Looking to stay on top of market trends and stand out from the competition? Read on to learn how creating a real estate business plan can help you do just that.
Whether you work for a firm or run your own business, all real estate professionals are effectively business owners. From the marketing strategies you employ to the leads you generate to the reputation you forge in your community, your successes (and your shortcomings) come primarily down to you. For this reason,you should be sure to create a thoughtful real estate business plan.
Keep reading for insights to learn why a real estate business plan matters and strategies to make your plan stand out from that of your competition.
In many ways, your business plan is like a road map for a cross-country trip. Chances are before you embark you’ve pinned spots where you plan to stop and sleep, some roadside attractions you want to visit, and maybe a national park (or two) you’d like to get your picture taken in front of. Similar to this roadmap, a business plan helps log where real estate professionals are starting, where they want to go, and how they’re getting there, as well as the many indicators of success along the way.
Like a roadmap, the drafting of a business plan can be almost as fulfilling as the trip itself. As you narrow down your goals and put them on paper, you also get a clearer idea of why you’re building the business in the first place. Is it to make ends meet? To finally build something from scratch? To provide for your family, or create generational wealth? Establishing your “Why” can be equal parts motivating and validating, and can help you recenter your focus when and if you encounter obstacles on your journey.
The short answer is: No, you don’t need a business plan for your real estate business, in that it’s not required to legally incorporate your business. A business plan is, however, essential –– for all of the reasons listed above and for countless others. For starters, a business plan will help you determine how your business will be structured, managed, and grown in the real estate industry. It should also include information on both your market and your competition, allowing you to pinpoint what others are doing and how you can stand out.
But perhaps the most important reason to create a real estate business plan is to fuel your growth. Should your business scale to the point of being worthy of outside investment, your real estate business plan will act as reassurance that investors are investing in a sound product. Consider it as a second business card, only instead of appealing to aspiring homeowners, it’s meant to impress potential business partners. With that said, real estate professionals looking to grow to this size without a business plan are immediately faced with an uphill battle, and your business plan should be established long before you begin planning for your inevitable growth.
Now that you understand the importance of a real estate business plan, here’s how to create a real estate business plan from the ground up.
Your who, what, when, how, and why. To establish a strong foundation for your real estate business plan, begin by ironing out some of these details in the form of an executive summary, a clear mission statement, and a composite of your ideal clientele. Let’s break these elements down a bit further.
Executive summary: Your executive summary should detail who you are with regard to your business and your goals, and can include a personal summary or a company description and a summary of your services. While this won’t necessarily be client-facing, it should offer all viewers a brief “you” overview.
Mission statement: While your executive summary provides a brief overview of who you are, your mission statement should drill down into why it matters. This brief summary will help define the future of your business –– serving as a reminder to both you and your prospective clients of why you’re in the real estate business.
Composite: Lastly, figure out who it is you plan to sell to. This composite should be three-dimensional, focusing on things like where your potential clients will be based and what their budgets might be but also the problems you hope to solve for them. (This will help determine your key differentiators in Step 3.)
Equipped with a better understanding of why you’re going into business, what you’ll be doing, who you’ll be serving, and how you’ll make a difference, you can begin working on a set of measurable goals. But don’t stop at simply defining these goals –– get to work on a rough idea of how these goals will be accomplished. Don’t worry too much about the nitty gritty; you can continue to refine your approach as you build your plan (and as initiatives succeed or fail.) For now, focus on measurable goals like your ideal closing rate and average monthly commission.
With an idea of what your goals are and what tactics you might use to accomplish them, you can begin to look at the real estate professionals you’re in direct competition with and possibly draft a competitive analysis. Take into consideration things like their years in business and the size of their office, and consult reviews and testimonials to see what they do well — as well as where they might fall short in the real estate industry. For example: If a common theme in client reviews is their chilly demeanor, you may be able to stand out by being accommodating and warm.
But when it comes to established real estate offices, you can learn as much from their years in business as you can from these client reviews. If they have a strong social media presence and you notice they also have a full-time social media specialist on staff, you can begin to map out your own future from a personnel perspective.
As fun as it may be to dream about hitting major milestones and growing your business to levels you’ve only dreamt of, it’s equally important to determine how little your business can earn while still breaking even. If, right now, your business is just you, this baseline might be the expenses it takes to keep your mortgage current, your WiFi on, and your gas tank full. But if you’ve already got a small staff or an office space, this bar may be significantly higher.
When establishing what figure will keep your business in the black, take the time to break this number down into metrics related to your goals, like your average monthly commission. If you’ve come out of pocket to get your business up and running, you might not break even month one.n this case, identify a date on the horizon when you aim to do so and do the work to get there.
