This article was updated on September 7, 2022
For many real estate professionals, starting a local real estate business isn't always as red-hot as the market. Future business owners must consider the expenses associated with starting a new business, as well as the geographic scope, clientele, and marketing strategy of their business.
Fortunately, there's one thing you can do as a real estate professional to help make your business a success, even before your first sale: crafting an effective real estate business plan to outline the structure of your brokerage and help you obtain funding.
If you are looking to start a real estate business , this blog post is for you. From writing the executive summary to devising your real estate marketing strategy, this guide has all you need to know to create an exceptional real estate business plan. In no time at all, you'll have a business plan that'll set your brokerage up for success for years to come.
Taking the time upfront to build a business plan will bring to the surface aspects of the business that may not have been thought about previously. The business plan is a documented snapshot in time of where you are today, where you want to be in the future, and details on how you plan to get there. Business planning forces thought about the current state of the market you're in and opportunities to improve performance with specific goal setting.
There's a lot that goes into writing a business plan as a realtor. That said, breaking it down into several components makes the task more manageable when starting your brokerage.
In general, most successful real estate business plans include the same four components:
Let's take a deeper look at each component.
Just as the foundation is the bedrock of a house, so too is it the start of a great business plan. Put simply, a business's foundation statement explains what the business stands for. It may also address the business's target audience and overall goals.
To craft a foundation statement for your real estate business plan, focus on two things:
The executive summary is a distillation of your business plan into a short, concise statement. In general, your executive summary should include the following:
Having an easily digestible, yet informative, executive summary is important. Those that lack information or are uninteresting may be detrimental to your overall business plan's objectives and may not show to potential investors what your competitive advantage is in the real estate industry.
The business description is the place to share the story and objectives of your company. Like the executive summary, the business description states your brokerage's vision. But unlike the executive summary, it allows your business's personality to really shine through. This is your real estate company. Show how you are going to make a difference in the real estate industry.
Keep the following in mind when writing your business description for your real estate company:
Good real estate business descriptions should also convey the business's values and its unique competitive advantage. Do you specialize in commercial real estate or real estate investing? For instance, in their business description, Asheville's Town and Mountain Realty state they are "full service, independent, and family-owned." Being cognizant of your business's values helps to establish your brand and plan a marketing strategy that targets the homebuyers you want to work with.
Besides setting you apart from competitors, adding a personalized touch to your business description may also entice future investors. As a real estate professional, use this section of your business plan as a way to illustrate your credibility.
Although a good foundation is necessary when sharing your real estate business's overall goals, it won't matter if you haven't identified your target market. Identifying your market is the first step in building a large, loyal client base.
When thinking of your target market, it's helpful to consider demographics. Are you targeting first-time homebuyers in their early 30s or older buyers looking for vacation properties? Does your ideal homebuyer gravitate towards any specific amenities? Knowing as much information as possible about your target market will help set up your real estate business for long-term success.
Once you've identified your target audience, it's time to think about two other important components of marketing strategy:
Researching your business's market is an important part of building your real estate agent business plan. Careful market research involves knowing the average sale price of real estate properties in your area, as well as identifying your competitors.
Knowing your competitors is especially important. Doing so will allow you to find ways to replicate their success while identifying what makes your brokerage stand out.
How you'll build brand awareness is an important question to consider when devising your real estate business plan. If you live in a very small town or rural area, word-of-mouth marketing may go a long way. However, most real estate businesses rely on social media and other digital platforms to reach potential clients.
Additionally, you may want to consider the following:
For example, Golden Real Estate in Golden, Colorado uses a clean, informative website to its advantage. Upon opening their website, you see part of their business description and a search bar enabling you to easily navigate through the buying and selling information available.
Building your local real estate business's network isn't easy. However, by incorporating the above real estate marketing strategies into your business plan template, you can help grow your clientele-and your sales-in no time at all.
Unless you're starting a non-profit, your business plan should devote a section to projected profits and expenses. Knowing your finances upfront will increase your local real estate business's transparency, making your venture more appealing to potential investors.
When thinking of financial plans, consider the following:
When starting a local real estate business, thinking about finances is extremely important. For many business owners, overestimating income while underestimating expenses is a scary and potentially harmful prospect. Put your mind at ease by mapping out your finances in advance.
Goals on paper are one thing. Putting your vision into action is another. Get your small real estate business off the ground quickly by creating plans of action that you and your team can follow, at least early on.
Although action plans vary by real estate business, they generally focus on three key areas:
Like financial plans, action plans are necessary components of any good business strategy. Spending time thinking about how you'll realize your goals will pay dividends down the road.
For many people, starting a new local real estate business is an exciting endeavor. However, things can quickly go downhill if you're not ready for the ups and downs of the business world.
This is where good business plans come in. By thinking through your foundational, marketing, financial, and action strategies early and often, you'll be better prepared for whatever the real estate market throws at you.
Build your business's foundation on Nextdoor. Start by claiming your free Business Page and, from there, connect with potential clients and grow your brand presence in the neighborhoods that matter most to your business.