A real estate agent business plan is a document that outlines your comprehensive strategy to grow your real estate business. It outlines important milestones of your approach, identifying what your goals are and how you will achieve them.
Because of the nature of the real estate business, you can construct plans as a broker, agent, etc. There are several ways to focus your goals and tactics when you are writing a real estate business plan, and each specific role you have will change what you’re trying to achieve and how you will do it.
It’s fundamentally important to remember that in real estate, there are two things to keep on the top of your mind:
- You are your own boss and manage your own business.
- Being busy doesn’t always mean that you’re making money.
Combining these two important thoughts leads us to one conclusion — that having a written-out plan will help determine what you’re trying to accomplish and will help keep you committed to a specific plan of action. A business plan is sure to help you identify measurable goals while helping you stay on a predetermined route to reach your ambitions.
Additionally, a plan will identify prospective issues you expect to run into and how you plan to overcome them. The plan will assign roles and responsibilities, and allow you to measure your success as your business progresses.
It’s important to know that you’re not in this alone – we have an experienced team of coaches who can help you create a real estate business plan that makes it simple and easy.
Why Create a Real Estate Business Plan?
Studies have shown that creating a real estate business plan can increase your chance of success by 12%. Additionally, it can raise your chances of success by 27% when you commit to writing a real estate business plan and combine it with other things like talking to prospective customers, making marketing materials, and getting yourself ready for business.
What’s more, you will be taken more seriously by potential business partners, brokers, and banks because you have dedicated time to sit down and devise a written plan that precisely outlines the actions you plan to take. This shows that you have placed significant personal investment in your business, and gives others peace of mind that they can join you in this venture.
A business plan gives you a clear direction and an operational checklist for identifying your goals. Some questions it will answer are:
- Who is my prospective client?
- How much do I want to earn?
- What do my sales need to look like to reach my ideal take-home pay?
- How will I cover the expenses of my business?
A plan is not set in stone and allows for adjustments as situations arise – but should be thoroughly devised enough to help you overcome foreseeable challenges like identifying leads and finding funding money to get started.
How to Start
The executive summary of a real estate business plan establishes your hopes and dreams, a broad overview of how you plan to accomplish them, and highlights from the research used to support your decisions.
It should identify who your potential clients are, the areas you plan to focus on, and any potential sales opportunities (for example, the average house in this area is $450k). If there are any competitive assessments, those are also important to note here.
In many ways, consider this your elevator pitch. Given 30 seconds, or the amount of time you were in an elevator with someone, how would you describe your ability to be profitable in real estate?
Write a Detailed Business Description
If you’ve ever seen the show, “Shark Tank,” you’d be familiar with how the business owner stands in front of the investors and shares their story about why they should invest in their product. This is the detailed business description of your plan, where you tell what inspired you to get involved in real estate.
The description will highlight the opportunity and how you plan to make the most of it, while answering ‘who, what, when, where, how, and why’. Who is your prospective client? What makes you different and what is your client looking for? When are they typically looking to buy or sell their property? How do they typically start their search or process of selling their home? Questions like these will help shape your detailed business description to answer questions that you might not think about at first.
Perform a SWOT Analysis
If you’re unfamiliar with the term “SWOT”, it stands for (S)trengths, (W)eaknesses, (O)pportunities, (T)hreats. When applying a SWOT analysis to writing a real estate business plan, the coined term helps you identify some of the core questions that arise when planning.
Strengths address what makes you different and a better choice than your competition. Will you be more knowledgeable? Have you lived in the area you’re targeting your whole life? Are you a well-known member of the area who already has created a personal brand that will go far in real estate?
Weaknesses address the exact opposite. What things are you lacking? What things do others do better? Naturally, if you’re breaking into real estate, one of the first things you’d note is experience. Having multiple weaknesses isn’t a bad thing. It means you’ve identified potential issues and how to overcome them. For example, a new agent with experienced coaches can quickly overcome the example weakness.
Creating a Strategic Real Estate Business Plan
Defining Your Marketing Strategy
As much as you would like to be the perfect fit for all clients, the reality is that you are going to have a specific type of client that’s going to work the best with you. Maybe it’s someone from a specific area of town, first-time homebuyers, those using specific types of financing options, or those in the Armed Forces.
