Just in case you have been preoccupied with other things going on in the world … its 14 days and counting. So, for your Christmas planning 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 in 2009.
If you selected option #3, please continuing reading, otherwise go check out the shopping malls.
In continuing our discussion on the importance of business planning, this week I wanted to take a look at the three key elements that make up a good plan. Each one has a role in helping you meet your profitability goal.
- Planning
- Business Development
- Tracking
Planning – Planning will require some math or technology – I suggest you opt for the technology. The first step is to 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 – but don’t stop here like most folks do.
Expenses – Take a long hard look at your expenses and examine the different ways you spend money. You will be amazed at how much you spend on areas that you take for granted and don’t think about – letting the expense fall through the crack:
- Just listed cards
- Just sold cards
- Virtual tours
- Newspaper ads
- Brochures and flyers
- Home books
- Posting to your website
- Open houses
- Property Staging
- Photography work
- Putting up the Sign and Lockbox.
Now don’t forget to list all of your annual Overhead Expenses such as:
- Licensing
- E&O insurance
- Desk fees
- Computer expenses
- Websites and email accounts
- Cell phone
- Automobile
- Education
- Annual dues
Tracking – Now for the calculation. Add all expenses together and use a ratio for non-closed transactions and add in your 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.
Ok - your Business Plan should reveal two very important items among other things:
- How many listings 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 as this will help you determine the activities you need to do to meet your goal. The more important item is #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 your income comes from." For the sake of this article let’s 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. Ask yourself some basic questions like: Where will you get your 15 listings? Will you get listings from the Just Listed Cards or Just Sold Cards? How about farm mailings or Internet leads? Do you send personal notes and think they will generate a listing or two? Are you planning any client parties or personal meetings with your past clients and sphere and will these activities generate listings for your business? How about your website or relocation business?
List all of the different Activities or Sources of business you will do in the upcoming year and then attribute closed listings to each of these sources until you have accounted for all 15 required closed listings.
Do this same process for your 12 buyers and remember to add the activities that typically bring in buyers such as open houses, floor-duty and your web presence. 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. Then continue this process for each of your sources of business and remember to stay focused on the activities that are quantifiable; the more hard data the better.
Now if this process sounds too overwhelming and if Christmas shopping is looking mighty attractive about now, there is another option … CreateAPlan. This real estate business planning software system will automatically take care of all these calculations for you in just about 30 minutes. At the end of the exercise you will have the best gift any Santa can give you.
To learn more about CreateAPlan you can visit www.CreateAPlan.com and use the Promo Code NRN159 and you will get a 20% discount off the regular price. Get next year off on the right foot with a good business plan.
