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Introduction
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.
Corporate Objectives
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
- 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.
- 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.
- Opportunities
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.
- Threat
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.
- 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.
- 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.
- Measure
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.
Conclusion
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!
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