Every investor would want to succeed, and they might even be aware of how to…
Real Estate Business Plans Serve Multiple Purposes
Instead of “location, location, location,” anyone connected to the real estate industry should be saying, “real estate business plans, business plan, business plan.” Without one, the locations may or may not matter because the goals of a real estate business were likely not defined. Hit-or-miss in real estate is not a legitimate strategy for independent brokers or agents working as independent contractors for real estate companies.
Great Deals Do Not Just Happen
Real estate agents can quickly get swamped by “great deals” and paperwork because they are working in one of the most highly regulated industries. The agent has to manage time in order to find and sell great deals or properties and not rely on luck, make contacts, attend meetings, show properties, and so on. Once the deal is done, there is a massive amount of paperwork to complete and each form has to be meticulously completed.
In other words, time must be carefully planned and wisely spent in order to be a successful real estate agent. There needs to be honest goals set, careful business planning, and actionable strategies.
That is the purpose of going through the process of developing a business plan. Each business element is given careful thought as to its reasonableness, its currency in relation to the market, its realism, and its fit with personal goals.
What Real Estate business plans Needs
Following are some characteristics that real estate business plans should consider from a personal goals and time management perspective:
• Key goals – Closing “great deals” is not a goal. Finding and selling hot properties sounds exciting, but what type of properties will be sold or managed – commercial, residential, or both? What price range is targeted? What is the sales goal?
• SWOT Analysis – Identify your strengths and weaknesses, and the opportunities and threats, all from a real estate perspective. You may already have a solid contact list and speak three languages, but are weak in real estate taxation and are starting out on a limited budget. Threats include things like rising interest rates and a weak new construction market. Opportunities may be increasing supply of downtown loft apartments and new businesses moving into the area.
• Realistic – Goals, marketing, and financial statements need to be realistic. It is easy to get carried away and say, “I am going to sell million dollar mansions because I will earn a huge commission.” However, unless the agent lives in a city where there are whole neighborhoods of million dollar mansions, there may not be a lot of properties bought and sold. The agent cannot control when one of the five million dollar houses in the area will be put up for sale. Keep everything in the plan realistic and actionable. It is the difference between twiddling thumbs, while waiting for targeted properties to become available, or earning more commission by moving more lower-priced properties every month.
• Suitable Measurements – Set measurable goals by being specific. How many real estate workshops will be held each year? How many contacts will be made each week? How many properties can the real estate agent reasonably manage in the workload and still give each account the appropriate amount of attention? Once specific measures of success are developed, be sure to review them on a weekly and monthly basis.
• Efficient Use of Technology – Technology is pervasive. People expect real estate agents to have websites, email, Skype, instant messaging, mobile technology, and so on. The agent can also use a variety of software that makes it much easier to manage contacts, maintain to-do lists, input information on forms, do market research, and much more. Just do not get bogged down in using technology for technology’s sake because it is possible to waste a lot of time on technology.
Guidebook for Success
The real estate business plans serve many purposes. It forces operating, marketing, and financial planning. The real estate business plans are like a guidebook, offering directions so the agent stays on the right path. It can be revised as needed when market conditions demand it, triggering a thoughtful change process. The one thing it should not do is become a burden or something to focus on rather than doing the things real estate agents must do in order to be successful.
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