Do not confuse a business plan with a goal. Any real estate agent can set a goal, but only top producers and true real estate professionals create and use a good real estate business plan.
A business plan is a roadmap that calculates how many transactions you must close, your total overhead cost per transaction, and how many activities you must complete to meet your income goal. Here’s a simple way to get started.
Determine your average sales price for the previous year and your average amount of commission. Decide how much you want to make and then divide that by your average commission to see how many transactions you will have to close to hit that goal.
Review how many appointments you went on, how many converted into signed business, and how many actually closed. Knowing your closing ratios (i.e. how many contacts it takes to produce a lead, how many leads are required to place a property under a contract, and how many properties actually closed after being placed under contract), will allow you to determine how many people you must contact on a daily basis to close the number of transactions you set as your goal.
Evaluate the number of leads from each of your marketing activities: geographical farming, Web marketing, referrals, relocation, expired listings, etc. Determine which activities are the biggest moneymakers and devote more of your time to these profitable activities. Make this determination after calculating your revenues, expenses, and net profits. For example, selling four $300,000 houses may take less in time and marketing costs as opposed to selling a single home for $1.2 million. Your plan should include how to expand these two or three key niches rather than using a shotgun approach that tries to service the needs of every client you encounter. Focus your business on what worked and eliminate activities that had poor results.
Implement your plan, but be sure to review it each month to see if you’re on course. Make adjustments if necessary and do whatever it takes to hit the production goals you set.
And don’t forget. After your business plan is set, you’ll need to create a marketing plan to achieve the business goals you set. Here’s a good source for helping you with your marketing plan.