Jacqueline Kyo Thomas
As a new agent, the key to your success is to write a real estate business plan. You need a business plan before you pass “go” and before you collect $200.
Here's why: Your real estate business plan will provide you with a reliable roadmap for the future of your business. With a well thought out business plan, you'll know exactly what steps to take to reach your business goals. Creating a real estate business plan is one of the smartest things you can do as a newly licensed real estate agent. And as the old adage goes, if you fail to plan, you plan to fail.
Because a business plan acts as a map, you can use it to know where you're going and to reorient yourself if you ever get lost. You can set a series of goals (i.e. destinations) and your business plan will provide you with directions on how to get where you'd like to go.
Also, if you'd plan to secure funding for your business from a bank, you'll need a business plan. Lenders will expect to see a solid business plan that outlines the expected future of your business and your plan to repay the loan.
If you’re worried about writing your own business plan, don’t. Your real estate business plan doesn’t need to be fancy to be effective. Think of it as a usable document that you’ll refer to often to stay in line with your goals. It should be simple but smart enough to keep you on track.
To help you create a smart plan for your real estate business, we’re sharing what will help you succeed and things to definitely avoid. Let’s get started.
The Do's of Writing a Real Estate Business Plan
Incorporate the following tips when creating your business plan:
Do Get Started Right Now
You may not feel ready to write a business plan just yet. And this is especially true if you just received your real estate license in the state of Massachusetts. However, it’s always better to start out with a plan for reaching your goals. And the earlier the better, because everything you do for your business should be prescribed in your business plan.
Write a Mission Statement A mission statement is a short declaration that describes the purpose of your business and your target audience. A mission statement can be one sentence or one paragraph, but it rarely goes over one paragraph. It should be pithy. In addition to describing your business' purpose, it should also declare your values and your goals.
Define Your Goals
As a business owner, one of your biggest goals is to make money. That's a given. But looking beyond that basic goal, think about what else you'd like to accomplish during your first year in real estate. For example, if you're currently planning to work in real estate part time, is your goal to become a full time agent by this time next year?
Set S.M.A.R.T. Goals
After creating a list of your business-related goals, turn them into S.M.A.R.T. goals. S.M.A.R.T. is an acronym that stands for specific, measurable, attainable, realistic, and time-based.
This means that every goal you have should be clearly identified and precise. Your goals should also be measurable, meaning that you can track them to ensure that you're still in line with accomplishing your goals. Your goals should be attainable within the timeframe that you've set.
Also, your goal should be realistic. In other words, your goals should be practical and in reach with the resources that are available to you. Finally, your goal needs to have a deadline attached to it. Otherwise, your goal will be a perpetual carrot dangling just out of reach.
Set Short Term and Long Term Goals
If you're just building your real estate business, you'll have a mix of goals. Some goals will be future ambitions, such as making your first $100,000 from real estate. Other goals can be accomplished within the first few months of penning your business plan, such as choosing a customer relationship management system, i.e. CRM.
Do Market Research
When you work as a real estate agent, you're running your own business. Sure, you're sponsored by a broker, but your broker is not your boss. You're your own boss, and you must think like a business owner.
One essential task you must perform is market research using what's known as a SWOT analysis. SWOT is another acronym, and it stands for Strengths, Weaknesses, Opportunities, and Threats.
First, consider the strengths of your business. (And, by the way, you are your entire business when you're first starting out.) Your strengths set you apart from other agents. These strengths may be hard or soft skills, such as your technical savvy or in-depth knowledge of a particular neighborhood.
Next, consider your weakness. What limits you from meeting your full potential?
Consider opportunities in your market. What needs aren't being met currently? Are there any groups that are underserved in your area? By the way, this is an opportunity to identify your niche.
Finally, identify your threats. What do your competitors do better than you?
A SWOT analysis gives you major insight about your business, specifically where you stand in your market and the opportunities you have to improve your business.
Do Ask for a Critique
Here's one of the best things you can do after writing a business plan: Ask your real estate mentor to review it for you. Choose a mentor (or someone you trust in the real estate industry) to look over your business plan to ensure that it's realistic. As a new agent, you don't know what you do not know, which is why you should seek out the constructive criticism of someone who's a little further down the same path that you're on.
The Don'ts of Writing a Real Estate Business Plan
Avoid the following pitfalls when penning the plan for your new real estate business:
Don't Forget to Create a Financial Plan
Whether you seek out a bank loan or bootstrap your costs, you will need money to be successful in real estate. Sure, you can do a lot for free, but you'll also need to invest in your business if you're hoping to gain serious traction quickly. From business cards to desk fees to professional memberships, you'll need to invest a decent amount of money into building your real estate empire. Be sure to predict and calculate your business expenses. This includes both operating and marketing expenses.
Finally, consider your personal, living expenses, such as your rent/mortgage, utilities, and groceries. You'll need to either pay yourself from your real estate business' revenue or from another source.
Your business plan should outline how you'll fund your business until you get your first commission check.
Don't Forget to Market Your Business
To increase visibility for your real estate business and generate new clients, you need a marketing plan. In your business plan, lay out a marketing strategy that you'll follow to reach your goals. Will you focus online? Where online? Or will you do a mix of online and offline marketing to grow awareness for your business?
Don't Take the “One and Done” Mentality
Writing your business plan isn’t something that you do only once. To find lasting success in real estate, you’ll need to revisit your business plan at least once a year. However, if you bypass the goals you listed in your business plan, don’t wait. Create a new plan right away. This way, you can set a new destination for your business.
Final Thoughts
Writing a real estate business plan may not be the most exciting activity you'll do, but it is one of the most important. When writing your business plan, be sure to observe the above do's and don'ts.
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