When did you last update your business plan?
According to the Australian Financial Review, less than 30% of small-to-medium businesses in Australia have a business plan. And while this statistic applies to businesses across a multitude of fields, real estate businesses are often no exception.
For many agency directors, especially those in smaller offices, the demands of day-to-day team and business management, combined with meeting sales or rental requirements for their own clients, leaves little time for planning.
Of those who have invested in planning, few recognise the need for a business plan to be dynamic. Plans need to be updated as market, industry and economic conditions change, in order to ensure goals are still realistic and achievable, growth projections are reasonable and financial forecasts remain accurate.
Like any industry, real estate is competitive both at an agent level and at a business level. Having a business plan gives you a clear understanding of where your business is now, where you want it to go, over what period of time, and how you intend to get it there.
The real estate market is changing…
In fact, it’s not just the market that is changing in real estate, it’s the industry itself.
At market level, many geographical areas — especially the major cities — are starting to cool after experiencing hot markets for several years.
At industry level, new legislation, technology, practices and even international players are influencing a shift that will see evolution, over time, of what agents offer and how they offer it.
David Colman, business consultant, says, “A business plan that is well-researched, fluid and pragmatic can help any agency, regardless of size, strategically navigate these changes so they can capitalise on them and use them as a platform for growth. It is important to keep your goals and objectives realistic and take time to check in and update them regularly. ”
Research is the basis of a good plan
It is difficult to accurately plan, when your future, career and personal success is tied up in that of the business. This is why, so often, even small businesses call on the expertise and objectivity of consultants to help them create plans that are independent, factual and feasible.
“As a business owner, it can be difficult to get raw and get real. You know what you want, and because you want it so badly, it’s easy to convince yourself the path to success is smoother and more straightforward than it really is. This idealism is often reflected in SME business plans written inhouse,” says David.
Regardless of whether you select to employ a consultant or not, research is the basis of a good plan.
A business owner who writes a plan without taking the time to explore the business landscape, competitive environment and economic conditions beyond his or her own immediate understanding, is likely to end up with a document that will guide the business poorly and limit growth.
Effort should be invested in undertaking deep research into competitors — their positioning, market share, strategies, successes, failures and financials where possible — rather than guessing and pitting your business incorrectly.
Likewise, delving into the market and economy to better understand where predictions are coming from and what they are based on, and broader influences such as political or global developments, will ensure a more reliable plan.
Finally, understanding your clients — both those you already target and those you may have passed over previously — is crucial. Searching beyond the anecdotal, and investigating relevant reports and even your own data (think analytics from your CRMs, websites, social media, sales platforms) can give you insights you may not have previously considered.
Defining your purpose and position
While establishing accurate financials and forecasts, or strategising for structural growth may seem some of the biggest challenges when planning, one of the first steps can be the most difficult for businesses: defining your purpose and positioning.
Your purpose and position is about much more than just jotting down: ‘selling houses’ or ‘excelling at property management’.
It’s about first quantifying what you deliver and how, through realistic and measured goals, and finding your unique point of the difference: the place in consumer’s minds you plan to occupy so potential clients choose you over competitors.
A plan that doesn’t include goals that help define purpose and direction is essentially not a plan. This step will help guide and inform most other steps in the planning process.
What to include in your real estate business plan
There are many templates available to help you when writing your business plan. Though all differ slightly, the essentials are generally the same:
- Identify a mission and vision for your business, and define clear, measurable objectives or goals. You will use these goals to evaluate and track success.
- Many plans will potentially include an operational plan and a strategy for growth, which covers how you will structure your business to accommodate expansion and maintain service excellence.
- Most plans will include a marketing plan that is designed to help you meet your business objectives. Within this plan, you will often include a market analysis, marketing objectives, thorough competitive analysis, audience analysis, benchmarks, and marketing strategies.
- All plans will include a financial strategy and forecasts section, which will also cover financial goals and should be monitored closely. When completing this section, among other information, you might include a forecast of operating expenses, sales, cashflow and P/L.
As noted, one of the most important aspects of business planning, is understanding that the plan needs to be updated . It is not a static document that is set in stone, it is a fluid document (or set of documents) that should be regularly re-assessed, reviewed and revised based on any new data or information that becomes available.
If you are looking for assistance in planning for your business, previous EAC board member, David Colman is the expert you need.
David has spent 30 years working as a senior manager specialising in business management, company frameworks, business planning, forecasting and delivery. He is adept at improving both company and sales team structures and excels at building, training and motivating sales teams to become and remain successful, and he has a proven record of substantially increasing income.
David has an exceptional ability in management and implementation of plans, ideas, services and products across multiple businesses.
You can reach David via his website.