As a real estate professional, a keen understanding of the local and national market can be the closest thing to a crystal ball or a sixth sense. And while it’s important to know what the real estate market is doing (and when it is doing it), understanding why these shifts are occurring will help you optimize your approach. As a part of your real estate business plan, take the time to get to know your target market to the best of your ability, including the buyers who make up this market and the reasons for recent (or expected) shifts.
A key element of this understanding will be the ability to identify real estate market trends, and how your business might adapt to these trends. For example: In recent years, when Amazon was searching for its second North American headquarters, real estate professionals in places like Arlington, VA and Long Island City, New York might have anticipated a rise in single, educated, first-time home buyers. When Arlington was ultimately chosen, the real estate agents who anticipated this shift undoubtedly benefitted.
In order to get better, it’s important to first understand what can be better. Upon starting your business, especially if you’re in the early days of your real estate career, you might not have a clear understanding of your strengths and weaknesses yet. But as your business develops and you learn more about both your trade and yourself, you should begin identifying the weak points which might be setting your business back. If you’re new in town, you may be struggling with brand awareness among locals. This creates an opportunity for you to be a more active, visible component of your community. By all means, your successes as they come along! Just be sure to remain conscious of how your business could be better.
A significant part of business planning is drafting a marketing plan. Thanks to the vastness of the internet and constantly emerging social media platforms, there are more ways than ever to promote your real estate business. But just because realtors are using Instagram, Facebook, Twitter, TikTok, and the growing list of other platforms doesn’t mean your business needs to.
When drafting your real estate business plan, be sure to incorporate a marketing strategy that will help you accomplish the above goals. Identify what platforms you intend to use, how you intend to use them, and what a potential budget might be for each (if necessary) to keep you on track as you execute your overall vision. Be sure to also draft ideas for what you want your marketing campaigns to look like, who your ideal client and target market is, etc. Need some innovative real estate marketing ideas? Discover more marketing ideas for realtors.
As involved as this process may seem, drafting your real estate business plan is the easy part –– actually launching your business is the challenge. But growing your real estate business can be as rewarding as it is labor-intensive, and your rock-solid business plan will help you keep moving forward even when faced with seemingly insurmountable obstacles. Outside of your plan, here are a few strategies to give your business the greatest odds of success.
CRMs, or customer relationship management systems, help you track leads as they move through the home-buying process. As a one-person real estate business, your CRM will help keep leads from falling through the cracks –– allowing you to maximize both your closing rate and your client service. Through integrated automations, you can even send follow-up messages at regular intervals without lifting a finger, keeping your business top of mind for clients who might be taking their time to make a purchase.
Your website can be one of your greatest tools as a business owner, but many real estate professionals have a “set it and forget it” approach to their site; they take the time to build their website and that’s the end of the story. This is sort of like securing a prime location for your real estate office, then blacking out the windows and not putting up a sign. Like an office on a busy commercial street, your office should cut through the noise and jump out to homebuyers. If you’re not working on improving your SEO, now is as good a time as any!
Compared to other sales fields, real estate has an especially long sales cycle. And for good reason: buying a home is a major purchase. For this reason, it can be exhausting to keep chasing leads who might take six months to a year to buy their home. But with some patience, persistence, and the help of a CRM, you might find yourself beating out your less patient competitors. Keep leads “warm” with automated messaging, and you’ll stay top-of-mind –– so when they’re ready to make this life-changing decision, you’ll be the agent they turn to.
As a business owner, you set your own schedule. Of course, all the business owners reading this know that this actually means that your clients and customers set your schedule for you. And when your working hours are always, you run the risk of burning out unless you learn how to properly manage your time. Guided by your original business plan and the mission statement you created, create a hierarchy of importance in your day-to-day tasks. If your mission is one of being the most responsive real estate agent in town, a timely response to messages from clients will likely be a high priority. And if your success is in your in-person impressions, the hours each week trying to grow your social media presence might be of better use elsewhere.
When the time comes that there simply aren’t enough hours in the day (and it will), it might be time to bring on some additional help to empower your growth. Not a bad problem to have!
When shopping for the right realtor, some home buyers and sellers can quickly feel lost in a sea of sameness. And while this creates an opportunity to differentiate yourself by being more understanding, more empathetic, and more personable than your rivals, this still might not be enough. With that said, one way you can stand out from your competition is by offering different services altogether: Like being the only realtor in your market to specialize in brokering sale-leaseback transactions.
Unlike traditional home sales, sale-leasebacks offer homeowners the opportunity to sell their home for equity, then pay a fair market rent to remain in the home for as long as they want –– as long as they keep up with payments. Offering a different service in addition to a full suite of realtor services will help you stand out while maximizing the variety of clients you’re able to take on.
Whether you’re in the early stages of developing your real estate business plan or you’re actively working to grow your business, this is an exciting time and we wish you the best of luck. To learn more about how you can empower your real estate business through lead generation and marketing strategies, visit the free Truehold resource library.
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