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By Craig Proctor

RISMEDIA, January 28, 2009-It is said that there are three types of companies: those who make things happen; those who watch things happen, and those who wonder what happened.

Much of what I discuss with agents relates to marketing and innovation, because these two areas are the ones which drive your business. However, just as important are the choices you make about where you plan to take your business-i.e. business planning.

A business plan gives structure and clarity to your thinking, a vision for where you want your business to go, and a step-by-step map of how to get there. With a strong, thoughtful and action-oriented business plan in place, you will gain perspective and insight. Most importantly, by getting a plan down on paper, you can stop getting lost in the trees and start looking at the whole forest. You can start working on your business instead of in it-and that will allow you to be much more effective with your marketing and innovation. You can start to be one of the few agents who makes things happen.

Most Real Estate Agents Don’t Have Business Plans

Some of you may think you have a business plan, but what most of you really have is simply a collection of thoughts and some numbers.

“Think of business planning as an opportunity to “stretch” your mind and envision the reality of your dreams,” says Lynn Horner-Baker, a real estate agent from Georgia. “This plan becomes the step-by-step blueprint to productivity and abundance in your life. When you have completed your plan, you have created a discipline with a wildly outrageous potential for personal and financial growth. Craig always advises us to work smarter, not harder and this is the answer. By investing just one uninterrupted hour today in developing a comprehensive plan, you can increase your productivity, your results and your earnings dramatically for the remainder of the year.”

The problem for most agents isn’t that they’re not smart enough to put together a business plan-or even that they don’t have enough time. The problem for most agents is getting started. As important as it is, the prospect of sitting down to write a business plan is so huge and looming, that we get scared off. It’s like looking up at a very big mountain that we know we really should climb. We really want to get to the top because we know that when we get there we’ll be able to see for miles and, with this perspective, we’ll be able to pick the best places to go and the best ways to get to them. But that mountain just seems so big! We look at it and look at it. We walk around it a few times. But every time we look up at it, it seems to get bigger and bigger. So eventually, we just walk away. We arbitrarily pick a place to go, and end up stumbling there rather blindly. Before you know it, another year has passed, and you didn’t quite get to where you dreamed of going.

How to Conquer the Mountain

The way to conquer the mountain is to stop looking at it all at once. In reality, business planning is a process. It shouldn’t be done all at once any more than you’d climb Mount Everest in a day. It’s a process. It happens in steps — one step at a time.

The basis of effective business planning is an overall vision or strategy. But why is strategy and business planning so important? Because most of the agents I deal with are quite entrepreneurial, many of them ask me this question. They ask me why it’s not enough to simply grab the good ideas that come their way and make them happen?

Well, good ideas are important, but first you need a way of evaluating these ideas so you know which ones are the best-which ones will get you to where you want to go most quickly and profitably.

In the absence of any clear-cut advertising strategy, most of us have a tendency to say “yes”. Most of us feel anxious when we say “no” because we’re afraid we may miss a good opportunity. But here’s the problem. When a business owner says “yes” too often, s/he may face:

  • – too many target markets (if they are defined at all)
    – a tangled maze of discounts to customers (because all of them have pleaded a special case)
    – high sales expense
    – advertising in media that really do not reach the target market
    – mis-coordination of effort, and
    – ignorance of costs

Simply Put, Your Strategy is Your Road Map

Your strategy is the picture you would take if you were to stand on top of the mountain I talked about earlier. It helps you spot detours and dead ends so you don’t waste time and money travelling a route that isn’t going to take you where you want to go or, worse, takes you in exactly the wrong direction.

“Your business plan should make a connection between your daily activities, your desired results, and the systems and leverage necessary to sustain a predictable and long term commitment to your goals,” says Horner-Baker. “It should also be 100 percent supported by your numbers. Knowing your numbers can cause a dynamic change in your lifestyle.”

Furthermore, your strategic road map will highlight shortcuts and new, superior routes that will not only get you to your destination, but beyond. Strategy helps you to spot opportunities by thinking through the entire system of marketing, competitors, customers, organizational resources, and organizational weaknesses.

Real estate agents seem to be a particular target for advertisers who want our money because we have the reputation of being vulnerable. As a responsible and hardworking business owner, you can’t let this happen to you. By formulating a strategy that will guide your business, you can:

  • – be consistent with your analysis
    – take optimal advantage of opportunities, and
    – make your own well-reasoned judgments about the risks and rewards resulting from various business decisions

It shouldn’t surprise you to learn that companies with a written and explicit strategic business plan are more successful than organizations that try to get by without one. A strategic business plan is a written document that spells out the goals, strategies, and tactics that will be used to gain and maintain the results you are seeking. It spells out not only where you are and where you want to go, but how you will get there and when.

