Great real estate businesses aren’t built on daydreams and wishful thinking. Like any business owner, you need a goal and clear strategies for growth. So how can you predict what will be beneficial to your business, and what your sales should be like in the future? Simple. Pull out your crystal ball, wave your hands dramatically, and…no. No magic or overthinking. Just create a forecast for the year and use it to build a solid business plan. So let’s, quite literally, get down to business.
Creating Your Sales Forecast
Sales Forecast. It sounds important and perhaps somewhat intimidating. Fear not, while it is indeed very important, it’s really just the way you predict your future sales based on your own sales history and some market factors thrown in too. Creating a sales forecast once a year gives you a baseline to measure up against. When you have a basis for comparison, it’s much faster and simpler to spot potential opportunities and problems, and act on them.
Step 1. Look at Last Year’s Sales
Document how many new clients you averaged and what your average net profit per customer was. Were certain months particularly good, or were some slower? Take note. This is the history you’ll use to creating a month-by-month forecast of the level of sales you expect to achieve in the future
Step 2. Factor in Some Market Research
Ah, the market is ever-changing, but it’s worth reading up on local and national news. Research trends and predictions that you should factor into your forecast. For example, if your area is hot hot hot, factor in ”x% growth” over last year.
Step 3. Consider Possible Internal Shifts
Just as the market shifts from year to year, no doubt certain aspects of your business will too. Consider if your resources are growing or shrinking. Are you trying to cut back on marketing spend? Or, perhaps you’re planning on adding to your team. Be sure to factor these changes in.
Step 4. Make Your Calculations
There’s forecasting software available to make this very simple, but now that you’ve created all your comparison research, noted your internal shifts, and researched your market assumptions, it’s time to make some calculations for your forecast.
A word to the wise: Be realistic with your forecast. It’s easy to get wrapped up in the New-Year’s-esque euphoria of optimistic planning, but the point is to create very realistic goals. Once you’ve drafted up your forecast, get some consultations. Ask team members for their take and make sure you’re setting yourself up for success and can build some solid goals from your predictions.
First your history…
Average Sales Price: Average price of properties in your target market
Average Commission: Average commission percentage you’ll earn on transactions
Growth Rate: Annual growth rate you’d like in your income for the first three years
Close Rate: Percentage of leads you work that eventually transact
Now, to the future…
Target Income: Amount you’d like to earn in your first year before taxes
Gross Revenue: Total value of the transactions you need to close each year to meet your income goals
Yearly Transactions: Total transactions you’ll need to complete to meet your income goals
Leads: Number of leads you’ll need to work based on your close rate
Cost-per-lead: How much you can spend to reach each lead
And of course, don’t forget…
Expenses: Factor in things like licensing, website, MLS, phone, etc.
Setting Your Goals
Once you’ve created your forecast, it’s time to evaluate where you’d like to take your business. In order to achieve your goals, you’ve got to have them! And by have them, I mean create meaningful goals by really thinking it through, writing it down, and knowing why it’s a goal in the first place.
A helpful way to guide your goal-setting, is to follow the SMART goal methodology.
Specific
Measurable
Attainable
Realistic
Timed
Putting your goals on paper is an exercise in clarification. It ensures you’re choosing something specific to work towards, and defining a timeline to achieve it. Displaying your goals can be motivating and inspiring too. Seeing them makes them real and spurs you to take action. It’s particularly helpful when you hit a roadblock, and you can see a reminder of what your purpose is, cut through the noise, and focus on what matters: taking an action that puts you closer towards your goal.
Narrowing Your Focus
Remember the first part of a SMART goal is to keep it specific. What number are you trying to achieve in your business? This is the “front and center” goal for your year, the line in bold at the top of your business plan.
For example, do you want to
Achieve X transactions this year
Reach $Xk in income this year
Generate X leads per month
Hitting a certain level of income is a popular goal. It’s easy to build a strategy underneath it of real activities to support it. For the sake of example we’ll suppose this is your goal, and now we’ll figure out how to support it. If you’re hoping to achieve $Xk in income next year, you need to determine how many transactions you’ll need to achieve that number and cover all expenses.
It’s simple math. Look back at past campaigns and the numbers in your forecast to see how many leads you will need to hit your goal. For example, if you average 25 unscrubbed leads and 10 qualified leads per sale, then calculate how many leads you need per month to fuel enough transactions to hit your goal income for the year.
Bob Sokoler of the Sokoler Medley Team, RE/MAX Properties East in Louisville Kentucky breaks his team’s goal down into a simple equation like this. The goal for his team is to hit 30 to 50 leads per sales associate per month. He found this to be the sweet spot for what his agents can effectively service, and the team’s minimum goal is 450 leads per month to support his 15 agents. He knows the development and success of his team depends on establishing a solid lead source, and uses a variety of tools including BoomTown to get there.
