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.
Why agents should have a real estate business plan
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.
Components of good business plans
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:
- Foundation statement
- Marketing strategies
- Financial plans
- Action plans
Let's take a deeper look at each component.
1. Foundation and description statements
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:
- Executive summary
- Business description
The executive summary is a distillation of your business plan into a short, concise statement. In general, your executive summary should include the following:
- The details of your market
- Your business strategy
- Details about the management team
- Any financial projections
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:
- When and why you created your business
- Where your business is located
- What makes your business unique
- Who the leaders of your business are
- Why you chose your target market
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.
2. Marketing strategies
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:
- Market research
- Brand awareness
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:
- Improving your website - A clean, informative website can go a long way in building awareness for your local real estate business. To this extent, make sure your website is accessible and user-friendly. Also, be sure to step up your Search Engine Optimization (SEO) strategy by researching popular real estate keywords that are most likely to drive traffic to your website.
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.
- Maintaining strong relationships - One of the easiest ways to build brand awareness as a real estate professional is to maintain strong relationships with your current clients. In addition to keeping your clients happy, maintaining strong relationships may help grow your network, especially if happy homebuyers recommend your services to their friends, family, and colleagues.
- Utilizing Nextdoor - The first and best option for local businesses, Nextdoor is a hyperlocal platform that connects neighbors to local businesses owners. To get started, set up a free Business Page . Add pictures, your services offerings, and a mission statement to promote your local real estate business to homebuyers near you. From there, become share a Nextdoor Ad to engage directly with potential clients in the areas that matter most to you.
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.
3. Financial plans
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:
- Expenses - For most small real estate agency businesses, typical expenses include costs associated with licensing, personal spending, and small business spending. You should also keep in mind marketing strategy costs. Finally, if you don't own the building that's housing your business, you'll also have to budget for rent and utility bills.
- Income - Projecting income is one of the most important aspects of a business plan's financial section. More than simply estimating how much you'll make in a year, you'll need to research the state of your current market to see how much you can expect to grow your profits year after year.
- Transactions - A factor in generating income, transactions refer to the number of sales you expect you and your agents to make each year. First, calculate how much income you need to bring in each year to make a profit. Then, calculate how many transactions you'll need to make to reach this income goal.
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.
4. Action plans
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:
- Marketing - Thinking through your marketing strategy is a major aspect of your market plan, but there are other factors to consider. For starters, think about your services and how your approach differentiates you from the competition. Then, think about your ad budget. How much are you willing to spend to target your demographic? Finally, consider the medium through which you'll interact with your target audience. For instance, if you're aiming to reach a younger demographic, focusing your attention on social media marketing may result in a higher return on investment.
- Goals - Goal-centered action plans focus on how, specifically, you'll reach your goals. For instance, if one of your goals is to make 20 sales a year, your action plan should detail how you'll go about accomplishing this sales goal.
- Exit strategy - having an exit plan in place is good for risk mitigation as well as goal measuring. Establishing an exit strategy can mean stepping away from real estate because your goals have been met or because a predetermined level of failure has been reached. Considering when to step away will help guide your actions today.
- Business practices - To help your real estate business run smoothly and efficiently, it's beneficial to standardize all aspects of your operation. For example, detail your ideal process when it comes to generating new leads, following up with clients, and managing your team. Setting guidelines early is one way to set up your business for long-term success.
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.
Build your real estate business with Nextdoor
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.