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We’re down to the wire. There are less than 50 days left until 2022! And that’s still plenty of time to get ready to hit the ground running in the new year.
Now is the perfect time to reflect on what went well (and what didn’t) in 2021, review your goals for the next few years, make adjustments, and craft a clear and actionable business plan for the year ahead.
9 elements to include in your business plan
Traditional business plans include nine key components, which are valuable to outline — especially if you’ve never written a business plan before. So, let’s start there:
1. Executive summary
This overviews the business as a whole and highlights what the business plan will cover. It’s a great place to also include your mission statement, principles or values.
2. Overview and objective
What product or service do you provide? Who will you serve? How do you provide those? What are the company’s goals? This is where you summarize your current operations and where you plan to go.
3. Products and services
What does your business sell? What are the fundamental financial models or costs you are charging for those services?
4. Market opportunities
Evaluate, research and then outline what the opportunity is for sales in your market.
5. Sales and marketing
How will you market and sell your product? What are you lead generation funnels (and associated costs)? What traction channels will you invest time and money into? Who is your target audience? How will you consistently get in front of them? What is your lead optimization and conversion strategy?
6. Competitive analysis
How does your business stack up against the competition? Who are your biggest current competitors? Who are the potential competitors you need to prepare for? How will you differentiate yourself from the competition?
How will you consistently serve your customers and clients, keep expenses in line and ensure profitability? What systems, models, processes, infrastructure and staffing will you need to achieve your business goals?
8. Leadership team
Who are the key leaders? What is each person’s role? What are their compensation plans? Who else might you need to round out your team?
9. Financial analysis
What do your current financials look like (balance sheet, P&L, cash flow statement, operating budget)? What are your financial projections for the year ahead?
5 steps to help you build out your 2022 business plan
1. Get clear on your goals
Forget about other people’s opinions or what you think you should be going after. What do you really want? Ask yourself:
- How do you want to spend your time every day?
- Who do you want to spend time with?
- What projects do you want to focus on?
- What ideas, services, or causes set your soul on fire?
- Where do you see yourself in five or 10 years?
- What do you need to do this year to get you close to that future version of yourself?
Take the time to journal or use tools to dig deep and clarify what you want.
2. Start with the end in mind — and then work backward
Now that you have your specific goal outlined, it’s time to work backward and break down your annual goal into concrete, actionable and measurable components.
Do you want to net $1 million in 2022? Great! What are your expenses? How much will you need to gross to net $1 million? From there, break it down even further:
- How many sales do you need per month at what average sales price, and at what average commission?
- How many appointments will you need to make that many sales?
- What’s your conversion rate?
- How many leads will you need to connect with to make that number of appointments?
Outline it all.
3. Figure out who will help you get there
Once you have your sales numbers outlined to hit your profit goal, consider who you will need on your team to help achieve that goal. Perhaps you’re able to make the calls and go on the number of appointments yourself.
But if that is not realistic or doesn’t align with how you want to spend your time, then it’s time to consider who you may need to hire in the year ahead.
Maybe it’s an ISA, an administrative professional, a cyberbacker or a buyer’s agent. Outline your staffing needs with the corresponding investment (don’t forget to include employee costs such as insurance, payroll fees and benefits!).
4. Review your expenses
You know where you want to go. You know what sort of sales activities you will need to get there. And you’re clear on who you need to invest in to help you hit that goal.
How are your financials looking at this point? What expenses do you need to eliminate that don’t serve your goals? What new hires or systems do you need to invest in to make your revenue goal? Make the necessary adjustments to your financial analysis in your business plan.
5. Delegate and set clear targets for your team members
Once you have done the work to create a clear business plan, make sure your team members know what part of the plan they are responsible for overseeing and delivering on.
For example, your operations manager or finance manager will need to keep an eye on expenses and the top line revenue to make sure each month the team is on target.
Your director of lead generation will need to be held accountable for procuring the necessary number of leads and appointments to hit your sales numbers.
Your team members might even want to create a simple business plan for their own division to stay on track throughout the year.
Whether you’ve completed a business plan before or it’s your first time, getting this information outlined and on paper and revisiting and revising it every year is an excellent practice for gaining clarity and being more strategic about your company’s growth.
As real estate professionals, I know we are all incredibly entrepreneurial; that’s part of the reason we got into the business in the first place! But if we want to build a sustainable, scalable and profitable business, we must take the time to create plans.
Yes, it might slow you down in the short term, but once you’ve done your due diligence with a business plan, you’ll be able to move so much faster and more effectively in the year ahead.
Adam Hergenrother is the founder and CEO of Adam Hergenrother Companies