The Real Estate Encyclopedia
Life_s a Gamble - Planning Improves the Odds
Category - Real Estate Information Sources - Real Estate Articles
Changing Times

In the late 1960’s Bob Dylan sang: “The times they are a-changin’.” For real estate professionals these times are more dynamic, hazardous, and confusing than ever before.

With hot market mania tantalizing the nation and Lion’s share moguls sweeping up the greater part, survival by carving out a winning niche has become no longer a wise plan, but an essential one. So for those agents who take their career seriously and wish to remain part of “The Few, The Proud, and The Millionaire Agent” club, the next 60 days is business planning time.

Many people set goals, but goals offer no means towards accomplishment. For that you need to map the journey. Simply stated, a plan is a calculated set of guidelines to direct you towards your goal.

To begin a business plan as an agent you need to map out your specific goals and objectives. You need to determine where you’re going, which market you’re playing in and who you’re up against. The primary reasons for planning are so that you can better comprehend what needs to be done and then focus on the specific tasks that will ensure successful completion.


A Seven Point Plan of Action

1. How Much Do You Want To Earn?
Be careful. Revenue is not income. Revenue is gross earnings before expenses and taxes. Income is what you keep after all is said and done. Do not confuse the two. If you do not set yourself an income goal for the year, the chances are very good that you will not achieve it.

2. Know All Your Expenses.
There are two types of expenses, fixed and variable. In real estate that translates into Overhead and Transactional Expenses. Overhead would be defined as expenses such as license fees, E&O insurance, signs, MLS access, etc. – expenses you would incur just to function in the industry. Overhead is the silent killer, as most agents do not take this into serious consideration when calculating their expenses. Transactional expenses are those that occur with each listing or buyer, such as “Just Listed/Sold Cards”, Virtual Tours, Closing Gifts, etc.

3. What’s The Size of Your Market?
You must have your hands around the market. Pinpoint your market, considering type, geographical boundaries, price range, etc. Obtain the specific details of your market: the size, number of annual sales, home price ranges, change in the market over previous years, and future growth projections.

4. Who is Your Competition?
It’s always wise to know your competitors. Are they national brands or well-established independents? Is it a firmly entrenched top producer, or a group of talented agents? Is their market share growing, constant, or declining? How aggressive or progressive are they? What unique elements do you see in their business plan and marketing?

5. Key Factors You Must Understand
A solid business plan addresses the key drivers that directly influence and impact it, and you must know and understand how these activities work. Ask yourself questions such as: What are my costs per transaction? Where does my business come from? What activities must I do to generate this level of income? How do I check my progress on a weekly, monthly or quarterly basis?

6. Map Out the Action Steps
While putting down your goals in written form is critical, it is equally important to lay down the action steps that will get you there. This is where the rubber meets the road. Only now can you determine whether the goals and targets you have will are achievable. If achieving your goals now seems impossible, go back to the beginning and revisit your research and earlier decisions.

7. Make It Measurable
Lastly, you must hold yourself accountable. You wrote the plan and set the goals with the intent of achieving them. Now measure your activities and results every week to ensure that you stay on track.


Tools That Can Do Everything

Thanks to the newest technology, business planning has left the stone ages of paper and pencils, to the point where a previously daunting task is now as simple as typing an email.

Texas-based CreateAPlan has created a web-based application specifically designed to create business plans for real estate agents and brokers. A wizard walks agents through the entire process. In less than 30 minutes you will have a well-constructed business plan detailing the number of required transactions needed to close, a weekly “To-Do” list for what must be accomplished in order to meet the user’s income goal, a five-year projection on revenue and expenses, and a calculation of the overhead per transaction. The system can even send you reminders about what needs to be accomplished each week.


In Closing

Sure, life is a gamble, but don’t you want win? A comprehensive understanding of the fiscal aspects of your business, coupled with a business plan that clearly explains how to achieve your goals will not only decrease the likelihood of making unprofitable decisions, but also will keep you focused and improve your odds for success.



References


External Links
www.swanepoel.com
 
 
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Real Estate Information Sources - Real Estate Articles
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