Creating a Real Estate Business Plan: Free Template
By Sandra Manzanares
About Agent Basics
Developing a real estate business plan is critical to forming a healthy and sustainable business, defining and measuring your sales goals, and growing your business holistically and proactively. This post will show you how to create a great real estate business plan that helps you organize and grow your real estate business, and provides a free business plan template you can customize.
Why Create a Business Plan?
A business plan is essentially a comprehensive plan for meeting your goals. How much can you expect to earn? How much more should you budget for marketing to grow your business? How many sales will you have to make to cover your expenses? A strong real estate business plan will make answering these questions (and more) simple. As your business grows, it lets you know where you stand in relation to those goals.
Consider New Years’ resolutions: While these are often made at the beginning of the year with lots of optimism, few people specify how they’ll carry out their resolution and how realistic their goal is. Somewhere between February and May, they’ve lost sight of the goal altogether.
Business success shouldn’t be wishful thinking. Successful real estate agents who develop business plans have a clear understanding of how they can compete in their market and the factors that will impact their future growth. They also outline clear strategies for growth and take action on those strategies. Particularly for real estate agents working independently, a business plan will help you stay on track throughout the year and let you know whether you’re on track for positive growth.
A final note: The length of business plans vary, but they generally outline between one and five years. For our purposes, we’ve used a length of three years. Few agents are able to fully develop their business in only a year, while planning five years into the future can be very speculative. For most new agents, three years is a reasonable time frame for achieving a degree of financial success and establishing a viable career in the industry.
Creating Your Real Estate Business Plan
How you create your real estate agent business plan varies based on your needs, but there are core issues every real estate business plan should address. We’ve broken these into four areas:
- Defining Your Marketing Strategy
- Creating a Financial Plan
- Implementing Action Plans
- Evaluating and Revising Your Plan
For each area, we will outline specific tasks you should perform, and provide tools to help you along the way.
Defining Your Marketing Strategy
Identifying Your Market Niche
Before setting out your facts and figures, it’s important to put a spotlight on your target market and how you’ll serve this niche. This helps you decide what’s realistic and feasible to achieve in your business plan. Determining your market niche is a fancier way of saying: Who, specifically, are your services best suited to? While honing in on a narrow target seems a little exclusionary, niche marketing can save you time, effort, and money on marketing.
At the end of this step you should be able to answer:
- Who is your target customer? Use our customer persona guide to find your target customer.
- What are the defining characteristics of your target customer?
- What service is your target customer seeking?
- How will you attract, nurture, and service this target customer?
Assess the Viability of Your Niche Market
It’s important to assess your proposed niche and make sure it is consistent with the market in your area. For example, if you’ve decided to focus on first-time buyers, do some research to look at relevant stats and figures: What percentage of sales in your market were to first-time buyers in the last 12–14 months? What was the average sales price to first-time buyers?
Also, assess how competitive this market is: Are you the only agent catering to the young first-timer, or are you competing with heavy hitters who are well-known? Use this area of your real estate business plan to iron out the details of your market and how your target customers are already served within your market.
Discovering Your Strengths and Weaknesses
Identify three main strengths that will help you become a top producer in real estate. These are areas where you currently shine and they will become integral to your marketing and services. Then, while a much less flattering practice, be honest with yourself to outline three areas where you are weak. This will allow you to identify the areas where you should focus on improving so you can achieve the goals you’ll set later in your business plan.
Setting qualitative goals is important: It puts the work you do in perspective, gets you out of bed in the morning, and makes you willing to go the extra mile. Determine three main areas you want to master, whether that’s being the go-to agent in your small town, being the most knowledgeable agent in the high-end property market, having the best online brand, or simply helping families find a place that feels like home. Writing these down in your business plan will be both motivating and help you later when you develop your marketing messages.
Creating a Financial Plan
Having a sound financial plan for your business is essential. To assist you, we’ve created spreadsheets you can use to estimate your goals, income, and expenses.
You will find specific instructions in the spreadsheets, but here is some guidelines for creating a financial plan:
Tracking expenses will help keep your financial obligations top-of-mind as you assess your budget and growth areas. To create your plan, you’ll want to determine what your expenses will be. Here are three main areas your expenses may fall into:
- Licensing: These expenses will include training, state exam fees, etc.
- Personal: This can include your wardrobe, technology fees (like computer and phone), and car fees.
- Business: Business expenses will include items like your broker fees, website and MLS fees, marketing and advertising, etc.
Estimating their income is the biggest concern for most new agents. To do this, you will need to decide how much money you need to make in your first year, and how much you would like that figure to grow. You will also need to research some basic figures for your market, like the average sale price for homes. Use our business plan template to help you calculate yours.
Transactions and Leads
To meet your income goals and cover your expenses, you’ll need to conduct a certain number of transactions. Further, to conduct that many transactions you will need to work a certain number of leads.
Our template will automatically calculate the number of transactions and leads you will probably need to meet your goals, but you will have to assess these figures to decide whether they are reasonable. For example, if you are planning to work part-time as an agent in your first year, but need to close 20 transactions to meet your goals, you are unlikely to have enough time.
Implementing Action Plans
Breaking your goals into action steps makes them more tangible and ensures you’re making strides to fulfill them. Here are some keys ways you can convert your real estate business plan into actual business practices.
