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You have three options:
- Do nothing and hope Santa helps out
- Scribble something on a napkin and loose it before the new year
- This year actually create an awesome, comprehensive plan that will guide you to success.
If you select option three, please continuing reading, otherwise go check out the shopping malls.
A good business plan has three parts:
- Planning
- Business Development
- Tracking
Each has a role in helping you meet your profitability goal.
Planning, which will require some math or technology opt for the technology. Layout the following information, annual household budget, commission schedule, average sale price of your listings, average sale price of closed buyers and commission rates you earn. This information will help generate the revenue portion of your business plan... and no this is not were you stop.
Look at your expenses. Examine the different ways you spend money. You will be amazed at how much you spend: Just Listed Cards, Just Sold Cards, Virtual Tour, Newspaper Ads, Brochures and Flyers, Home Books, Posting to Your Website, Open Houses, Property Staging, Photography Work, Putting up the Sign and Lockbox.
Last item in the expense section is to list out annually all the Overhead Expenses you have in running your business; Licensing, E&O Insurance, Desk Fees, Computer Expenses, Websites and Email Accounts, Cell Phone and Automobile. Don't forget about education and annual dues.
Now for the calculation; add all expenses together and use a ratio for non-closed transactions and add to the personal annual household budget then take the sign of the tangent line leading from your front door to your office... this could get difficult to explain and that is were technology comes in to do the calculation for you. The calculations itself is nothing more than basic math, done in a certain order and repeated until you come up with the end result.
Your Business Plan should reveal two very important items amongst other things:
- How many listing and buyers you must close
- How much you spend per transaction in Overhead
The reason you need to know how many transactions you need to close is simple...this will help you determine the activities you need to do to meet your goal. The more important item is number 2 Overhead Per Transaction. This figure represents what comes out of each commission check to pay for all of your personal marketing and overhead.
Next you need to determine "Where does your income come from?" For the sake of this article assume that you need to close 15 listings and 12 buyers to make your income goal.
The first step is to determine what sources of business you will pursue. Where will you get your 15 listings? Will you get listings from the Just Listed Cards or Just Sold Cards? How about farm mailings? Do you send personal notes and think your personal notes will generate a listing or two? Are you planning any clients parties or personal meetings with your past clients and sphere... will these activities generate listings for your business? How about your website or relocation business?
List out all the different Activities or Sources of Business you will do in the upcoming year. Now attribute closed listings to each of these sources until you have accounted for all 15 required closed listings.
Do this same process for Buyers; remember to add the activities that typically bring in buyers such as open houses and floor-duty. In this process you are trying to account for all the required closed buyers that your business plan has indicated you will need to close.
Continue this process for each of your sources of business. Remember to stay focused on the activities that are quantifiable.
Now if this process sounds too overwhelming and that Christmas shopping is looking mighty attractive about now, then go out and buy yourself the CreateAPlan real estate business planning software system that will automatically take care of all these calculations for you. 30 minutes and you will have the best gift any Santa can give you, a productive 2007.
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