The Steps Of Real Estate Business Plan
Step 1: Evaluate Your Target Market
A market valuation summarizes the financial, cultural, and demographic factors that affect buying and selling real estate in a given area. This is a critical first step in writing your business plan as it determines both opportunity and potential challenges to business success. To complete a market valuation, draft a market overview, define your target audience within the market, and research competition. Finally, complete a comparative market analysis (CMA).
Step 2: Executive Summary
Now that you have a clear picture of your market, target audience, and competition, you can begin to create a clear description of your company. This starts with an executive summary, which summarizes your purpose, services, location, and audience concisely. In three to five sentences, write out what your company will do, what services you will offer, your area of operation, and who you plan to serve.
Step 3: Define Your Mission Statement
Your mission statement builds on the executive summary by clearly explaining your motivation and purpose. This is commonly referred to as the “why” statement in your business plan. To form the foundation of your mission statement, consider why you decided to start a business and what your passions are in the real estate industry.
In fewer than 15 words each, answer the following questions for your mission statement:
- Why did you want to want to start a real estate business?
- Why are you passionate about real estate?
- What kind of impact do you want to make on both the industry and your community?
Step 4: SWOT Analysis
The SWOT (strengths, weaknesses, opportunities, and threats) analysis outlines the places where your real estate business can gain or lose sales based on internal and external factors. Consider what strengths, opportunities, weaknesses, and threats your company will encounter for your real estate business plan. Strength and weakness are usually internal while opportunities and threats are external to the company.
To assess the strengths of your real estate business, think about what you offer the market that separates you from the competition or makes you stand out in the industry. Your strengths should be the things that customers will rave about when they write reviews or make referrals. Try to identify three to five strengths.
Here are some questions to ask that may highlight your strengths:
- What do you want to be known for in your market?
- Is there something unique you can offer that will attract clients and influence sales?
- Do you or your employees have skills that stand out from others in the local real estate market?
Determining your weaknesses means finding where your company can improve. To understand your company weaknesses, look for places where the company might fail to live up to the expectations of clients. Determine three to five potential weaknesses that you can directly address.
These are the questions you should consider to determine your company weaknesses:
- What skills or resources do competitors have that you do not have?
- What does your company lack in resources or services?
- What are some messaging, branding, or marketing problems you may have?
Business opportunities are usually defined as market areas or audience niches with limited competition where you can grow your business. To uncover your own opportunities, identify areas with low or no competition, new developments, underserved audiences, and new ways you can serve an area that are unique to you as a broker.
Ask yourself the following questions about your opportunities:
- Is there an underserved market in your area?
- Is the competition low for a specific location or farm area?
- Is there a new development planned in your area?
- Are there services you could provide in an area not provided by other agents?
Threats are internal and external problems your brokerage is likely to face as it grows. Think about all potential threats to your business, considering the most common ones first: logistical stumbling blocks, legal or financial hurdles, negative press, and lack of leads.
These are some of the questions you should ask to identify potential threats to your brokerage:
- Are there legal or tax regulations that will impact the market or my agents?
- Will a competitive franchise cause problems for my business?
- What type of negative press might cause my realty office trouble?
- How will I court customers to create a positive referral or review stream?
Step 5: Company Goals
Determining company goals allows you to map out a path to success clearly, both immediately after launching your company and in the years ahead. To do so, identify your top goals for the company based on competitor achievements, your personal ambitions, and realistic growth. Then, separate them into short and long term categories. Finally, determine key performance indicators (KPIs) that will help you measure the achievement of your goals.
Step 6: Create Management Structure & Outline Daily Operations
The management structure of your business determines areas of responsibility for all team members. Once you have this in place, you can outline your daily operations and determine who will oversee those operations. Start by listing the areas of responsibility within the company, then match these with a list of staff members. Next, create a management flow so that the reporting structure is clear. Finally, outline daily operations to determine who will oversee what projects.
Step 7: Layout Your Financial Plan
Now that you have a management structure and goals in place — as well as a view of daily operations — you can map your financial plan. Start by writing down your startup costs and ongoing expenses. Then, determine funding options.
Step 8: Marketing Plan
Real estate marketing entails everything associated with acquiring leads and moving those leads through the sales funnel. To begin with, find a reliable customer relationship manager (CRM) that you can use to track both leads and contacts, examine lead generation options, set up drip marketing, and launch brand awareness campaigns to get your brokerage name out to the public.
Step 9: Review & Revise Your Real Estate Business Plan
Once you have compiled all elements of your real estate business plan, read it over with anyone who will be helping you launch the company. Ask for input and feedback to gauge the viability of your plan. Make revisions as necessary until you are satisfied with all sections. Then, store a final PDF of your business plan, as well as a printed version, for easy access by all company stakeholders.