8 Business Planning Tips for 2014

REAdY fOR A fRESh START fOR ThE NEw YEAR?

ChECk OuT ThESE EighT BuSiNESS pLANNiNg SuCCESS TipS fOR REAL ESTATE AgENTS ANd BROkERS

With the New Year right around the corner now is the time to start thinking about some solid business planning strategies for 2014. Whether you already have a plan in place – or whether it’s time to start fresh – these eight tips for success will help ensure that you have a productive year:

1) Embrace your fluctuating income. When you signed up for a sales career based solely on commissions, it didn’t take long to uncover the positives and negatives of the setup. On one hand, your paychecks are sizable and unlimited in that there is no real “ceiling” prohibiting you from earning as much as you can. But these checks are not always guaranteed, nor do they come at a predictable rate. Keep this very important point in mind throughout the business planning process.

2) Don’t neglect your own needs. New and seasoned business owners alike have a bad habit of paying off their business bills and obligations before taking care of their own financial needs. Your business planning will be more fruitful if you pay yourself an adequate compensation (from each month’s commission checks) that provides sufficient money to “live on” for the month ahead.

3) Allocate your commission checks wisely. If you just collected a $3,750 commission check (based on the sale of a $250,000 home, split with the cooperating broker and split 50/50 with your own broker), for example, deposit $2,000 to your personal bank account (for living and personal expenses and savings), set aside 20-30 percent for taxes, and then reserve the remaining cash to either pay off business expenses (MLS dues, for example) you’ve incurred during the last month, or retain that money for future business use.

4) Always be prospecting. A real estate agent’s income fluctuates in direct proportion to how well he or she prospects, plain and simple. That means if an agent slacks off on finding new customers, generating referrals, or cultivating her existing customer base, she’ll definitely feel it in the pocketbook. “Agents need to have consistency about their work habits,” says David Fletcher, a Florida-based real estate coach and author. “They can’t back off just because they’ve had a few sales, nor should they go into panic mode if they haven’t made a few sales.” Here are a few good prospecting options: w Farming, or selecting a specific neighborhood, community, or “farm area” to market yourself and your services to on a regular basis. w Direct mail pieces (Just Sold, Just Listed, etc.) w “Warm” calling potential customers with whom you’ve had prior contact w Calling For Sale By Owner listings w Contacting “expired” or “cancelled” listings from the local MLS w Reaching out to anyone else in your own network who may be ready to buy or sell in the next one to 12 months w Asking past clients for the names of two to three of their friends, family, or colleagues who may need an agent now, or in the near future

5) Focus on filling your deal pipeline. Instead of working towards one commission check at a time, aim to have at least a few deals in every stage of the “pipeline” at any given moment. That means having a regular supply of: w Potential buyers who are looking to purchase new homes now w Potential buyers who may be ready to buy within the next three to 12 months w Homeowners who are ready to sell their homes now w Homeowners who are ready to sell within the next three to 12 months

With all four categories covered (some clients may not “fit” perfectly, such as the buyer who is ready to purchase in 60 days, but this gives you a general idea), you’ll be assured a steady flow of business possibilities.

6) Divvy up your daily activities accordingly. The social nature of the real estate profession can quickly bog you down with tasks that don’t generate income. Floor time, during which you man the office phones for potential clients, can be very productive, for example. Time spent chatting by the coffee pot waiting for that phone to ring, however, can be better spent on marketing and advertising activities, calling friends and family to remind them that you’re there to help if they want to buy or sell, or updating your web site to reflect updated listings and information.

7) Save for the lean times. This isn’t always easy for newer agents, but there’s no excuse for those entrenched agents to not sock away some money from each check for a rainy day. If you need to open a separate account and deposit $500 from each check into it, go for it. Money market accounts –which pay slightly higher interest rates than regular savings accounts – are a good option. Whatever investment vehicle you choose, the key is to create a cushion on which to fall back on should you ever need to go more than two to four weeks without a commission check.

8) Review and tweak your plan as needed. Pull out your business plan every quarter and review it and/or tweak it to make sure you’re on the right track. “If you’re stagnating, then you definitely need to tweak your plan,” says Greg Herder, CEO of Hobbs/Herder Training in Santa Ana, Calif. “There should be a steady, upward trend in an agent’s real estate sales based on natural client-generation tools, such as referrals.” For example, referrals are a great source of business, but they shouldn’t be your only revenue streams. To pump up sales, achieve your financial goals, and avoid income fluctuations, you should also be feeding your client pipeline with new marketing efforts.

Check out NAR’s Field Guide to Writing a Business Plan for even more business planning tips, resources, and advice. v