Creating a Marketing Plan
Marketing is the essence of how you get your services and your listings in front of the right customers. You can take on inbound strategies (like blogging, thought-leadership, social media, etc.) or outbound strategies (mailers, advertising, etc.). When considering your marketing potential, you want to plan for the following:
- Product: Product for real estate agents is both your listings and your brand. A decision to work with you is as much based on your expertise and sales style as the listings you represent. Determine what distinguishes you in the market and constitutes your personal brand.
- Price: While you can’t necessarily control the price of every listing or commission, you can use average sale prices to hone in on your target buyer and the amount you’re willing to spend on your marketing to get a sale. This will save you money in the long run, so you can make sure the buyers exposed to your marketing can likely afford the properties in your area. Knowing your average commission helps you deduce the amount of money you can invest on marketing. Learn how to set your ad budget with our advertising budget guide and then use our handy PPC ROI Calculator to set your bids.
- Place: Once you’ve established a strong idea of your target market, you’re able to understand where and when to interact with them. Is your target demographic social and constantly on their smartphones, or are they less tech savvy and more likely to enjoy print materials? How and when you showcase your services to the right leads determines a large part of your marketing success.
- Promotion: Determine the exact channels where you’ll promote, how often, and the language you’ll use to communicate your goals and branding message to your target audience.
Making Your Goals Tangible
When developing action plans, get as literal and specific as possible. Take the goals you outlined earlier in your financial business plan and expand on each of those in the area, strategy, and specific actions you’ll take to fulfill that strategy. Here’s an example:
Goal: To generate 500 leads in my first year
Area: I want to generate leads through Facebook
Strategy: I will post content consistently and advertise on the platform
Specific Activities Involved:
- Developing my blog so I have content to share
- Signing up for social media scheduling technology that will help me post around the clock
- Researching Facebook advertising campaigns and setting up weekly ads campaigns to target quality leads
- Assess success rate of my inbound and outbound campaigns and develop strategies to tweak based on the leads generated
Do similar activity plans for each goal you identified in your financial plan.
Forming a Lead Nurturing Strategy
Next is determining how you’ll help move leads through the sales funnel. Determine if online communication and content distribution is your style, or if you’re more comfortable meeting in person consistently and answering questions on the spot. Make note of the materials that you’ll invest in to nurture leads, like handouts or online resources, and create an ideal sales timeline.
Setting Business Best Practices
Write out your ideal practices for how you’ll deal with qualified leads versus unqualified leads, how quickly you’ll follow up with interested parties, your practices for helping a lead throughout the final steps of the sales process, and how you’ll stay in touch with customers after papers have been signed. Write down your business best practices in a place where you can see them daily so you’ll stick to them.
Building a Team
Do you need a team to carry out tasks and ensure success? Determine if you’ll be hiring or working closely with a team of associated agents to reach your goals. If you don’t have a team, take the time here to write out any connections that will help you execute your tasks on a regular basis, like a printing vendor, brokerage team, legal aid, marketing intern, etc.
Evaluating and Revising Your Plan
Just like a New Year’s resolution, a business plan can’t be effective if you don’t actually put in the time to work on the goals you’ve outlined. Use these tips to stay on track and get the most out of your real estate business plan.
Constantly reassess the market.
The housing market is constantly changing, and that can cause you to reassess your current real estate business plan. Stay on top of market changes:
- Read real estate industry news and tips. Industry news, mergers, and new statistical data emerge throughout the year that can impact the values of the properties you sell, the pool of leads, or the types of customers you sell to. Use these reports and articles to fuel your knowledge so you can be proactive about your strategies (and work them into your business plan).
- Attend conferences. Much of what will inform your marketing and business tactics will be industry advice you gain from successful real estate agents. Real estate conferences will help you repurpose strategies to strengthen your own business plan.
- Implement feedback from clients. Clients will give you an honest picture of your business. While you can try to figure out what worked, it’s often good practice to provide a questionnaire after closing, or ask for reviews or testimonials from former clients who were happy with your services so you can grow your business in that area.
- Hire a real estate coach. If you’re fairly new to the business, there’s no better way to shorten the learning curve than by getting guidance from a real estate coach, who can advise you on both your business plan template and how to become a successful real estate agent.
Staying on Track and Measuring Success
Outline standards for measuring success and check in on your current business plan regularly to make sure you’re meeting all the steps that will lead to your goals and projections. For example, if you’re hoping to close 10 transactions by the end of the year, and spring is an active sales time in your area, outline how many transactions you’ll need closed at the end of the first and second quarters. Looking at these early in the year will help you determine if you need to reframe your business plan and add more efforts in a specific area.
Reassess Your Real Estate Business Plan Annually
Look over your business plan each year and set new goals and projections based on data from the previous year. This will ensure your market analysis, expenses, and tactics are up-to-date.
Download our Real Estate Business Planning Template to map out your agency’s approach for the year ahead.
Published on November 20, 2014
Written by Sandra Manzanares
Writer, editor, and marketing manager with a passion for helping brands enhance their content marketing strategy. I'm a firm believer that creative storytelling is an essential part of the way we communicate. Constantly striving to fill my head with as much creative and analytical information as possible.