The Bottom Line as Your End Goal

The best place to start is at the top. Ask yourself, “How much do I want to earn this year?” You can have total control of your income and make as much or as little as you desire. The only person or thing that determines your income is you. The market, other realtors, and other outside factors have very little control over your income. Although they may influence what you need to do, they aren’t determinants of success.

Once you determine how much you want to earn, break that figure into quarterly, monthly, and weekly amounts. For example, if you decide to earn $500,000 this year, you need to earn $125,000 a quarter, $41,666 per month or $9,615 per week. Next, figure out where your business comes from by determining the percent of transactions that originate in different ways. For example, let’s say you closed 75 deals last year, of which 30 came from referrals, 15 came from open houses, 18 came from sign calls, and 12 came from expireds.

Given these figures, 40 percent of your business was from referrals, 24 percent from sign calls, 20 percent from open houses, and 16 percent from expireds. You also should figure out the percentage of listings sold versus buyer-controlled transactions.

Now, determine your average commission check. Take your gross commission and divide it by the number of transactions you complete. For the purpose of this example, we’ll use $5,500 as your average commission check. You want to earn $500,000 this year in gross commissions. To do so, you’ll need to close 91 transactions (divide $500,000 by $5,500)--16 more than you did last year.

Take it one step further, and figure out how many transactions should come from your different origination sources. Assuming your business will follow the same general formula as last year’s, you’ll need:

• 37 transactions from referrals (40 percent of 91)
• 22 transactions from sign calls (24 percent of 91)
• 18 transactions from open houses (20 percent of 91)
• 14 transactions from expireds (15 percent of 91)

Again, break these numbers down into quarterly, monthly and weekly amounts to get a clear path to achieve your income goal. If you do the number of transactions you need each week, by year’s end, you’ll achieve your goal.

Make Your Time Count

You’ve already identified where your closed transactions tend to originate. Now you should dissect what it takes to capture those different types of clients. By doing so, you’ll have a clear idea of how much time and what activities it takes to get referral clients, open-house clients, Web-based clients, and so on.

Break down each category of business as much as possible, even into the daily activities it takes for open houses, referrals, etc. The further you can break your business down, the easier the overall goal is to achieve. Now all you have to do is complete the tasks you’ve identified to create your different client bases.

Once you’ve looked at your business from the micro level, you need to step back and look at it from the macro level. Take some time to evaluate changes in your marketplace, in California’s economy and its real estate market, and the nation as a whole. Odds are, all three are in a different state than they were a year ago, which means you need to consider the difference in your business plan for this year. Get out of the old answers for what worked in the past and into the new questions for what it will take to thrive in today’s market. Here are some questions to consider:

1. What really works right now?
2. What do I need to do differently?
3. Which activities generate the most revenue for me?
4. Why don’t I do those activities more frequently?
5. Which activities provide a low return on my investment, both in terms of my time and my money?
6. Are there more efficient ways to achieve the same results?

All these questions are essential in building the road map of your business.

Turn Words into Deeds

The last aspect of a well-conceived business plan explores ways to implement new ideas or systems. Most of us rarely plan the new systems or ideas we want to use. Often, we go to a seminar, pick up good ideas and try to use them, but the results don’t live up to the hype. That’s frequently because we didn’t take the time to plan out how the new system would fit in with our current business practices or ask whether the new system coincides with our preferred work styles.

The most successful people plan out their success. Determine the weaknesses in your business, and then devise plans to overcome them. Don’t overextend yourself by doing too many things too quickly; you can slow your business down to a crawl with over-implementation. A good rule of thumb is not to implement more than two major changes in any given month. Decide what needs to be completed, prioritize this list and then devise a plan to implement changes at specific times.

A business plan can be the backbone of your successful business, so long as you stick to it. To that end, you should review your business plan daily for the first few months and then regularly after that. Don’t make the mistake of writing a fantastic business plan and then never looking at it again; that would be almost as bad as if you had never written a plan in the first place.

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