add to this list once I dig into my own annual review.
Don’t limit yourself when doing this brainstorming. Be sure to write down whatever comes to mind. Include personal and business thoughts.
The Lessons Learned
The lessons you’ve learned are what makes this brainstorming process worthwhile.
Review all of your notes from above and pick out the most surprising and the most interesting answers to your questions.
Look at some of your results and ask “Why was that?”
For example, if you fell short of your goal to buy 2 real estate deals last year, what was the main reason? What could you have done differently knowing what you know now? What will you do differently next year?
In addition to my own answers, I also like to ask people on my team, like my wife, my business partner, my mentors, my bookkeeper, my CPA, and my contractors what they think we learned. These are usually very insightful, and I often use their insights more than my own.
This process of evaluating the past can be difficult. It requires courage and honesty because it exposes your weaknesses and your soft underbelly.
But if you can get through it, you´ll have a starting point for dramatic improvement next year.
Step #3 of the Annual Review – Create Goals For Next Year
When you want something, all the universe conspires in helping you to achieve it.”
Paulo Coelho, The Alchemist
At this point I move past the prior year and begin envisioning my goals for the following year.
Every great achiever I’ve studied has created goals first in their mind or on paper. Once the goals are clear, they’re much easier to accomplish in real life.
Again it’s time to take out your pen and paper and get ready to brainstorm.
Decide Goal Categories
I like to break my life into different categories for ease of setting goals. Stephen Covey calls these our roles and goals. Zig Ziglar calls it the wheel of life.
Whatever you call it, categories can help you create balance in your goal setting.
Here are the categories I currently use:
- Personal “Blissiplines” (aka sleep, nutrition, gratitude journal, etc)
- Exercise (subcategories: Cardio and Strength)
- Family Time
- Financial (subcategories: Personal Earnings, Savings, & Investment Income)
- Career (subcategories: Real Estate Business, Teaching/Writing Business)
- Creativity (writing and video production)
- Local Community Contribution
By all means create your own categories, but feel free to borrow mine if you want to move on.
For each of your roles on the list above, it’s now time to create some goals.
I like to have 1-3 goals for each category or subcategory. This means you could have anywhere from 7 to as many as 30+ goals for the year.
Don’t let that overwhelm you! These are your goals. Keep the list as small or as large as you need to feel comfortable.
Let’s take one of the most common categories , FINANCIAL, and explore how you might go about goal setting.
Earnings are pretty straightforward if you are a salaried employee. Take this opportunity, however, to set a goal for a pay raise or a performance bonus.
Earnings goals for an entrepreneur or sales professional are more difficult.
Let’s say you’re a real estate wholesale flipper, and you have a goal of $60,000 personal earnings this year. Let’s say your overhead for marketing and other basics is $3,000/month or $36,000/year. Your business will need to earn a total of $96,000 in order to meet your personal goal.
If you make on average $5,000 per wholesale deal, you need to do 20 deals total in order to reach your goal. If that sounds like a lot of work, you’re right! I’ll help you think about specific plans to reach your goals in the Step #4.
If you don’t specifically choose numbers for these goals, you’ll wake up at the end of the year and just use whatever is left over (which is normally nothing). Choose specific numbers that aren’t too unrealistic but that are a little bit of a stretch for you.
Step #4 of the Annual Review –Plan For Success
A goal without a plan is just a wish.”
Antoine de Saint-Exupery, French writer
What usually prevents you from achieving your goals? Is it fate and luck? Or is it the lack of a sound plan?
There is a fine line between a goal and a wish. A good plan makes all the difference.
So, let’s go over how you can create a simple but effective plan for next year.
Notice the Gap
Artists and entrepreneurs are creators. In your mind’s eye you connect a vision of the future with a present reality. This is the creative gap.
A plan is your best effort at connecting this gap in your mind and then on paper.
Let’s say your goal this year is to make $100,000 in personal income. Last year you made $60,000 in personal income. If everything stays the same, you’ve got a gap of $40,000.
I’ve noticed that just by recognizing the size and nature of this gap, my creative mind instantly begins formulating ways to accomplish the goal (i.e. a plan).
If you’ll give your mind time and space to brainstorm, amazing insights will rise.
