How to Put Together a Business Plan for 2019
Because the first years of business often determine whether an agent will be able to succeed in the market, it’s crucial that you have a detailed business plan in place even before you begin interacting with potential clients.
Use software or a template to make writing a business plan more manageable. You don’t need to start from scratch. If you decide against using a template, consider checking your plan against a standard template to make sure you haven’t left out anything crucial.
1. Write an Executive Summary.
This first section of your business plan will outline your available opportunities and detail how your unique skill set positions you for success. What will you do to take hold of your desired segment of the market?
Include overviews of:
Your skills (marketing, sales, business) and experience
Your business development plans
Your target market and your assessment of the housing market in your area
2. Assess the market you’re planning to work in.
This second step will help you determine your “farm area.” This real estate term draws a parallel between the seeds a farmer sows and the fields he harvests and the leads you’ll generate through your work and advertising choices.
As a new “farmer” of a real estate territory, you should try to meet with a few experienced, successful brokers or agents who are willing to help you as you research your farm area.
You’ll want to find out:
Information about your competition in the area
How long a home in this area typically stays on the market
Home sale and rental prices
The “average months of supply”
Population demographics
3. Create a complete list of contacts in your sphere of influence.
As a new agent, you’ll begin your career by marketing to people who are already within your sphere of influence. This includes your friends and family members, people you’ve met through former jobs, and business contacts you’ve made.
Reach out to these people and share that you’re now a real estate agent. Placing personal phone calls is always recommended, but you can also use email and social media to reach out.
4. Detail your lead generation and lead nurturing strategies.
Because the strategies that will work for you will depend on your personal strengths, your target demographic, and the market in your geographic area, you’ll want to research lead generation strategies and choose several that seem like a good fit.
Once you’ve settled on your lead generation strategies, decide how you’ll turn leads into clients. You’ll be reaching out to contacts repeatedly, so you’ll need a system in place to manage and organize them coherently.
As you evolve and grow as an agent, this list will change. You’ll discover which of your strategies are strongest and which are less likely to lead to positive outcomes. Keep this portion of your plan active and fluid.
5. Develop a concrete, realistic financial plan.
The first step toward setting accurate financial goals involves cataloguing and predicting your expenses. Because your cost of living is the bare minimum you’ll need to cover, it’s important that you’re accurate about your spending.
If you don’t already have a comprehensive personal budget, this is a great time to review your spending over the last year to create one. Adhering to your budget will be vital to your financial stability while your business is in its fledgling stage.
Now think about your personal financial goals. Do you want to save up for a new car? A home or apartment? A vacation? Write your goal down and calculate how much income you’ll need to make it happen.
Operating a real estate business involves a number of business-related expenses. The exact annual figure will be specific to you, but should include:
The cost of business-related technology (phone, computer, internet, professional software)
Transaction fees and commission splits
Lists of homes that are For Sale by Owner (FSBO)
Printing costs (business cards, signs, flyers, and mailers)
Your desk fee
Dues you’ll pay to professional organizations
Licensing fees
Cost of a professional wardrobe for each season (these items should be crisp and current)
Client-related expenses (meals and drinks)
Travel expenses and vehicle-related costs
Continuing professional education
Marketing fees
Multiple listing service fees
6. Calculate the number of deals you’ll need to close.
Because you’ve already determined the average prices for rental homes and real estate in your area, it’ll be easy to calculate this step accurately.
Normally you’ll be earning one half of the real estate commission by representing either the buyer or the seller. This is usually 3%. Use this percentage to calculate how many deals you must close to break even. Finally, calculate how many deals you must close to reach your financial goal.
The Takeaway
The process of crafting a high-quality business plan will help you clarify your direction for your first active years.
Be sure you are continually working to maximize your exposure and network with other agents. Choose a few reliable mentors you can depend on for guidance with your business plan. Being able to refer back to your plan when you feel stuck will guarantee that you always have a plan of action for success.