A Roadmap To Writing A Business Plan For A Successful Real Estate Company
by: Stefan Swanepoel
Business planning is similar to military planning and planning your real estate company is no different. It requires the identification of goals and objectives as well as the pinpointing of the strategies and tactics necessary to achieve the desired end result. In simple terms, it is a plan of attack to built your real estate company into the best there is. No different than armies, real estate brokerages fight to capture, expand their market share - all while generating gross commission income and increasing profit. This may seem like a difficult and aggressive approach, but survival of the strongest is the name of the game.
In business, winning does not however not need to be achieved by arrogance, unfair tactics or the elimination of your enemy. It can better be achieved by out maneuvering one's competition, beating them to an initiative or more efficiently implementing and following up on your business plan.
Achieving this is only possible if the plan has been well thought-out, written down, researched, debated and shared with the your team. Your business plan requires continuity, dedication, focus and follow through. It has little value if your dream remains only in your head. Daily actions need to echo the written word that in turn echo's the dream.
Before you can begin a strategic or business plan for your real estate company, you need to map out your objectives. You need to determine where you are going, where you are playing, whom you are up against and what your role is within the bigger picture. This helps you focus more clearly and when you begin to write your business plan, you can refer back to this document to see if it still satisfies your objectives.
Ask yourself the following questions:
What type of real estate market do you wish to be in?
Is it residential or commercial, is it resale or new construction, is it single homes or apartments, etc. Obviously there are many such scenarios and they are not necessarily mutually exclusive. You could partake in more than one type market.
Which region, county or area is considered your turf?
Similarly now that you know what market you are in, is it located in Southern California or more specially Orange County, or are you just focusing on the city of Laguna Niguel, or is it the area known as Niguel Summit, or… Well you get the picture. This will help you later determine what you should aim for, market to, etc.
What is the state of the market?
Now that you have pinpointed your market you can obtain the specific details of your market, i.e. the size, recent growth, number of annual sales home prices, average home prices, etc. etc. I cannot start to stress the importance of knowing your market very well.
Who is your competition?
Also good strategy to know your competitor. Is it national brand such as Coldwell Banker, REMAX or an well established independent real estate company? How long have they been there? Is their market share growing, constant or declining? How old, aggressive, progressive, etc. are they? What are the strengths of their management? Really know and understand your competition.
What are the company's strengths & weaknesses?
Some business schools like referring to the exercise as the SWOT analysis. (acronym for strengths, weaknesses , opportunities and threats). The underpinning basis is that it is important to examine your company's structure so that you can later best determine how can you use them to your advantage? This requires and objective introspection of oneself, your partners and the company as a whole and anything less than honesty will hinder future success.
What will the future of your real estate company be without change? And is that satisfactory?
This is equally as an important question as the one before. If you are happy with what your company is or will remain, then change may not be necessary. However, if you think that the changing economy or the introduction of e-commerce in real estate may change the paradigm as I do, then you start to realize that without change and adjustments you might be looking at the end of a business cycle that may well look completely different in less than a decade. Try to imagine what you think the future of real estate will look like. Read as much as you can in industry publications like Realtor Magazine and books like Real Estate Confronts the e-Consumer that deal with this subject. The important thing is not whether their predictions are 100% right or wrong but rather to widen your own thought process and to broaden your perspective.
If you believe your current plan will not withstand the forces of change, then creating a new plan to prepare your company and the future is critical. Let's see if I can over the next few paragraphs take you through the basic steps in creating a business plan for your real estate company.
You will now be using a lot of the research you did before when creating your corporate objectives and will now be structuring them into a plan.
Creating a Business Plan
1. Analyze your business
Ask yourself what business are you in? Is it sales? Is it in homes or homeownership? Or is it making dreams come true? You must have a clearly defined purpose of in what business you are before you can create a mission statement. The mission statement addresses the company's reason for existence, the reason why it is different and unique.
2. Analyze the environment
When establishing your corporate objectives earlier, I stated that you should ask yourself questions about your market, the area you were operating in, who your competitors were, etc. This is the place you incorporate that data into your plan. Now you also can expand that initial research to external factors that you may have little or no control over and this may influence, even destroy your business. These include political, technological and economic factors. Can your business survive if mortgage rates rise to 15% again or if your sales volume drops 80%? The goal is to get you thinking ahead.
We touched earlier on first part of the SWOT analysis. Now its time to go down another level and evaluate the opportunities that you have before you. Is the current market one that you can capitalize on? Is the socio-economic structure, age, income, etc. of the area in flux? Will a new development in the area create change the buying patterns of the consumer or is there an opportunity that you can benefit from due to the recent closing of a longstanding dominant player in your market? Understand these questions and seek out the answers.
Onto the last letter in the SWOT analysis. What could take your real estate brokerage company different direction? Evaluate what may potentially happen to severely impact your company and what your plan of action would be if salaried agents became a reality, or commission is discounted to say 1.5%, or home buyers increasing use the Internet. Don't have blinders on or ignore the obvious or even the improbable. Remember we are you here agreeing or disagreeing with a trends, just opening our mind to prepare about a possible threat to our company.
5. Goal Setting
Time to decide what you wish to achieve. There are, of course, many different types of goals and you should try to include as many of them as possible, as long as you make sure they are all quantifiable and set to specific time lines. Like is our recent Presidential election, this is another place where "fuzzy math" doesn't apply. Set specific goals for items such as sales volume, GCI, net profit, number of offices and/or agents you wish to attain, etc.
6. Action Plan
This is in my opinion the most critical part of your plan. All the theorizing before is of little value if you do not map out the necessary action steps you intend taking to achieve your goals. This is where the rubber meets the road. When putting the action steps together you will now see if your goals are realistic and feasible. Can they, with the resources to your disposal be achieved within the timeframe you set? You must be fair, logical and reasonable. Budget every action, determine how much resources you have available and how much you need to obtain externally. If achieving your goals seem impossible, go back to the beginning and revisit your research and earlier decisions. Maybe you should reduce the size of the market you had intended focusing on, on the speed at which you wanted to grow, etc. This is not failing, but adjusting your plan to more realistic points. You will still be doing this frequently, even after you have approved the plan.
Last, but by no means least; you must hold yourself and your team accountable. You wrote the plan and set the goals with the intent of achieving them. So now break them into smaller more measurable pieces and monitor the results regularly. A plan that cannot be measured is almost always destined for failure. Create small steps and measurable wins - celebrate them with the team and recharge for your next goal. Decide beforehand what constitutes a real serious loss, and what perceived loss is actually acceptable. If you find in the future that goals are unrealistic, adjust them, but keep this practice infrequent and logical. Rewards must always be hard yet achievable to reach.
If you have followed the steps you should now have a plan. Know it, understand it, and make it a part of you. Make sure that your key team members feel the same way. Build upon it continuously, work on it together effectively and you will more likely see the beginnings of a successful company being built. On the side, may I suggest also leaving politics at the door, keeping egos in check; channeling aggressiveness outwards and not inwards, sharing thoughts and ideas openly with criticism, supporting your team members enthusiastically and always remaining focused. Good luck!
Stefan J. M. Swanepoel is an author, strategist and international entrepreneur. He helped grow California based 9keys with 200% into a $1.6 billion home services group, while in South Africa he launched and expanded US franchise ERA from zero to 120 offices within 24 months. Currently he is Vice Chairman of GenuTec, an American and European financed telecommunication company developing the next generation of unified communications and integrated messaging systems.
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