Is it vital for real estate agents to write a business plan? It may not be, but an often-sourced study called “Should entrepreneurs plan or just storm the castle?” found that planning improves business performance – and could help you grow your business 30% faster. Whether you are just starting your real estate career or have already sold a fair share of properties, here are some tips for writing a business plan for real estate agents.
Parts of a Real Estate Business Plan
The National Association of Realtors outlined several essential components for business plans for real estate agents, including the following:
- Mission Statement
- SWOT Analysis
- Goals
- Strategic Plan
- Financial Plan
Here’s a summary of each real estate business plan section to guide you through the writing process.
Mission Statement
You had your choice of industries and careers, but you chose real estate to make a living. Your mission statement further defines your business and the ideals under which your business operates.
For example, your mission statement could detail your niche and target area. It may also describe what sets you apart from your competitors.
SWOT Analysis
A SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework entrepreneurs use to evaluate a company’s competitive position and to develop strategic planning.
Awareness and honesty are crucial when conducting a SWOT analysis. If you are writing one for a brokerage, it’s best to have an open conversation that includes diverse voices from within the organization.
Goals
Much has been written about goal setting within the real estate industry. Consider the SMART goal-writing strategy, which means your goals should have the following traits:
- Smart
- Measurable
- Attainable
- Relevant
- Time-Based
Your goals can be based on income or time spent completing specific tasks. Use your weakness outlined in the previous section to create your goals.
Strategic Plan
Once you have outlined your goals, it’s time to form a plan on how they will be achieved. Using helpful resources that you can find from industry journals and blogs located in the Colibri Real Estate career hub, create systems and plans on how you hope to meet – and hopefully exceed – your goals.
For example, perhaps you could better use your Customer Relationship Management (CRM) system to keep track of your interactions with clients (and potential clients). Maybe you could create a plan to participate in or organize community events to market your business. Or you can read one business book weekly to grow your industry knowledge.
Of course, completing these plans may take cash, which is the focus of the next section of your business plan.
Financial Plan
Your financial plan is a crucial part of your real estate business plan. You’ll need to focus on this part of your plan – especially when you first enter the industry.
Determine how much you need to earn – and the number of typical transactions you must close to make this amount. Then, consider your operating expenses. You’ll need to keep your expenses low until you grow your business, so set a budget and stick with it.
As a side note – before you spend a dime on business expenses, it’s crucial that you set up a business account and consult with a tax advisor. Of course, as a real estate agent, you must pay taxes on the commissions you earn, so you need to keep careful financial records.
Schedule Periodic Reviews of Your Real Estate Business Plan
Consider these words by Zig Ziglar: “I don’t care how much power, brilliance or energy you have, if you don’t harness it and focus it on a specific target, and hold it there you’re never going to accomplish as much as your ability warrants.”
As you let these words sink in, think about how you will use your business plan – because it will only have power if you use it to focus on a specific target.
With your business plan as your guide, keep meticulous records of objectives related to your goals. Track your progress. If you don’t see improvement, you can alter your strategic plan to try a new strategy.
Save your business plan to your desktop, and schedule bi-weekly or monthly reviews of this living document. Do a deeper analysis when you pay your quarterly taxes.
Remember – even though you are in charge of your own financial destiny, you aren’t alone. Colibri Real Estate has helped hundreds of thousands of people earn their real estate licenses, and we are dedicated to helping you grow and expand your business.
Check out our helpful resources by scrolling through the Colibri Career Hub. When you are ready to take that next step in your career, sign up for your state-specific pre-licensing broker courses.
