Real Estate Business Plan: The Complete Guide
Many real estate agents struggle to sustain and continue their real estate business in the initial years. Almost 80% of real estate agents quit the industry in their first year. Although there are few different reasons for this, the main one still happens to be the fact that the majority of these agents never created a concrete real estate business plan.
New agents have to understand the importance of creating a business plan, as it is the foundation of all their other activities. Real estate agents are, in reality, small business owners. Therefore, like any other business venture, you would also have to carry out business planning.
Basics For A Real Estate Agent To Create A Real Estate Business Plan
Business plans are necessary in order to achieve long-term goals and achieve success. Irrespective of the industry, this is the foundation of all business ventures. For a new agent, it is a must to carry out a proper analysis for creating a business plan.
In the first half of the article, we shall focus on the basics of how to create a proper business plan.
1. What Exactly Is A Real Estate Business Plan?
In simple terms, a business plan has two main components. What do you want to achieve? And how do you plan to achieve it?
If we break it down further, before you launch your business, you must first identify the goals of your business. Then the strategies you will follow to achieve those goals, and how you plan to tackle any potential issues that you may face once you get started.
2. Why Creating A Business Plan Is Necessary
Many new agents are under the impression that as they are running a small business, they do not need a plan. They feel that they are capable of carrying out the business and handling any problems on a day-to-day basis.
This is an entirely wrong approach. The size of the business does not matter. It is necessary to have a plan so that you have a clear path to achieve your goals and a way to ensure that you are working towards them. Therefore, it is always a good idea to start with a real estate business plan. You can always modify or make additions to it as required.
A good business plan will help you identify some of these integral aspects which will affect your company.
- What is your target market?
- What kind of clients do you wish to serve?
- How much do you expect to earn?
- What are your expenses going to be?
3. Start Writing A Business Plan
Once you have decided to form your real estate company, you should first identify the following aspects of your future business. You will be building upon these, so ensure that you take time and care to identify the following points:
A. Write Down A Clear Executive Summary
The first thing to do is put down your thoughts in the form of an executive summary. It will be all of the details between where you are starting and what your goals are. In the executive summary, try to write down the more detailed points of your goals.
- Identify the target neighborhood — do you wish to focus more on condos, apartments, or detached homes? Is this an affordable neighborhood, or is it more upscale?
- Who are your target audience? Are they families? Single people? Couples looking for their first home?
- How are you planning on marketing your service to these people?
- Who are your competitors, and what are the benefits of working in your locality?
B. Write A Detailed Business Plan Template
After you have written down the executive summary, it is time to form some concrete aspects of your new real estate company. Start with writing your firm's mission statement.
A mission statement needs to convey briefly what you wish to provide your clients, what sets your company apart from others, and why it will serve the customers and the community the best.
C. Carry Out A SWOT Analysis
Once, you have got the summary and mission statement figured out, the next step is to carry out a SWOT analysis. It is a business tool that is used to identify the strengths and weaknesses of a business. It helps a company have a clear vision and prepare for the future.
SWOT stands for strengths, weaknesses, opportunities, and threats. In this, the first two aspects are internal, and the latter two aspects are influenced by external factors. It is simple enough to list out the factors under each heading to know what business owners need to do.
For example, under the category of strengths, you can list that you are young, have grown up in the neighborhood, and have a good understanding of technology. In weaknesses, you can mention lack of experience, no established professional circle, and maybe minimal funding.
In this way, once you have got all four columns filled, you are in a better position to carry out the rest.
4. Write Down Your Business Strategies
The next step is to identify your core business strategies. For this, you may need to carry out market research and understand the condition of the real estate market in your city and the demands of the home buyers and sellers.
A real estate agent should also include a plan to build and widen your social and professional circle. From becoming familiar with the local real estate investor group to building business relationships with the other professionals engaged in the real estate industry.
5. Identify Your Marketing Strategy
Now, you can move on to forming your marketing strategy. For this, you need to revisit your executive summary. Now, the audience that you have chosen to target will be active on various platforms and will expect communication in various forms. Therefore, you need to identify this part in more detail.
A. Decide Your Target Market
Now, you may have broadly identified your audience, but now you need to create a buyer/seller persona--the kind of people you wish to serve.
For example, let us assume that you wish to serve the newly married couple segment, then think what are the aspects of marketing which will make them choose you? It could be as follows:
- Looking for independent homes.
- Large homes for future family growth.
- Preference for safe suburban areas.
