Planning to Fail? Part 3 – Business Planning
Sorry for the delay in getting this post out to my PropertyMinder AccelerAgent family.
We have some cool new features coming out in the coming months so keep your eyes open.
In my previous posts we have explored business planning and I set up some guidelines and strategies to help agents get on the road to creating a business plan so that they have some daily direction in their business. Let’s examine the first of those guidelines:
Start with your goals and work back
Let’s keep with the format. Since we only plan for the next 30 days, you need to determine what your goals are for the next 30 days. If you are using cash earned or commissions as part of your goals, and since most escrows will last 30 days it will be tough to hit those numbers if you are starting from scratch. Let’s not start out by planning to fail. Money is the bottom line for most of us, we need to make a certain amount… or else.
Decide on how much money you would like to earn in the next quarter, or 90 days. In order to achieve those numbers, how many transaction sides will you need? (Take the average commission per transaction in your area and divide into your goal). Take that total number and divide it by 3. If you have nothing in escrow right now then add 50% for your first month’s goals of transaction sides. If you have active escrows add 25% to give yourself a TFT buffer. If you have nothing in escrow now, you need to earn half of the money next month, and the other half in the last month of the quarter.
For example: If the goal is $90,000 in commission this quarter. That means I need to earn an average of $30,000 in commission per month. If the average commission in my area is $15k per transaction side, I need 2 transactions closed per month. If I add my 50% because I started from scratch, I would need 3 transaction sides. If I already had a deal in escrow that would earn me $15k in commission I need to 2 more transaction sides this month.
If I am starting from scratch and I do not have a listing inventory, I need to focus on a) getting some listings to ease next months burden, b) getting some buyers into contract right away. Experienced agents know that listing sides are the key to a successful real estate business and getting listings should be a strong part of every agents business plan, however, getting listings does not necessarily translate into now money, and now money is what many agents need to pay the bills. The best source for now money in today’s market is finding motivated buyers, and according to my goals, I need to plan on finding 3 buyers and getting them into contract in the next 30 days. I have no time to lose!
If I have listings I need to determine which listings are the most marketable or better phrased, priced to sell. Those that are not priced to sell, need to get price reductions. Since I have listings I am ahead of the game in getting my 3 transaction sides this month and my business plan for getting transactions in escrow is going to be slightly different over the next 30 days than the agent that is starting from scratch.
Starting with my goals and working back, I have determined I need 3 transaction sides in escrow in the next 30 days.
What am I going to do to make that happen?
Tune in for the next post and please comment on this one.