Even though we hear that every business needs a business plan, people getting into real estate seem to think that selling real estate doesn't count as a “real business” therefore it doesn't merit a “real business plan”.
Now I will agree that selling real estate definitely does not fall under the traditional category of businesses but it is most definitely a business.
In fact, after interviewing top producing agents from every level, the most productive and successful agents are the ones that actually do treat their business like a real business.
The correlation is abundantly clear.
If you fail to plan, you plan to fail.
If you want to succeed and achieve your goals, you have to treat your business like a business and it starts with creating a Business Plan.
Conventional wisdom would have you believe that a business plan needs to consist of 20+ pages complete with bar graphs and pie charts. That's why most real estate agents don't even get started on their plan and just tell themselves “I'll figure it out.”.
There's a better way than just ‘winging' it.
We have a simple, free, focused 1-page business plan template for you at the bottom of this article.
Your Business Needs a Business Plan
Business planning is one of the most vital parts of planning for every business yet I consistently meet with agents that give me a blank stare when I ask them about their business plan.
There are always a few of them who I can tell have put some thought into their business plan but they haven't put it down on paper and putting it down on paper is the key.
Don't just take my word for it, multiple studies show that writing down your goals actually increases the odds of you achieving them.
A more recent study found that you become 42% more likely to achieve your goals and dreams, simply by writing them down on a regular basis.
If an entrepreneur or business owner went to apply for a business loan and when asked for his business plan, was not able to produce one, he might be laughed out of the bank. With “traditional businesses”, business plans are pretty well assumed and expected yet so many agents don't treat their business like the “traditional business” that it really is.
Now with all that being said business plans are indeed vital for every type of business however with the speed of today's world we have to be able to adjust and optimize them as needed.
It's important to remember that your business plan is not and should not be written in stone but it should serve as a guide for executing your strategy and reaching your goals.
Your business plan is not and should not be written in stone but it should serve as a guide for executing your strategy and reaching your goals.
A business plan is especially important for new agents because often times new agents are juggling a side job or even a full-time job until they can make enough money to fully commit to real estate.
In other words, making money as fast as possible could be the difference between living the real estate life or having to stick to your day job.
What Your Business Plan Should Cover
This one-page game plan was crafted after taking into account all of the wisdom we've gained from interviewing top producing agents on the CompleteAgent Podcast.
We figured out that all you need is to summarize your goals and the strategies you’ll use to achieve them and we also found that it can all fit on one page.
Here's what the business plan will cover:
Your Big Hairy Goal – This can be one or two main goals
3 Key Focus Areas – Areas of focus that will help you reach your goals.
5 Objectives for Each Focus Area – Next you'll break down each focus area and write 5 objections or specific actions & tasks that correlate with the focus area.
Key Metrics – You're going to choose and identify 3 key metrics that will give you a quick overview of how your focus areas are doing and if you’re on track to reaching your goals.
Costs & Budget – What costs and activities will you need to achieve your goal? How much do you absolutely have to make each month to live?
Business Boosters – What unfair advantages do you have over your competition? I like to think of this as the “low hanging fruit”. What is the low hanging fruit ready for a little nurturing in your life? (relationships, access, experience, etc)
In the business plan template download, you'll find a blank template as well as a filled out business plan to give you examples of what your business plan can look like.
Feel free to take from it what you want, use it for inspiration or don’t and completely make your own plan. The example template is just there for your reference.
Start With Your One Big Annual Goal
You have to start your plan with your one big annual goal. This goal only has three requirements: it must be specific, measurable and tough to hit. Believe me, it's an amazing feeling to achieve your goals but it's an even better feeling achieving a big hairy goal you never thought possible.
Aim for the moon, so if you miss you land in the clouds.
For real estate agents that annual goal can be a number of transactions, total closed volume or a gross commission income goal. In the example provided in the business plan template, we used a goal of 24 transactions in 12 months.
We chose 24 transactions as the annual goal because the average sale price in our market right now is $260,000 which bring the average commission to $7,800.
Multiply this commission times 24 (2 closings per month) and the total gross commission is $187,200.
Have fun with your big goal and don't be afraid to reach for the stars! Actually, it's encouraged.
3 Key Focus Areas to Reach Your Goal
The key to achieving your goals is getting laser focused on your key focus areas. These items should represent larger and more daunting tasks that you won't be able to knock out in a day.
For example, your focus areas could be establishing a daily lead generation strategy, building an online presence, geographically farming a community, building a team, and/or increasing the number of referrals.
So think big picture when choosing your focus areas and be sure that executing your focus areas will help you achieve your one big hairy annual goal.
If one of your goals is to break into a specific neighborhood or community, one of your focus areas should be mastering open houses and holding at least 2 per month.
If you want to learn a complete, proven system for holding open houses that gain you at least one ready, willing and able buyer each and every time while filling up your pipeline with quality leads, click here to sign up for my Open Houses That Work Course starting up in January 2018.
Play to Your Strengths
When breaking down your key focus areas into actionable objectives try to play to your strengths and set yourself up for success. For example, if you know that you hate cold calling or you hate the idea of confrontation, then cold calling 20 people a day or knocking on 10 doors a day might not be the best action items for you and that's okay.
There are plenty of successful agents who don't cold call and who don't door knock, but the difference is that they know their strengths and don’t waste their time trying to force a square peg into a round hole.
A Few Words on Costs & Budgets
Real estate agents are notorious for mismanaging their finances and getting into trouble with the IRS and I can speak from experience that it’s very easy to get into trouble unless you build a foundation and processes for managing your money and business investments.
The biggest area where realtors get in trouble is simply spending too much money on their business.
At the end of the day it's not what you make it's what you keep and it's really easy to want to throw money at every marketing channel that you can with the hope of just getting that one closing, maybe a $5,000 or $10,000 check that makes everything worth it but that is not the way to run your business.
You have to hold your marketing dollars accountable and that means literally holding each dollar accountable and making sure you’re getting a good return on your investment.
Actually, having a marketing budget is the best excuse for getting rid of telemarketers trying to sell you marketing services.
Next time when you get called by yelp or any other marketing company that calls you to spend money with them you can tell them that you've already done your marketing budget for the year and that I'm sorry but you can call me next year. It's the best excuse and works pretty well.
For the cost and budget section of the business plan template, the main two questions that you have to ask yourself are simply:
- “How much am I going to invest in my business to reach my goals?”
- “How much money do I need to make to live and pay my bills each month?”
Without a doubt, this business plan will grow and change to reflect your successes and failures, and it should.
CompleteAgent’s One Page Business Plan Template asks the right questions to help you reverse engineer your goals with a simple layout that won’t require you spend hours creating a 34 slide PowerPoint presentation.
So grab our template, get started, and remember it doesn’t have to be perfect.
This is your rough plan, and when your vision gets a little blurry on your journey, you’ll have this map to guide you.
Remember, don’t be afraid to change your business plan or even completely scrap it and start over if you feel that’s what you need to do!