- Require more amenities of entertainment.
- How do they prefer to be contacted? Emails, phone calls, or text messages?
B. Social Media Plan
Now you will be planning a marketing strategy for all the conventional modes of advertising, but you need to create a separate and focused plan for how you wish to handle the social media aspect of your company. Successful real estate agents utilize various social media platforms to their advantage.
Real Estate Agents' Guide To Boost The Real Estate Business Plan
Now that the basic foundation of your real estate business plan has been covered, let us now look at the next part of a good business plan template, which is all about planning for the specifics of a commercial real estate or residential real estate company.
1. Create Your Financial Plan
A strong financial plan is a key element to meet your goals. A new agent without a proper plan would start facing a fund crunch very quickly. Many real estate agents fail in the first year also due to the mismanagement and wrong allocation of financial resources.
A financial plan will help you avoid all of these troubles and also enable you to achieve your business goals. The following are the three main parts of your financial strategy:
A. Expected Expenses
First, start off by listing out the expenses that you expect to incur. This is the money that you will have to spend to get your business started. These could be your licensing-related fees and expenses, broker's fees, business and office expenditures, and your personal expenses.
B. Estimated Income
When it comes to estimating the income you hope to get, you do not focus on the maximum money you hope to make, but rather try to figure out how much minimum money you need to earn to meet all the expenses you have listed and still make a decent profit in the first year.
C. Expected Number Of Transactions To Be Fulfilled
The final step of your financial strategy is to identify the number of transactions you need to carry out in order to meet your income goals and expenditures. These will help you identify whether you are on the right track or not. It is a good indication of how your first year in the business can be expected to be.
If you feel that you will not be able to make money according to your expectations, then you must re-do it from the start. Try to trim down some of the expenses, or see if you can avoid or postpone them.
2. Plan Your Business
In your real estate business plans, you also need to write done clear and measurable steps on how you are going to fulfill your business goals. A few ideas are as follows:
A. Identify Lead Generation Strategies
Lead generation is the most significant aspect of any business. You need to identify the sources for you to generate leads and enough leads that you will be able to meet your transaction goals.
For example, some real estate agents work on the leads that they get from their real estate brokerage. However, a lot of agents also prefer to use online lead generation platforms to increase the number of leads that they get.
Dorrmat, which is the leading online seller lead generation platform, provides the registered agents a pipeline of quality real estate leads. These are all viable leads and therefore for a new agent, it is highly useful to help meet their leads and transaction targets.
Dorrmat also provides multiple benefits, such as a strong CRM, professional landing page, lead capture, vendor inclusion, and many more. These features can help a new agent cut down some of the expenditures.
B. Create Your Marketing Plan
Similar to your lead generation plan, you also have to create a concrete marketing plan and expenditure outlay as well. This can include all of the different forms of advertising you plan to carry out to build your brand, obtain resources, and attract new clients.
You should also consider a personal real estate website, and invest in the local search engine optimization services (SEO). This will help you reach a wider range of your market by helping you rank on the top in the search engine rankings.
C. Form Measurable Business Goals
The number one rule to achieve your sales targets is to always have measurable goals. Clearly separate your long-term goals and short-term goals. Most successful real estate agents further divide these goals into daily, weekly, and monthly goals. These help you to ensure that you stay on course and can achieve the sales figures.
3. Assess And Modify Your Real Estate Business Plan As You Grow Your Real Estate Business
Once you have created your plan, you also need to constantly monitor it and make changes to it as required. Remember, a good plan is the one that helps you achieve your long-term and short-term goals. There is nothing wrong with making modifications to your plan as your business grows and expands.
Keep an eye on the market and make modifications in the way you utilize your resources, how you are investing your money, and how you achieve more sales. These will lead you to build your brand and achieve success.
4. Get Started And Create Your Real Estate Business Plan
Now, for the last step, you need to make a start. Yes, it might seem like a lot to do for one person, but the benefit of following a clearly laid out personal real estate business plan is that you know exactly what your next step has to be.
Even if you are still in the initial stages of setting up your real estate business, it is important to research your market and start building your personal brand. In order to achieve your income and growth targets, you need to make a start by following the steps we have outlined to ensure that you have success.
A real estate agent should always think from the perspective of a business owner. Therefore, when launching a new real estate business, it is necessary to start with a real estate business plan. By following the strategies mentioned in this article, we are sure that you would be able to get started on your business planning and be able to build a thriving business and achieve success.