Most agents spend more time planning their family vacation than they do planning for the success of their business. It’s true, less than 5% of ALL agents currently have a formalized business plan. This series of articles will examine the components of creating a successful real estate business plan. Each month you and I will explore one of the following topics:

  • Business Planning
  • Exit Strategy
  • Lead Generation
  • Systems
  • Training
  • Coaching & Accountability
  • Websites for Agents
  • Database Marketing
  • Farming Strategies
  • Open House Strategies
  • Listing Inventory

Business Planning

Pareto’s Principle, known as the 80/20 rule, states that 20% of the people produce 80% of the results or, 80% of your results will result from 20% of your activity. In any case, the rule holds true… except in real estate. Statistically, in real estate, the end results are more drastic. 95% of the results are produced by only 5% of the real estate agents. The rhetorical question is… “How do you get into and remain in the 5%.

The first step is to determine your income “Commitment” for your next year in real estate. There is no figure that is out of the question. It is entirely up to you and your motivation.

Let’s look at some numbers:

This plan is based on an 11-month year and a 4-day workweek. Let’s face it, we got into this business to set our own schedules and have “free time” for ourselves, right?

Your Commitment Income is $95,000

Your Average Home Sale Price is $289,000

Your Average Commission Rate is 3%

Notice that I have labeled your income “Commitment Income” instead of “Goal”. Goal is the most overused word in business today! How many times have you heard “Set your goal high and see how close you get to it!” or, “How close did you get to your goal?” We hear it all the time. However, a “Commitment” is entirely different. You must hit or accomplish a commitment!

The difference between a goal and a commitment is the result!

Here is a breakdown to indicate how many Appointments, Contracts, and Closings you will need to achieve your commitment. For this exercise I have used various industry benchmarks. The results and those benchmarks will vary with your knowledge, practice and experience.

Transactions Total: 14

Listings Closed: 8

Buyers Closed: 6

Listings

Listings Closed: 8

Conversion %: 88%

Listings Taken: 9

Listing Appointments @ %: 90%

Listing Appointments needed: 10

Leads converted to Appts. %: 20%

Listing Leads needed: 50

Buyers

Buyers Closed: 6

Conversion %: 95%

Buyers Offers Accepted: 6

Buyers shown who wrote %: 70%

Buyers Appts. Needed: 9

Lead Conversion %: 20%

Qualified leads needed: 45

Based on these numbers you will need to adhere to the following breakdown in order to achieve your commitment of 14 transactions.

Leads

95 Leads Per Year

8.6 Leads Per Month

1.97 Leads Per Week

.49 Leads Per Day

Appointments

19 Appointments Per Year

1.7 Appointments Per Month

0.39 Appointments Per Week

.098 Appointments Per Day

These estimates are conservative assuming only mediocre presentation and sales skills. I suggest you track your numbers and break them down into monthly, weekly and daily numbers as shown above. Can you follow-up on 2 leads per week and 2 appointments per month? Sure you can! This plan makes it possible for you to close 14 transactions per year and achieve your commitment with ease!

The following is also important to review consistently so as to measure your results and manage your activities closely.

Expenses

Advertising 9%

Supplies 6%

Auto 3%

Postage 2%

Professional Fees 1%

Miscellaneous 1%

Now that you have established the foundation of your business plan you are ready for the next step, developing an “Exit Strategy”. No one wants to work forever, so in next month’s article you and I will develop the exit strategy for your business plan.

Remember, it’s your business

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