4 Steps to Writing a Real Estate Business Plan
A business plan is a comprehensive summary of every aspect of your business, including your goals for growth. Usually business plans lay out the next one to three years of your business, so they’re an important way to keep track of your progress. Before going into how to write a real estate business plan, let’s talk about why having one matters.
Why do you need a business plan?
- Because it helps you meet your goals and grow your business. Defining your goals clearly and specifically makes it easier to meet them, especially if they span weeks or years.
- Because it helps you think about your business in the long-term. A good business plan is not a static document. Instead it provides a metric against which you can measure your business’s growth over months and even years.
- Because it saves you money. A business plan helps you focus your marketing on the leads you’re most likely to convert, meaning you’ll spend less on marketing and lead gen over all.
Step 1: Analyze your Market and Competitors
Real estate agents working a niche section of the market thoroughly and patiently do better than undisciplined agents who jump at every lead that goes by, even ones in areas they know little about. That’s because agents working a niche develop more valuable experience and attract more committed customers. Niche selling also saves you time and money on marketing because you know your audience well.
Find you market niche by thinking about who you serve. What age groups, income levels, and locations are your services best suited to? Once you’ve identified your niche, work on defining it. Be able to answer these questions:
- Who is your target customer?
- Where do they live? What is their income bracket?
- What are their needs and concerns?
- What are the best ways to reach them?
- What kinds of information do they want?
Your answers to these questions should become the basis for your marketing strategy.
Talk to your peers. No one is going to know the market better than the agents already in it. Ask veteran agents questions, and think critically about the ways their advice and experiences might apply to your business.
Now that you’ve got a good understanding of the market and your niche, move on to looking at where your personal business fits in.
Step 2: Describe your Business and Mission in an Executive Summary
Your description should include the services you provide, the markets you operate in, your achievements and awards to date, and your business resources such as work facilities, employees, and equipment.
Your mission statement explains your short- and long-term business goals, your methods of customer service, and what sets you apart from your competition. This section is your spot to refine and summarize your business pitch. Review your assets and business description to explain exactly how your services support your customers.
Remember—your goals need to be tangible and measurable or they won’t be any help.
Step 3: Lay Out your Financial Situation
What are your expenses? Usually agents deal with three main kinds:
- Licensing: Training costs and state exam fees.
- Personal: Wardrobe, car fees, and the cost of maintaining technology like your phone and computer.
- Business: MLS and website fees, broker fees, marketing and advertising expenses.
How much money do you need to make this year? Once you know your expenses, decide on a target income for the coming year. Don’t pick this number out of thin air; make sure you know how you plan to reach it. That means returning to your market research for information about average home price, sale time, and local taxes.
Step 4: Outline your Day-to-Day Business Operations
These are the daily tasks that keep your business running. Think about your lead gen activities, your professional development goals, and the mundane chores of running a business.
This also includes your lead nurturing and marketing strategies, since they are built on daily actions. Take note of the materials you’ll need to invest in to effectively nurture leads—like handouts or a CRM—and make sure you’ve factored these into your expenses.
Write action items. This is the place to break down the long-term goals you wrote earlier into action items and marketing strategies. What tasks do you have to complete every day, week, and month to reach these goals? What marketing platforms and strategies will you invest in?
Compile all important documents related to your business and add them to the plan in an appendix. Since your business plan is a resource, it’s the ideal place to store master copies of important paperwork.
Bonus: Tips for Reassessing your Plan.
Set a date. Make reassessing you plan a regular part of your calendar at least once a quarter.
Constantly assess the market. The market is always shifting, and if you want to deliver up-to-date advice to your clients you need to keep pace with it. Read industry news and other statistical reports published throughout the year and consider the best ways to pass this information to your customers.
Incorporate feedback from clients. Consider asking them to fill out a questionnaire during closing to get a sense of what you’re doing well and where you need improvement. Client feedback gives you a view of your business you won’t get anywhere else.
If you’re not reaching your goals, figure out why. If something in your business plan isn’t working, start with the goal you’re not reaching and work backwards through the steps that are supposed to get you there to find the problem.
These four steps make it simple to lay out a strong business plan. Work through them, and you’ll have your guide for the next few years in no time.