Shift From Result Goals to Processes
The gap between your present and future state is too wide to jump over in one bound. You need to break the gap into small pieces. You do this with a process.
Getting back to our example, you need to earn an additional $40,000 to meet your financial goal.
Can you just go out and do $40,000?
No. That is a result.
What causes you to earn $40,000?
A process, or even more valuable, a process where you serve others.
For example, in my real estate business buying and selling houses, the core process that makes money is making offers to buy new properties. Once I buy these deals, I can resell them for a profit.
Therefore, I transform my goals from an end result goal ($40,000) to process goals (execute marketing campaigns, make offers to sellers, etc).
By the way, if buying and selling houses is not a good fit for you to make more money this year, here is an interesting list of many more money-making ideas that you probably had not thought about.
Record Your Process For Each Goal
Now take each goal you created in step #3 and turn it into a process. If possible, make the process something that you can measure and track.
For example, if my goal is to run a 10k race this year, the most important process might be to do 3 training runs each week. So I will write down and then measure “complete 3 training runs each week.”
If you followed my advice in step #1 and used the goal tracking spreadsheet, you can write each of these processes in the cells called “measurable goal” below each category.
Step #5 of the Annual Review – Take Action
What does Nike say? “Just Do It!”
If you do nothing else with this entire process, determine the next possible action step, and just get started.
Ask yourself, “What is the next action I need to take right now? And the next? And the next?”
Break each goal and process down all the way into very specific action steps, like:
- Schedule exercise time in my calendar
- Schedule vacation in my calendar
- Call a potential private lender
- Download data for a marketing list
- Write a letter to send out to my mailing list
- Print, fold, stamp, and stuff 100 letters and drop in the mail.
I love having next actions written down every week and every day. I check them off throughout the day, I review them in my planner before I go to bed at night, and I review them during a short planning session at the beginning of each week.
These tangible steps give me a sense that my ultimate destination is within reach. It also allows me to measure my progress on a short term basis.
Whatever you need to do, develop your action muscle. Action is at the core of being successful at any endeavor.
Flexibility and the Paradox of Plans
In preparing for battle I have always found that plans are useless, but planning is indispensable.”
Dwight D. Eisenhower, Former U.S. President and General
There is a big paradox when you take action on your plan. Your actions lead to changes that inevitably require you to change your original plan!
So, should you just forget planning all together?
No. Just pick a plan, pick a process, pick the next actions, and then get moving.
Then after being in motion for a while, take a pause to review your goals and plans.
I have a mini review session each quarter where I review the progress of the last 3 months and then adjust plans for the next 3 months.
During each mini-review session (between 5 – 60 minutes), I may adjust or even eliminate goals and plans that are no longer relevant. But most often I simply adjust the goals or plans after bumping into realities along the way.
In this way, you build flexibility into the necessarily focused process of planning.
Conclusion – Emulate Exceptional People
Now you have read my 5-step Annual Review process.
My own process is a collection of ideas from exceptional people who are worthy of emulation, including Stephen Covey, David Allen, James Clear, Chris Guillebeau, Brian Johnson, and John Wooden, among others.
In one way or another, exceptional people in any field tend to follow the principles I have outlined in this article, which are:
- Prioritization of slow, reflective time
- Self-honesty towards past successes and failures
- Creation of goals that stretch you beyond the status quo
- Creation of focused and flexible plans
- A bias towards action
The plans of exceptional people still have flaws. The goals of exceptional people may even turn out to be the wrong goals once they’re achieved.
But exceptional people are consistently in motion towards the next installment of their journey. That is a trend worth noting.
In this way, a successful year or a successful life never occur in a straight line. It’s more like a sail boat tacking against the wind, constantly veering left, then right, then back left, and back right.
From a distance you can see the slow and steady progress of the boat towards its destination. On the decks of the ship, however, all you hear is howling wind and all you see is the next wave 10 feet in front of you.
Set your compass towards your goals. Put on your heaviest rain coat. And hang on for the ride.
I wish you a wonderful year full of growth, action, enthusiasm, accomplishment, and great daring.
What parts of this annual review do you like and plan to implement? Do you have your own annual review process? What do you do each year? How do you set goals? I’d love to hear from you in the comment section below.
This article was originally publish on December 1, 2015 but was updated on December 12, 2016.