- To be successful next year, you need to follow a budget, know where your business is coming from, continue your training and education, and evaluate and measure all of your efforts.
Many real estate agents dive into their careers head-first without a solid business plan for their long-term success and growth. Real estate businesses take money, time and effort to grow and prosper.
Utilizing a real estate business plan, you can organize your business goals into actionable steps that are manageable and measurable.
A business plan does not have to be complex to be effective. Follow this four-step guide, and create a simple business plan for your growth and success in 2018.
Step 1: Show me the money
A budget is essential for any real estate agent. Inconsistent cash flow is one reason agents struggle to make it long-term in the real estate business. A budget will help you manage your cash flow and the uncertainty that comes with the real estate business — working on commission.
To create a simple budget for your real estate business, you will need to look at both your business expenses and income for the year ahead.
Start by outlining your monthly real estate business expenses. Expenses may include things like:
- Advertising and marketing expenses
- Business expenses (auto, insurance, supplies, training, taxes, licensing)
- What do you need to pay yourself to live (pay yourself a salary each month)
Use a spreadsheet or bookkeeping program to establish and track your monthly business expenses. This will ensure you keep your expenses within your budget and will help you maintain a more consistent cash flow from month to month.
Outlining your expenses each month will help you better identify how much income you will need to pay the expenses needed to run and grow your business. To establish income goals, look at the following:
- Average sales price of homes you have sold (current or estimated based on your target market)
- Number of appointments and clients needed to meet annual goals (buyer and seller)
- Percentage of appointments converted
Your income and transaction goals will help you determine what actionable steps you need to do each day to meet your income goals. Managing your income will allow you to see where you are most profitable and where you can make simple adjustments to increase your bottom line.
Step 2: Where is your business coming from?
Most agents spend too much time managing their transactions and not enough time managing their business. This causes agents to neglect current business relationships and new business opportunities.
A marketing plan will help you create action steps to keep in touch with your current business prospects and seek new business opportunities. Evaluate the following areas when developing your real estate marketing plan.
Identify your ideal client
Identifying your ideal client will help you be deliberate with your marketing efforts. Ask yourself the following questions as you work to define your ideal client:
- What are the demographics of your ideal client? (Age, location, occupation, income, average sales price)
- What challenges does your ideal client face? (Example: First-time buyers may lack real estate experience)
- Where do your ideal clients get their information? (What do they like to read, where do they spend their time?)
Determine possible marketing areas
To grow and market your real estate business, you need to diversify your marketing efforts. This may include identifying new areas to market. To determine if an area is worth your marketing dollars, evaluate the following:
- Where are you currently working?
- How many homes are in the area, and how many can you consistently market?
- Does the average sales price fit your target market?
- Is the area already being heavily marketed by someone else?
- What is the turnover rate for the area?
You can calculate your turnover rate with this simple formula:
Number of homes sold in past 12 months ÷ number of homes in market area
Although turnover may vary depending on your market area, an RPR study suggests that you look to market in areas with a turnover between 5 percent and 7 percent.
Create an action plan
The final step in is to create an action plan for your success. Successful marketing takes time. Many agents do not succeed with their marketing efforts because they lack a system, consistency and diversification of their efforts.
Create a successful plan over the next year that will be consistent and diverse so you will remain top-of-mind to those in your market area. Use this simple diagram as a guide to get you started.
Step 3: Stay informed
Education and training
The real estate industry is constantly evolving. Learning new skills gives you the ability to better serve your clients.
Incorporate a plan for your education and training as part of your business plan; budget for the cost of conferences, training and new business tools that will help your business grow.
Step 4: Evaluate and measure your efforts
Track ROI, and adjust
A real estate business plan gives you the opportunity to see your goals on paper. Create a system to evaluate your marketing efforts. If something is not working, or the market shifts, you can easily make adjustments to your business plan.
Running real estate business without a business plan is like driving blindfolded. You have no idea where you are or where you might end up. Create a plan for your success in 2018 by creating a solid real estate business plan.