Every Real Estate Agent Needs a Business Plan
We launch our 2021 blog with a topic that should be of critical importance to every real estate agent, regardless of how much time you have in the industry: Business Planning.
According to the National Association of Realtors, 87 percent of all new agents fail after five years in the industry. If you’re asking what’s so special about the other 13 percent, the answer is simple: business planning.
It is estimated that business with a plan grow up to 30 percent faster than those without one. Still, the vast majority of real estate agents go through their days without a business plan. Indeed, many agents succeed without a plan, but those agents, by far, are the outliers. The truth is, many agents don’t want to spend the time and energy working on a business plan (yes, experienced, as well as novice agents). This is especially true if your business is solid at this moment. If you’re getting transactions, why take the time to worry about a plan. Of course, the answer is simple (as high performing agents know all too well): real estate is fickle, and you can’t always count on things running like a well-oiled machine.
Before we get into the nuts and bolts of business planning, a word on the “value” of going through the planning process. The primary benefit of business planning is that you have a process to hold yourself accountable. As we’ve written before in this blog, the numbers don’t lie. And top performers take comfort in the fact that numbers don’t lie. They want to know everything in as much detail as possible, the good, bad and ugly. With this knowledge, they can continually make adjustments to meet their goals.
Below are a number of elements that should go into your realtor business plan. Some lists will vary. Our goal here is to outline a business plan primarily for those who have never written one.
- Mission/purpose: Why are you in the real estate business? What gets motivated every morning? Or, if you’re not motivated every morning, are you even in the right business? It’s important for all of us to take a step back and do some self-reflection about our purpose, and to assess what’s important in our lives.
- SWOT: Self-reflection should also include some objective self-assessment. Take time to honestly assess your strengths, and weaknesses. If your list of strengths is dramatically longer than your list of weaknesses, it’s possible you’re being less than honest. What opportunities do you see to expand your business (maybe becoming a neighborhood expert?)? And, what are the threats on the horizon?
- Business goals: This is where you start to get specific with your numbers. You may decide to have short, medium and longer-length goals (i.e. 1, 3. 5 years). Of course, your one-year numbers are the foundation of any long-term planning. To that end, you’ll want to drill down as specifically as possible when defining your goals:
- 12–month transactions and/or revenue
- Average commission per transaction in your MLS
- # of listings you’ll need to reach your goal
- How many listing presentations to yield a single listing?
- How many calls to get one listing presentation?
- How many calls to reach/talk to one prospect?
- How many hours do you need to prospect each day to reach your goal?
- Strategies: What specific strategies will you employ to reach your business goals? What approach is the most likely to get you to your goals sooner? Your strategic platform can be one or a combination of the following:
- Prospecting expired listings exclusively
- Prospecting FSBOs exclusively
- Becoming a neighborhood expert, through neighborhood farming
- Working your sphere of influence
- Focusing on the luxury/high-end market
- Expenses: Businesses that are doing all the right things in terms of strategy can easily fail if not enough attention is paid to expenses, notably:
- Personal expenses: Housing, vehicles, health insurance, utilities, education, entertainment.
- Business expenses: Vehicle, phone, office space, business taxes, website hosting, etc.
- Start-up: If you’re new to the business, you’ll have start-up costs, such as website development, licensing fees, business cards and on-boarding fees to a brokerage.
- Process and Investment: Some might put this section under expenses, but we maintain that it should be separate. One of the keys to success in real estate is investing in your success. In terms of mindset, there is a huge difference between looking at something as a line-item expense and a long-term career/business investment. The primary difference is that it is easy to cut expenses, especially those that might not yield immediate results. So, here are some of the investments that can be essential for your long-term success:
- A world-class Customer Relationship Management (CRM) program, such as Vulcan 7. Vulcan 7 is a comprehensive system built around the best expired and FSBO leads delivered to your desktop every morning. Learn more about Vulcan 7’s features HERE.
- A professional coach. Investing in a coach provides you with someone who will help to keep you focused and accountable.
- Industry seminars and workshops. Even in the time of COVID, there are numerous online workshops that connect you with other real estate professionals and expand your understanding of the real estate business.
- Marketing and personal brand development: Personal branding is an essential tool for any real estate agent. Whether you work with a branding expert, or invest the time yourself, the more you know about branding, the better you’ll be a defining yourself in the marketplace.
IMPORTANT: If you’re going to take the time and energy to write a business plan, make sure you review it daily, or even several times a day. Many small business people develop a business plan, so they can say they did it. But then it sits in a desk drawer or in a folder somewhere deep within their computer. Keep your business plan in a place where it’s convenient to look at it frequently. The more you take the time to study your plan, the more it becomes a part of you, and the more you become invested in achieving your goals.
As we said at the outset of this post, very few real estate agents invest the time to write a business plan. Therein lies YOUR opportunity! By writing a business plan, you help to define yourself vis-à-vis the other agents in your area. But perhaps more importantly, a well-crafted plan becomes the foundation for your business, a tool to inspire you on a daily basis and the roadmap to your future success.
Good luck in 2021.
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