Written By: Ralph R. Roberts, CRS, GRI. Ralph is the author of the forthcoming book Flipping Houses for Dummies (John Wiley & Sons, November, 2006), co-authored with Joe Kraynak.
I have been in the real estate business since I was 18 years old. I worked for a bunch of different companies since then. I now own my own company.
When did I write my first business plan? What do you think? 20 years ago? You would think that 20 years ago I had a plan to sell over 600 homes a year? Not even close!
I wrote my first business plan only 5 years ago - on a pad of yellow paper - it ended up as 10 sheets of paper with handwritten notes.
On yellow sheets of paper...I run a business doing in excess of $50M a year in real estate sales and my business plan is on a yellow sheet of paper? It really hit me between the eyes when I went to the bank for a line of credit to buy some investment properties. The banker said, "Let me ses a copy of your business plan." I gave it to him. He said, "well, it's good but is this how you keep your business plan?" I said, "well, that's the written copy, but we keep the typed one back at the office with the staff."
I didn't have a typed copy. My assistans had no idea of what I was going to do and where we were going. Just repeating this story makes me shutter.
Stanley changed my life...Superstar agent, Stanley Mills from Memphis, Tennessee, visited me. We spent a week writing a business plan. That week changed my life forever.
When I see something that works, I keep it going. I start my business plan each year at Thanksgiving and finish it just after the first of the year. My business plan is now 109 pages and it has everything, including details on how much money I plan to generate per hour.
Now my staff, my assistant, my receptionist - everybody at the company knows that when Ralph is working, he's GOT to be doing the most dollar-productive tasks. When I'm working, everybody gets paid. So, if a file or document gets dropped off, I don't bother with it - and they know how to handle it. More importantly, because of the business plan, they know where we are going and how we are going to get there.
Consider yourself an independent contractor...to this day, I find it incredible that I worked so many years without a business plan. I think one of the problems that I see in the industry is so few people (even though they work for a company) look at themselves as an independent contractor or as a business entity unto themselves.
Don't fall into the trap that the company will take care of you. You should be thinking like a business and every successful business begins with a strong business plan that has the following:
If you don't have an assistant, maybe you can plan on how you will create enough business to afford one.
Without a plan - without goals - you are a motorboat without a rudder. You end up going in circles or in random (and ineffective) directions.
Get into the success mindset...So whether you are a broker or own your own company; if you are a sales manager or an assistant, you need to have a business plan.
One of the most important aspects of your plan is to get a grasp on what your time is actually worth. Once you begin to truly understand that, you'll see how ridiculous it is for you to do clerical work, like reviewing credit reports, filing documents or delivering loan packages. You'll realize that by delegating the no-brainer, time-consuming stuff, you will devote more of your valuable time to doing dollar productive tasks. (Now do you think you can afford an assistant?)
Break it down to simple steps...I hope you are getting the picture of how important I think a business plan is to your financial well-being. It doesn't have to be complicated. They do not have to be outrageous and unattainable goals.
My goal was not to just sell 10 deals per month. I break it down as small as I possibly can. I break it down to selling four, For Sale by Owners, six Expired Listings, and eight Foreclosures. I know I have to get 18 deals to close 10 of them. As a loan officer, you could break it down into 3 deals from real estate agents, 2 from marketing to apartment complexes, 3 from builders and 1 each from your affinity partners such as CPA's, financial planners and attorneys. You will need to know your closing ratio and how many deals you can convert to closed loans.
One a day is all I ask...suppose your goal is to close 20 loans per month. Now to hit your goal, you must take 30 applications - which is one per day. Thinking about it one day at a time is easier than thinking about per year (365 days). If you follow the plan, you will have closed 240 loans.
Last words...your plan should cover everything. It should include your personal goals, like taking a day off to go on a field trip with your daughter. Or a date night with your spouse. What do you have to do to make that happen?
Hopefully, you will sit down tonight and begin writing your plan. You'll be amazed at what it can do for both your career and income.
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