How Structured Should Your Real Estate Business Plan Be?
Business plan basics tell us that every business needs some kind of formalized plan to grow and prosper. A real estate business plan can be a daunting challenge, and most agents never even think about it when they're first getting started. There is a ton of information on this site about business plans, including a review of a real estate business plan service at CreatAPlan.
By all means, if you want a formal real estate business plan, check out the services available and even some business plan templates available. However, especially for the new real estate agent, you can do a good job of creating a simple but effective real estate business plan. Considering the high failure rate for real estate agents in their first two years, a good business plan could make the difference between success and failure.
Why a Real Estate Business Plan?
If you're starting your real estate agent career, or even if you've been around a while, there are very good reasons to develop a business plan:
- Help you to determine your business strengths.
- Provide a guide you can refer to as you move forward.
- Help in developing an operating budget.
- Planning marketing, a significant expense in the real estate business.
- Structure for growing the business intelligently.
- Help you to avoid common mistakes that contribute to failure.
Without spending money or too much time and effort, you can set out a simple real estate business plan that will provide structure and a plan to survive and succeed as you grow your business.
Elements of a Simple Real Estate Business Plan
In the spirit of K.I.S.S., Keep It Simple Stupid, here are the basics of a plan to survive the first two years and to grow your real estate business for a prosperous future.
First, it's a plan: Write it as such. It should have action statements as to what you should do and when. Sure, it should have reasons and any other information that helps you to remember why the items are there. However, make sure that it has items that you will be putting into play for success.
Things NOT to do: It isn't bad to actually put some things in there that you should remember not to do. Of course, they can be written as positive statements. Example: Avoid paying for leads from sources that provide them to competitors as well. That's a simple statement of what to do, but it should help you to remember that you don't want to buy leads when they're being farmed out to multiple agents.
Define Your Business
Just what is your business going to be? Sure, it's getting real estate sold, but that's too simple and doesn't give you a good start on your plan. First, what do you like to do? Some agents love working with buyers, while others only like working with sellers. Others want to specialize in a niche, maybe condominiums, or even farms and ranches.
Develop a statement of what you want to do and any niche markets you want to cover. Example: "I want to work primarily with sellers in the residential niche. I also want to work primarily in the [area] of my market." You could also define a price range or buyer type. Perhaps it's first time buyers in the starter homes price range. Or, it could be vacation home buyers if your market area is popular for those type of homes.
Develop a Starting Marketing Plan
What type of marketing do you plan to do? When you're doing this planning, you have what you defined for your business as your guide. If you defined your business as working mostly with buyers in the residential market, then plan your marketing to reach that audience. Scattergun marketing and advertising wastes your precious financial resources.
Set up a Budget
This is critical. How much money do you have to invest in your business? Even if you believe you do not have any money for a marketing budget, figure one up for after your first commission. You will have expenses, however. Between your license, continuing education and vehicle expenses, there is enough going out that you should plan for it.
Part of this budget planning is setting aside a portion of commissions for marketing and growth. Take your average expected home price and commission and plan on what you'll set aside from each for your business budget.