The Holidays: Time to Create APlan for 2007

When it comes to planning ahead this holiday season, you have three options

By Allen Wright

When it comes to planning ahead this holiday season, you have three options: do nothing and hope Santa helps you out; scribble something on a napkin and lose it before the New Year; or this year, actually create an awesome, comprehensive business plan that will guide you to success. If you plan to select option number three, please continue reading; otherwise feel free to join the crowds at the shopping malls.
A good business plan requires three steps: planning, business development and tracking. Each has a role in helping to meet your profitability goal.

Plan Ahead
This can entail some math or technology, so whenever you have the choice, opt for technology. Lay out the following information: annual household budget, commission schedule, average sale price of your listings, average sale price of closed buyers, and commission rates you earn. This will help generate the revenue portion of your business plan.

Take the time to examine the different ways you spend money. You will be amazed at how much you spend: just-listed cards, just-sold cards, virtual tours, newspaper ads, brochures and flyers, home books, your Web site, open houses, property staging, photography work, and signs and a lockbox.
You will also need to list out annually all of the overhead expenses you have in running your business: licensing, E&O insurance, desk fees, computer expenses, Web sites and e-mail accounts, cell phone and automobile costs. Don't forget about education and annual dues.

Reveal the Plan
Now for the calculation; add up all expenses together and use a ratio for non-closed transactions and then add them to the personal annual household budget. Next, take the sign of the tangent line leading from your front door to your office-this could get difficult to explain and that is where technology comes in to do the calculation for you. The calculation itself is nothing more than basic math, done in a certain order and repeated until you come up with the end result.

Your business plan should reveal two very important items amongst other things:

1) How many listings and buyers you must close

2) How much you spend per transaction in overhead

The reason it is necessary to know how many transactions are required to close is simple; this will help determine the activities needed to meet your goal. Overhead per transaction-the more important factor-represents what comes out of each commission check to pay for all personal marketing and overhead.

Identify Expenses
Where does your income come from? Assume that you need to close 15 listings and 12 buyers to make your income goal. The first step is to determine what sources of business you will pursue.

List out all the different activities or sources of business for the upcoming year. Now attribute closed listings to each of these sources until you have accounted for all 15 required closed listings.

Do the same process for buyers; remembering to add the activities that typically bring in buyers such as open houses and floor-duty. In this process, you are trying to account for all the required closed buyers that your business plan has indicated you will need to close.

Continue this process for each of the sources of business. Remember to stay focused on the activities that are quantifiable.

Thirty Minutes to Productivity
If this process sounds too overwhelming and that Christmas shopping is looking attractive at the moment, then you'll want to consider the CreateAPlan real estate business planning software system. CreateAPlan will automatically take care of all these calculations for you. Thirty minutes and you will have the best gift any Santa can give you-a productive 2007.

Allen Wright is senior vice president with CreateAPlan (www.createaplan.com) and can be reached at allen@createaplan.com or (949) 349-9394 x 115.

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