11 Components Of A Real Estate Business Plan
If you’ve never crafted your own real estate business plan before, doing it for the first time can feel especially overwhelming. The good news, however, is that if you include certain things in your plan, and construct your plan in a certain order, you’ll have no problem creating something that fits your business where it is — and prepares you for growth next year.
When you’re creating your real estate business plan, make sure you include the following, ideally in this order.
The most perfectly crafted real estate business plan won’t get you anywhere if it’s focusing on the wrong part of the market, an area where a business is going to contract instead of expanding — unless you have a very specific plan to capture more business regardless. But to make that specific plan, you’ll need to know where the market is, so even if your ultimate goal is to swim against the tide, start by pinpointing the tide itself.
Take a look at the past year (or, ideally, two or three years) of sales in your area. Look at price points, location, days on market, and see if you can identify or pinpoint any trends. Did luxury sales look stronger than normal last year, and why do you think that could be? Did price growth suddenly start to soften around entry-level homes?
When you know who is buying and selling which homes in your area, what they like and what they don’t like, and what they’re willing to pay or to list their homes for, then you’ll have a good idea of how you can fit into that mix and provide services to those buyers and sellers.
After you’ve assessed the market, take some time to think about what inspires you in your day-to-day life. There are probably some moments you’ve experienced in your career that make you feel like all your effort and hard work paid off in a rush of reward and accomplishment. If you think about those moments and try to identify any common denominators or features they each hold, what might those be?
You could realize that you feel most fulfilled when you’re handing keys over to a single parent who’s working on building a stable life for a family on a single income. Or perhaps you get that rush helping an elite seller offload a property discreetly, quickly, and for a sizable amount of money, earning their praise and referrals.
Why tackle the mission after the market assessment? Truthfully, you could do either one of these exercises first; if you do the market assessment first, however, then your mission is likely to be at least a little bit more actionable in the current real estate environment.
The acronym, if you’re unfamiliar, stands for “strengths, weaknesses, opportunities, threats” — and this is a critical analysis to complete for your business plan if you want it to be competitive. Start with your strengths: catalog where you know you do well and count those as assets. Be equally thorough and even more brutal with weaknesses, though.
Next, look back at your market assessment and think about the opportunities and threats that you think will be most important to have on your radar in 2020. Maybe one area of your business or one method of lead generation that was important to you seems to be drying up; in that case, you definitely need to mark that as a threat. On the other hand, perhaps a new industry opening up in your area or a chance meeting with a developer who wants to work with agents could be a sweet new opportunity for you.
You’ve got the foundation built for your real estate business plan; now it’s time to put an actual, well, plan into action by setting some goals. The work you’ve done on the market assessment, your mission statement, and the SWOT analysis should give you a good framework for where you should make goals in your business to help drive you forward and what, exactly, those goals might be.
For example, maybe a combination of new industries emerging in your area, a new network connection into some new condo developments, your own assessment that condo sales are climbing while single-family home sales are stagnating, and your age and technology savvy all lead you to believe that there’s a big opportunity in condo sales and that you could be the person to tap it. Perhaps your goal will be to close a certain number of condo sales this year or to double the amount you did in 2019.
It’s a good idea to build a few different goals around different areas of your business so it’s not all about production. Think about the financial and lead-generation goals you want to meet, of course, but also consider operational goals like hiring an assistant, or lifestyle goals like being able to take two weeks of vacation in 2020 without things going haywire while you’re away. You can even use this opportunity to set health goals, relationship goals, anything else you want to work on next year; after all, your work is part of your life, and if one of your work goals is to give yourself more spare time and energy to spend with your loved ones, that’s both admirable and doable.
Your strategic plan is essentially your road map from getting from where you are today, your current state of affairs, to reaching or passing your goals. This is the part of your plan where you break your goals down into actionable steps, giving yourself a clear pathway to the end of 2020 and the successful completion of every single one of your goals.
One effective way to do this is to look at the gap between where you are today and where you want to be, measure how wide the gap is, and assess the best way to bridge it. If you wanted to run a marathon, you’d know that you have to start running every day, so “run every day” would probably be on your list of things to do to accomplish that goal, along with “register for a marathon” and “buy running shoes.”
Taking the marathon analogy to the next level: When you start training, hopefully, you would know better than to try to run twenty miles on your first day. You want to build up to running those long distances, which means you first need to acclimate yourself to running shorter distances.
With your goals and strategic plan in hand, think about your schedule and how you’ll time those incremental steps toward your goals. Don’t forget about seasonal or annual commitments that might make things easier or more difficult for you at different times of the year and then plan accordingly — your future self will thank you for your thoughtfulness.
You need to spend money to make money, so the saying goes, and that’s definitely true in real estate as much as any other industry. But that doesn’t mean you should be spending indiscriminately; in fact, you should actually be setting a budget for these goals and then doing your best to come in under that budget if you possibly can.
Make sure you are paying attention to the budget in your business plan. Outline how much you will spend upfront and then reinvest in your lead generation system, how much you will save for business expenses, how much you will reinvest for retirement — if it’s money-related and you have a goal tied to it, but the budget in your business plan.
You’ll have to market yourself as an agent in addition to marketing your listings, although those tasks can take different priorities in different years. So think about your marketing goals in 2020 — even if it’s only to automate what you’ve been doing, or delegate it so you don’t have to think about it anymore. Have you already put those into your business plan? What else might you need to add to help actualize the rest of your goals in terms of marketing?
Systems and processes
Outlining the systems and processes that you’ll use daily in your real estate business plan might seem like overkill, but on the other hand, if there are things that you’re doing at a very practical level and on an extremely regular basis that don’t entirely align with your goals and your mission … don’t you want to know about that as soon as possible so you can make some changes?
The other advantage to outlining systems and processes in your business plan is so that you fully understand what you are personally handling and what you’re outsourcing, and you can decide when it makes the most sense to either delegate further, outsource, hire an assistant, or whatever you need to do so that you’re able to reach your end goals.
This is the part of your business plan that sums everything up, exactly what it sounds like. Why is it necessary? Well, if you need to remind yourself in a sentence (two, tops) what you’re doing, for whom, and why, the executive summary does that perfectly. You can even use that structure to create it, and if someone asks for your elevator pitch, you’ve got it down to a single sentence — impressive!
Some agents create a real estate business plan and then never check it again until it’s time to make next year’s plan … which might as well look a lot like this one, if not identical because you never implemented anything. Look at your goals and your schedule, then decide how often you’re going to pull out your business plan to review it and see how you’re pacing. Weekly? Every other week? Every month? (That’s probably the longest you want to go, realistically.)