If you’re working with a team, it’s critical to make your expectations clear from the start. Your team should know exactly what the top priorities are so they can hone in on their own role in the overall goal and know what’s expected and how to stay on track. Establishing operational processes will keep workloads streamlined, expectations clear, and everyone accountable.
Create Action Plans Around Your Goals
You’ve got some real goals set now. That’s great. But, remember that New Year’s Eve trap: all the optimism, but none of the accountability. The next step now is to outline how you’ll actually go about accomplishing your goal, and building a real business plan.
This plan needs to answer:
What are your areas of focus to reach your goal
What are you going to change in order to reach your goal
What are the steps you and your team need to take to reach your goal
The first step in any solid business plan is to look at your external audience. Asses what customers you’re trying to serve, AKA your target audience. Figure out what type of personas suit your skill set and your service offering, and how to reach and engage them. Do your homework and get some solid statistics around your target audience (think: first-time homebuyers, luxury clients, a certain neighborhood, etc.)
The more you can drill down on your ideal customer and how to reach them, the more effective you can be with your marketing material, and the more efficient you can be with your marketing dollars. This will help you determine your areas of focus to reach your goal.
Next you need to consider your internal audience. What will really get your team on board with your goals and empower them to hit the ground running?
Could incentives be the ticket to really motivating your team?
Reaching team goals on the Duncan Duo team of RE/MAX Dynamic in Tampa, Fla., means that Andrew Duncan rewards his entire 40-person team with an all-inclusive trip to destination cities across the United States. The whole team, sales associates and support staff, is motivated to reach . Last year, the Duncan Duo team averaged 28 transactions per sales associate and earned an all-inclusive trip to Los Angeles. This type of incentive is a form of actionable accountability that motivates sales agents and support staff to reach their full potential.
Perhaps your team needs better tools at their disposal to boost the pipeline and help them build better relationships. When your goals are bigger you need to feed your agents more opportunities and they need to be able to leverage technology to streamline their workload and prioritize their time. The right platform can provide you with the tools to operationalize your processes and save major time with working your database.
Boost Your Marketing Efforts
Build in the relevant business best practices that will remove barriers to sales and increase activity: more calls, better conversion rates, increased training and effective incentives. If you’re lost trying to decide the best way to boost your business and hit those goals, here is a list of strategic objectives to get your moving in the right direction:
Geographic Farming
Working Seller Listings (Here’s Tom Ferry’s take)
Social Media Marketing
SEO and Optimization
Cold-Calling and Door Knocking
Flyers, Post-Cards, and other Offline Marketing tactics
Email Marketing
Paid Lead Generation and Facebook Advertising
Measure, Track, Revise, Repeat…
You can’t improve what you don’t measure! When you’re effectively tracking your efforts, it’s easy to make adjustments where you need to and keep on track for success. Reviewing your plan as a whole should be done at least quarterly, but on a monthly basis, use tracking forms or a performance dashboard to record your activity, calculate the results, and compare them to your forecast and your business plan.
When you’ve outlined your yearly strategy in your business plan, use this as a guide to get granular and create monthly, weekly, and daily game plans around each strategy. This will keep you focused on the most dollar-productive activities to help you reach your goal.
Here are some good things to consider using in your game plans:
Daily:
Make ____ contacts
Weekly:
Send ______ personal notes
Add _______ people to your database
Contact _____ FSBOs
Contact ______ Expired Listings
Monthly:
Add ______people to your database
Hold ______ open houses monthly
Mail or email market updates to your SOI/past clients
Mail or email relevant info to your designated farm of ______ properties
Door knock/ door drop _________ houses
Take ____ past client to coffee, lunch, or drinks
Network with ____ B2B referrals
Stay on the Cutting Edge
When you take the time to develop a forecast and set strategic goals against it, you’re looking at the big picture and building your bottom line. You can’t set it and forget it though. Stay the course with activity-based sales techniques. Evaluate which strategies are working and systemize them in your business. This makes the effective processes repeatable and gives you and your team a systematic and streamlined approach. The market is always changing to. Read industry news and reports, attend conferences, work with a coach, and do whatever you can to continue to educate yourself and stay on top of the game.
When you build a strategy, consistently reassess, and arm your team with the right tools, support, and systems to deliver the best consumer experience, you’ll hit your goals, and work on your business instead of in it.
The post Your Ultimate Real Estate Business Plan. Forecast and Set Goals to Win appeared first on BoomTown!.