To position your brokerage for success in 2018, follow this step-by-step guide
Whether you’re running a two-person boutique brokerage or an office with hundreds of agents, you should have a business plan in place.
It may not be sexy task, and it’s often easier to spend time putting out fires and running meetings, but all business owners need to spend time working on the business, not just in it.
A business plan is just a road map that guides your decisions throughout the year. To position your brokerage for success in 2018, here’s a step-by-step guide to creating your own business plan.
Do your homework
Before you look forward to 2018 and beyond, first you must look backward. You cannot make 2018 projections until you know where you stand currently.
Gather data from at least the past year, and ideally the past three years, so you can analyze numbers and look at trends.
Print out profit and loss statements from your bookkeeping software, and also run the prior year comparison reports.
It’s great knowing that the firm brought in $525,000 in commission income in 2017, but you also need to know and compare the figures for 2016.
If $525,000 represents a 10 percent increase in GCI from 2016, this is very different than if it’s a 10 percent decrease. You want to compare prior year figures to see what’s going on in the big picture.
Break down the GCI figures into divisions if you have income from multiple sources (residential, commercial, property management), and allocate the expenses to each division as well to get an accurate picture of where the income is coming from and to see if expenses are lopsided in any one category.
This takes some time if you’re not already doing it, but it’s invaluable in tracking what is working (and what is not profitable).
For example, our office used to handle property management, and it looked like that was a solid source of income. But after analyzing the expenses and time spent, I realized that this was a division we should move out of so we could concentrate on more profitable areas.
Besides printing out profit and loss statements, you’ll want to look at number of closed sides, total volume of closed GCI and market share data. I do this monthly and quarterly, and again compare the figures to prior year numbers.
Go over your expenses and compare them year-over-year to see where costs are increasing and where costs may be shifted next year.
Define your goals
After looking at the data, you know where your income is coming from and where you’re spending money. Where you want the company to go in the next few years?
How you answer this helps define your goals for the year. Sample goals may be to:
- Increase cash flow by 10 percent
- Double the number of listings
- Increase market share
- Recruit 10 more agents
- Open a second office in another town
- Move into a niche market such as military relocation
- Bring a family member into the company
- Merge with another firm
- Build long-term value for a future sale
- Retire within five years
How you move forward in 2018 may be very different if you intend to retire and sell in five years than if you want to start opening new locations in different towns.
You may have more than one goal, but they need to work together with the same vision. For example, you may want to double the number of listings, recruit 10 more agents and open a second office.
Recruiting 10 more agents and opening a second office may be accomplished by merging or taking over a competing office.
What are your main objectives that you want to happen in 2018? That’s your vision.
Condense it into one clearly worded positive statement: “By the end of 2018, this firm will have closed 225 sides with 18 agents who brought in a total of $800,000 in GCI.”
Talk to clients
If you survey your clients post-closing, you should be reading through those results regularly to keep your pulse on what clients think of your firm.
If you don’t do this already, check out a service such as RealSatisfied that will send an email to your clients after closing to rate your agents and the customer’s experience.
Even if you already do this, pick up the phone and call a few clients to have a brief interview with them. What do they like about working with your office, and what do they wish was different?
I have a group of repeat clients who refer business to our office. I am sure to call these people when I’m in the midst of writing each year’s business plan to see if they have any suggestions or insights on things that we are doing exceptionally well and where we can make improvements.
Involve your people
As the broker you’re the ultimate decision maker. But your staff and agents are not working in a vacuum. They may see opportunities or trends that you don’t see.
Ask both front line staff and those in the background what are their biggest challenges at the office? Do they see any opportunities to either move into new markets or niches that you haven’t discussed?
Do they see places to invest marketing dollars or that you should cut back on? What is their opinion of how the office runs now (lead distribution, marketing, etc.)?
A critical question to ask is if they could change one thing about the office, what would it be?
Asking agents this one question led me to backtrack from an open office concept that I thought everyone loved.
In 2017 we un-did the 2013 open office redesign and went back to assigned desks and cubes after the agents requested it in the prior year’s planning session.
If I didn’t ask that question in 2016, I would not have known how unhappy they were without permanent desks.
Now that you know the numbers, your goals and what your clients and agents think, you can build your strategy and focus using a SWOT analysis.
Draw a square on a blank sheet of paper with four quadrants labeled strengths, weaknesses, opportunities and threats.
After listening to your clients and agents you know your strengths and weaknesses. List them in the appropriate box.
For example, one broker I did consulting work for found that his office’s virtual phone system was a weakness (according to his clients). He decided to hire a remote live receptionist to address this issue.
For me, clients consistently told me they loved the fact we have a professional photographer on staff to photograph their homes. This is a strength we play up in our marketing, and we are expanding this in 2018 to explore how we can use this to gain even more listings.
Write it down
Doing all of this work is pretty much worthless if you don’t commit what you’ve learned to writing. Clearly spell out your goals and vision for 2018.
Break it down into quarterly goals so you can track your progress throughout the year. If you wait until fall to see how you did, it’ll be too late to correct course if necessary.
Unless you’re going for financing, the plan does not have to be a formally crafted report. It does not have to be perfect. It is a living document that is meant to be reviewed and revised on an ongoing basis.
After writing out your business plan, use it as you make decisions throughout the year. When you have a decision to make, this road map will guide you to whether the choice fits your vision, and if it’s financially feasible.
When someone wants you to try a new marketing channel or to buy into their product, the plan helps you answer that question.
Just after drafting my 2018 plan, a new business opportunity came my way. The proposal was tempting, and for a few weeks, I played with the idea of folding it into the brokerage as another avenue of income.
After going over my plan, I realized the additional income would be nice, but the overall logistics did not fit with my vision, with the big picture of where I wanted to go with the firm, and I turned the proposal down.
Without a clear idea of where I want my office to be in a few years, the decision would have been much harder to make.
Taking the time now to map out your goals is the best way to position your brokerage for success in 2018.
Erica Ramus, MRE, is the broker/owner of RAMUS Real Estate.