Most Agents Have An Idea Where They Want To Go, But Don’t Have A Plan To Get There

For most agents, if any formal business planning is done at all, it doesn’t get past the “objectives” stage except for some quick numbers that are thrown together to look like a budget. In other words, most agents will identify “where” they want to go, but they never take the time to figure out the best way to get there. Instead, they just get in the car and start driving.

You can imagine how much time this wastes heading aimlessly towards an elusive destination. These agents are bound to take a lot of wrong turns. Often, these agents even fail to take a look at where they started. Imagine the repercussions of this if you decided to go to California and thought you were starting off in British Columbia when you were really starting in Florida.

When your plan is this aimless, even if you eventually do get to your destination, you will not have done so very efficiently, and you probably couldn’t do it again. This is the “good luck” school of business management, and businesses which operate in this way don’t often end up being very successful.

In broad strokes, here are the components you should be including in your Business Plan:

Situation Analysis (Where You’re Starting From)

Your Situation Analysis helps you clearly establish your starting point-where you are in your business, how your competition affects you, who your customers are and what they want, what threats face your business and what opportunities can be seized.

Compare yourself to your competitors (market share, unique selling points, target market, etc.) so you have a good understanding of the landscape. Analyze how your business has grown (or not grown) and identify why. Figure out what your prospects really want, and conduct first hand customer research, if necessary, to get some real answers.

Objectives and Goals (Where You Want To Go and When)

The Situation Analysis points out where the business is currently, and where it might go. The next step is to develop a statement about where the business should go. Your objectives become goals when they are given magnitudes and target dates. (e.g. I will sell 100 more homes in the next 12 months than I did this year.)

Strategy (Your Road Map Which Tells You How You’ll Get There)

As discussed, your strategy is your master plan-the big picture. It tells you in broad strokes how you’re going to get where you want to go. Your strategy indicates where major efforts should be directed in order to get you to your goals. The basic idea of strategy is to meet your objectives in a way that takes best advantage of your businesses resources, your prospects’ needs, your competitors’ weaknesses and the available opportunities. We call this optimization.

Action Plan (Your Detailed Route Plan)

Where your strategy is your master plan, your Action Plan is your step-by-step. Your Action Plan breaks your Strategy down into the week-by-week details that need to be accomplished in order to achieve your goals. These are your tactics. Where your strategy probably should not shift that much over the year, your tactics might very well undergo change during the year.

“Where did your business come from – what worked and what didn’t – where is the market today – who is your competition – what are the obstacles and what are the opportunities? How many properties do you need to sell to increase your production by 20%? What is your percentage of listings versus sales? How many listings does it take to sell one home? How many appointments does it take to list one property? What is your best lead generator for buyers? How many buyers does it take to close one sale? Ask yourself tough questions and based on these ratios, establish coordinating numbers to achieve your goals. Can your business structure support this growth? What systems, technology, and staff are required? Are there any potential problems and what are the solutions?” says Horner-Baker.

Each action must have a timing attached to it which will help you make sure you don’t miss important landmarks along the way, and keep you accountable as you go along.

Budget (The Funds You Allocate For Each Element of Your Plan)

Basically, this is a projected profit-and-loss statement. On the revenue side, it shows the forecasted number of units that would be sold and the average net realized price. On the expense side, it shows all your costs of doing business from salaries and office space to advertising. What’s left at the end is profit. You should be doing this on a monthly basis, and measuring and re-evaluating on a regular basis.

By drawing up your budget last, it becomes an overlay to all your previous work which allows you to determine ahead of time which initiatives are most worthy of your investment. Remember, this is a back and forth process. The first time through, I’m sure you’ll find that you can’t afford to finance all you want to do. This will force you to put a priority on projects, and this is a very positive step. There’s nothing like a shortage of funds to lead you to more creative and efficient ways of doing things.

“High achievers are goal driven and production oriented with their sights set on lofty rewards. So be certain to include vacations, adventure, family, friends and personal time in your business plan because when you focus each day on what you want, and follow your road map to success and financial freedom, the quality of your life will simultaneously expand to reflect your vision. Remember, without a business plan you are simply a kite without a tail, reacting to every change of direction or bump in the market,” concludes Horner-Baker.

Billion Dollar AgentTM Craig Proctor has been in the top 10 for RE/MAX Worldwide for 15 years and is the only real estate trainer who actually does what he teaches. Craig consistently sells over 500 homes per year to earn almost $4 million in annual commission. Over 25,000 agents nationwide use Craig’s system to make more money in less time. To learn about free Craig Proctor workshops held year round in cities across the country, click here.  These three hour workshops coach agents on the essential success strategies for this market, including free lead generation, short sales, bank foreclosures and reverse prospecting. Learn how to run powerful ads that will compel motivated buyers and sellers to contact you, without spending money you don’t have; how to convert the best prospects to guaranteed income; and how to give yourself an unfair competitive advantage in your marketplace.