Identifying your market niche isn’t going to limit you to a specific clientele, but it’s going to direct your marketing and branding so that you’re not throwing lots of things and hoping that something sticks. This means saving time and money by directing your marketing efforts to the most meaningful ways, giving you the biggest bang for your buck.
Understanding the marketing strategy aspect of your real estate business plan will help you know who your target is, what their defining characteristics are, what services they are seeking, and help you understand how to grow those specific relationships.
Understanding how you will generate leads is incredibly important in developing your plan. If you don’t have leads, you won’t have sales — which means you won’t make money. Because of the nature of the business, you’ll need to understand how prospective clients start the process (which is usually through looking at things online).
Creating a Financial Plan
An important aspect of writing your business plan will always include money. Here you will identify your expenses, income, and estimate your sales goals. It’s important to create realistic and well-thought-out measurements in this section, to understand how your plan will come together.
When looking at your expenses, consider all things that will change for you on a licensing, personal, and business level. Licensing may seem self-explanatory, but ongoing education, covering multiple states, and other things might pop up. Personal expenses are also easily overlooked — will you need to buy different clothes, will a new smartphone be important to your work, and will your cost of gas rise? Business expenses are things like your broker fees, advertising costs, and other things often charged directly from your office.
A true financial plan is not a rough collection of estimates or guesstimates. It’s a close look at the reality of the costs you will be facing when you choose to start on the endeavor, and a true understanding of what it will take to achieve your goals. One of the basic goals you will look at financially is the ability of real estate to keep you economically profitable in consideration of your time and resources.
Analyze Your Local Competition
In-depth research into your local competition will help you beyond your SWOT analysis. When you’re looking at other offices that might be competing with you, consider what sets you apart and makes you different. Also, use this competitive insight to grow your brand and sharpen the services that you offer to clients.
For example, if your focus is on first-time homebuyers, are there any competitors that also have this focus? What do they do that seems to work? What can you offer that they don’t? There are generally four areas that will set you apart in regards to your competition; the product (your brand and focus), the price (your commission and price you seek for your clients), the place (your ideal market you’ve chosen to focus on), and promotion (meaning the way you’ll choose to market to generate leads).
Understand Your Ideal Customer
Understanding your customer is critical in writing a real estate business plan. Without that important link, you won’t meet your goals, your marketing dollars will be wasted, and your time will be spent without result.
The important things to know about your customer are:
- How do you reach them? Will they respond better to emails, texts, or calls?
- What matters to your clients? Is it more space, interior luxury, or location?
- What brand does your client subscribe to? Will they value Walmart or Whole Foods more?
- What matters most to your prospective buyer? Is it space, price, or something else?
- What is your ideal demographic? This is age, sex, etc.
Having a firm grasp on these important things will help you develop your plan so that you can speak to what your market research is telling you. Perhaps your opportunity is in selling new homes in an up-and-coming area, or to military families who have been given new orders near a base. Referrals and leads will always attract outside of your ideal mindset, but this will help you focus your efforts.
Implementing Action Plans
An action plan is a carefully considered set of steps to take in achieving a specific goal. For example, if your goal is to get ten new leads a month, an action plan will help you get there. An action plan establishes a clear goal and the different things that need to be done to reach your objective.
You might have different action plans for marketing, closing sales, ongoing education and personal development, social media goals, etc. All of these individual action plans will help carry your real estate business plan to fruition.
Evaluating and Revising Your Plan
Your business plan is sure to be a living document as time goes on. With a constantly evolving real estate market, it is critical to stay up to date with the latest news – not only for the industry, but also for the markets you specialize in. As you continue to meet and shake hands with individuals, new doors will open, offering you opportunities that you probably didn’t consider when you originally developed your plan.
For example, maybe you’ve met a developer who’s asked you to help list their properties. What you learn from your clients will be equally important to your plan – if things don’t matter, save time and resources by removing them. Additionally, if there are things missing (like virtual open houses, alternative social media focuses, etc), find a way to incorporate them into your plan.
There’s something to be said for pulling from the experience of others, and having an experienced real estate coach look over and help develop your real estate business plan is a great way to jump past the typical pitfalls new agents face. A new agent starting out, dreams of the financial freedom to spend more time with their family and friends. Skipping over the learning curve by having an experienced professional will only help you achieve your goals faster.