Business Planning for Success
By failing to prepare, you are preparing to fail ~ Benjamin Franklin
It amazes me how many real estate agents have never written a business plan.
Have you ever taken a road trip? Imagine getting to your destination without GPS, Google or Apple Maps or even an old school map book.
Guessing which hiway to take likely isn’t going to end up in your favour. You know you where you want to go, but without a map it is going to be a difficult trip to get to your destination.
Not planning out your real estate business is the same thing. If you are not tracking your current business, how can you possibly layout your road map for the following year?
Below, I am going to give you a template of how you should be setting up your business plan and also what metrics you should be tracking on an on-going basis to truly get a snapshot of where your business came from and where it can go.
Tracking and Measuring: First Things First
You might think that jumping into the planning phase would be first.
What is more important though, looking towards the future? Or looking to the past so that we can plan for the future? You need to track and measure where your business came from this year so that you can understand where to focus your energy and resources for the following year. This is the most important step and is why we titled this section First Things First.
The metrics you must track in order to be able to look towards the future
There are many different metrics that you should be tracking, however, one of the questions that will likely come up in reading this article would be where to track this information. You don’t need the shiny CRM that does everything but does nothing at the same time (meaning it won’t do anything because most agents won’t use the CRM how it is intended), what you do need is a basic working knowledge of Excel. That’s it.
This is what you should be tracking:
- Contacts You Need to Have in Order to Support your business goals
- # of Listing sales you want to have
- # of Buyer Sales you want to have
- Average GCI in your business on each transaction
- How Many Weeks Will You Work in the following year
- How many listing appointments do you convert into listings? 90%, 87%, 95%??
- How many times do you take a buyer out before they write an offer? 4, 5, 10?
These metrics will help you gain an understanding of how hard you will need to work. For example, if you convert 85% of your listing appointments into listings and you want to sell 20 homes through the listing process, how many listing appointments do you need to go on (assuming of course that all of your listings sell)?
The answer is that you would have to go on 23 listing appointments to convert 20 homes into listings.
The other metrics you need to track are:
- Client Name, Property Address, Sale Price, Commission Amount, Sales Volume
- Source of Business (Super important, you’ll see why later on in the post)
- Were they a Buyer or a Seller?
- If it was a listing, what was the average days on market (important when in listing appointments, stats are a good thing!)
Business Plan: Putting it All Together
It is important to keep all of your tracking, measuring and planning in the same place. In that Excel spreadsheet, you just need to create another page and title it “Business Plan for 20XX”. That way, you can refer back to your business week in and week out and also measure it against what your plan calls for.
Here is how you start:
- Put down your Mission, Vision and Values statement. This is important as it is a constant reminder of why you are in the business, it is good to see this at least once a week and to ensure you are living it every day.
- Identify the Lead Generation Pillars in Your Business. If you are tracking and measuring, then you would know where all of your business came from in the previous year. For example, I know that 72% of my business came from my SOI (or Sphere of Influence). I know that I am going to put a lot of effort into this segment of my business in 2017 because it was a huge part of the previous year. This will also allow you to see the areas that you will want to improve upon when planning your business
- Take a 40,000 Foot View Approach to Your Business. This should be the high level vision of where you see you working your lead generation pillars. The ideas that you have to generate business from your pillars.
- Breakdown every idea into an action. Saying you are going to generate business from Past Clients is great, but how are you going to do that? You can break it down into smaller bite sized chunks, for example: Past Client Referrals is a lead pillar. I will commit to the following: Video Text Messages, Email Marketing, Direct Mail Newsletter. These are the actionable ideas of how you want to market to your past clients.
- Calendar everything. The second most important part to success in real estate (besides business planning for success) is holding yourself accountable to your calendar. You have the action items that you envision yourself doing to generate business, putting them in the calendar gives you a clear vision of what your responsibilities are on a daily, weekly, and monthly basis.
Your source of business is likely the most important piece of information that you will track. When you begin to breakdown this information at the beginning of Q4 (meaning October is when you should start) you will have a good look of where your current year’s business is coming from.
From there you can begin to plan how you are going to increase certain areas, maintain others and drop other areas off completely so that you can focus on the lead pillars that brought you the most business.
Now, planning without execution….well that’s a different topic for a different day!
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