In most cases, the decision to become a real estate agent is a decision to go into business for yourself. Rarely are real estate agents employees of their affiliated brokerages, but instead, operate as independent contractors.
That’s likely a large part of what attracted you to this profession in the first place, right? Control your own destiny and all that.
Very good… as long as you have a plan, that is.
Benefits of a Real Estate Business Plan
A business plan is a strategic road map that shows you where you are today, where you want to go, and how you’re going to get there.
It provides you with focus, making it easier to say “yes” or “no” to opportunities that come your way, depending on how well they fit into your plan.
A business plan provides benchmarks and measures that allow you to see your progress. It can also send up red flags when course corrections are needed. Think of it as your business GPS that calls out, “recalculating…” as needed in order to get you back on track.
5 Key Elements of a Business Plan
A good business plan will be tailored to your particular business and your specific goals.
For example, if you are starting a business that needs loans or outside investment, your business plan should be constructed, to some degree, with that audience in mind. On the other hand, if you yourself are the primary (or sole) audience for your business plan, your efforts will be to create a plan that provides structure, focus, and measurements of success for your business.
All that said, most businesses plans are structured similarly. Here are five elements or sections common to most business plans that can serve, at the very least, as a starting point for the business plan you create for your particular needs.
1. Executive Summary
The opening section of a business plan is typically an executive summary that describes the primary focus of the business. Some people might say that it’s the “elevator pitch” of the document.
Its length can vary, but if done properly, the executive summary will provide an overview of what your business plan entails, briefly describing you, the services you provide, and your target customers.
What that could look like: Felicia Jones is a Seattle-based real estate agent who specializes in the sale of bank-owned REO properties.
2. Mission Statement
Some business plans will roll the mission statement into the executive summary while others will present it as a separate section. Either way, it should give insight as to the company’s purpose, guiding principles, and aspirations.
What that could look like: Drawing upon my expertise in the vacation property niche, I support my clients through the transaction process, including providing such services as comparative market analysis, inspections, staging, and marketing. I help sellers get the best price possible. I help buyers get the best value for their money. And I help investors properly assess the revenue potential of the properties they consider.
3. Management and Personnel
This section of your real estate business plan identifies the critical members of your team. You might be thinking, “Well, that’s easy… it’s just me.” But is that really true?
Even as a sole proprietor, you will likely rely on others to reach your business goals. Some of that support will be provided by your affiliated broker, and some you might need to find (and pay for) on your own.
Many successful real estate agents, for example, employ non-licensed assistants who take care of paperwork, answer calls, and handle other tasks that do not require a license. To the degree those matters can be delegated to an assistant, you are freed up to build up your client base and increase your closings — the source of your business income. If that’s your plan, put it in your plan!
Maybe you will contract out your website’s creation and maintenance or, perhaps, you have a freelance photographer on call for property shoots. Think about those who play a role — large or small — in your business and identify them here.
What that could look like: I am an independent agent. I have a part-time non-licensed assistant who handles paperwork, bookkeeping, inbound phone calls, and other miscellaneous projects. I utilize freelance photography and web designers on an as-needed basis.
4. Market Research/Competitor Analysis
When deciding where to do business and what services to offer, a bit of market research is in order. You will want to consider the existing and future needs in the marketplace and identify those who would be your competitors in servicing that need.
Many businesses find value in carrying out what is known as a SWOT analysis. SWOT is short for “Strengths, Weaknesses, Opportunities, and Threats.” It’s a way of comparing your business to your competitors.
What that could look like: Strengths include niche expertise, social media skills, and local market knowledge. Weaknesses include lack of bilingual capacity, low brand awareness, insufficient support staff. Opportunities include securing executive relocation service business with companies moving into the area and adding lease negotiation to the package of services offered. Threats include the rising costs of office rent and support staff pay and the growing number of competitors in the same niche.
5. Financial Information
The financial section of a business plan should indicate who owns the company and in what legal form the company exists. Company expenses, assets, and liabilities need to be identified. Then, a break-even analysis and cash flow analysis should be created that plots the path to profitability.
How complex this section of the business plan is will depend on the structure and size of the business. For a real estate agent operating as a sole proprietorship, it will be much simpler than it would be for a broker running a real estate firm with employees, independent contractors, and office expenses.
Tips & TakeAways for Your Real Estate Business Plan
Ready to get started on your plan? Great! Here are a few things to consider as you start.
It’s a Living Document
Understand that your business plan can evolve over time. You’ll want to review it every so often to make sure it is still relevant to your present-day goals. Knowing this is to be expected should take some pressure off you to “get it right the first time” — which can keep many a person from getting the first edition done.
So Many Resources
Once again, the internet is your friend. Do a quick search of the terms “business plan” and “real estate business plan” and you’ll find all sorts of valuable articles, tools, and templates.
Here are a few of our favorites:
“How to Write a Business Plan, Step by Step” - Article appearing on nerdwallet.com
“How to Create a Real Estate Business Plan” - Article by Zillow Premiere Agent includes a link to a free business plan template.
SCORE - A 501(c)(3) nonprofit organization and a resource partner of the U.S. Small Business Administration (SBA), SCORE is the nation’s largest network of volunteer, expert business mentors. SCORE is dedicated to helping small businesses get off the ground, grow and achieve their goals. Most of their services and resources are available at no cost.
Let Us Be a Part of Your Plan!
Wherever you are in your career, we want to be part of your business plan for success. Find out what we have to offer in pre-licensing and continuing education courses.