BUSINESS PLANNING FOR A PROFITABLE YEAR

BUSINESS PLANNING TO MAKE THE YEAR AHEAD MORE SUCCESSFUL AND PROFITABLE

Another year – another chance to grow your business or career.
Much is said and written about the need to prepare a Business Plan so you can chart the progress and growth of your business.

We are all aware of how some licensees and Sales People have continued to grow their market share, profile and profitability whilst others have struggled to survive, and indeed some have exited the industry.
No doubt there are some who clearly possess the energy and skills, which we could label as “natural”. A closer examination of their performance usually tells a different story though. They always nearly have a defined modus operandi, a
Way of doing business that simply “outruns” the average operator.

They are people who have planned for success – watched, learnt, listened to the best and emulated them.

Perhaps it’s a good time to take a look at the sort of planning these people do: to see if there is something in their strategies, which we could adopt.

So if things need to improve it could be time to make some serious changes to your business. I would like to discuss how you might assess the changes needed by outlining a simple Business Planning strategy I see being used by some very successful businesses.

“Unless you are growing and prospering, simply doing more of the same is pretty much a turn up and hope strategy.”

“If you do what you’ve always done, you’ll get what you’ve always got” Too often people leave off the final phrase “…in ever diminishing amounts.”

Where do you start?

1. The best place to start is with you, and not the Business

One would hope that you have a clear vision of the life you want this business to fund.
I believe that people choose a business or career to “fund the life they want”.
Firstly you need to be really clear on your personal goals. I continually surprised that the majority of people I meet in Business do not have their personal goals written down. Therefore they have no written strategies of how they are going to achieve them.

It could be time now to look out 5 years and write down the type of life you want by that time.

You could set targets for:

Personal Health and Fitness
Relationships
Family
Annual Income
Investments
Debt Reduction
Travel
Sports achievements
Business Awards and Recognition
Community or Industry Service
Etc

All this will need Funding, and that’s the role of the business!

Without assessing these goals you run the risk of more of the same. If you aren’t making the progress you want, imagine working just as hard again this year for the same results as last. For many people that is not a palatable picture. The key is in understanding what your goals are, really believing they are right you, and then focusing on what needs to be done to achieve them.
I call this the fuel to fill your tank each day with the energy, drive, focus and enthusiasm to build a great business and to make the changes that are required. So have you a Business Plan that specifies the production targets required and the key strategies that will take you to that success picture.

2. Define the Business that will deliver the Income required

Once you know the level of income you will require it’s time to create a picture of the “Business that will deliver”.

You will know your market place and your competitors. Couple this information with the required income you need and start to build a picture of what your business will need to be like.
How big, how many people, what profile, reputation and market share?
What will it are like to work there?

Start with a simple calculation.

Profit Required EG $300 000
Annual Running Costs $300 000
Office Gross $600 000
Paid to Sales People $600 000
Gross Net of Franchise Fees $1 200 000
Franchise fees (If you pay any) $90 000
Total Fee Income $1 290 000

Average Fee collected $6000
Sales required per annum 215
Per Month 18

Sales In Market Area PA 1000
Market Share 21.5%

When you have worked this simple Calculation take a look at the feasibility. The above example looks a pretty simple case of “I can do this in my current Market”. One must assess whether the current business location will deliver enough revenue to build the profits to the right levels.

3 Assess the Competition

No matter what you intend there is an impact made by your competitors.
List them all and assess their weaknesses and strengths, look at any competitive advantages they might have and estimate their market share.
Now ask yourself “Can I build my business in this environment?”

4 Examine your Current Reality

Now conduct a SWOT analysis on your business.
Before doing this you will want to have access to some pretty accurate information about production and efficiency in your business.

Look for the following

Your Trading history and any trends

Average Monthly Costs
Team Size
Recruitment
Marketing Costs and any trends in Vendor Contributions
Image
Profile
Productivity and Average Incomes across your team
Minimum standards
Market Share
Listings taken
Exclusives
Auctions
Tenders

Assess these on a per person basis, and then calculate accurately the “Clearance Rate“. That is work out the % of listings taken that are actually sold.

Have you really got a handle on current reality for your business and do you understand why that is so? I suggest you have a look at your real levels of productivity in your current business.
How many controlled listings do you list per person per month?
How many auctions do you list per person per month?
How many of them sell?
What’s it costing you to hold this stock? How much per listing do you spend?
How much per sale do you spend?
What are your Clearance rates of these listings into sales?

5 Establish Strategies to Make the Difference

So now ask:
Why is there a gap between where you want to be and current reality?

What are the specific strategies that will make the biggest difference?

Now spend time looking at the difference between the current position and where you want to be. Having collected all the past performance history you can start to define the Key Strategies that will take your business where it needs to go.

The first places to look are

How many Listings are you getting per person per month?
How many of them sell?

In most of the Real Estate Businesses we work with the key to improved performance is tied up in these 2 factors.

Small increases in performance here can have a huge impact on profitability.

Lets look at a typical set of figures (Pretty average really)

Number of Sales People - Current 10 Future 12

Exclusives Per month - Current 2 Future 2.5
Auctions Per month - Current 0 Future .5
Total Exclusives PA - Current 240 Future 360
Total Auctions PA - Current 0 Future 72

Exclusive Clearance - Current 50% Future 60%
Auction Clearance - Current 0 Future 80%

Total Sales PA - Current 120 Future 273

Income on Fee of $8000 - Current 960 000 Future 1 638 000

Average S/C Income - Current 48 000 Future 68 250
@50% Payout

The above improvement would have several strategies required. They could include but not be limited to:

1 Recruitment Strategy
Have I enough/too many people?
Have I the right people?
What new skills do they need?
How’s my recruitment plan? Where will I find the new people?
What Induction and training do they need?
How is my training programme?

2 Skills training to lift the Clearance Rate.
Based on skills from Qualifying Vendors through to advertising quality, Listings management, pricing, Assisting Vendors understand the market, Open Homes, Sales and Negotiating Skills.

3 Auction Strategy
Do I need to introduce this into my business and if yes who is going to run it?

4 Marketing Strategy to Create more Listing Opportunities
This could include use of company/Sales persons Databases, use of Vendor Marketing Contributions, Geographic and Strategic Marketing, Sign Boards etc.

5 Coaching Strategy to Keep sales team members focused on Key Tasks
How do I learn the skills to be a great Coach of my people? How do I introduce Accountability Programmes to ensure my sales team is performing to new levels?

6 Financial Strategy to Manage Costs and Measure Income and Performance

7 Operations Strategy
Do we have the right technology and support to achieve new levels of Quality?
Are we in the right premises?
Do we need more or less branches?
The physical environment?

8 An Awards and recognition Strategy
Let’s celebrate our successes and give credit where it’s due.
Monthly, Quarterly and Annual Awards.
Of course there’s more to it than this. Like how do you get buy in from your existing team to setting new standards and creating accountability so that this isn’t just a good idea but ultimately becomes the “way we do it around here”?

In many Businesses we can generally note 10 to 15 strategies that are required to lift the business to new levels. In most cases we recommend that you select the 4 or 5 that will have the biggest impact and then create a detailed action plan for each of those.

Once we have a set of Action Plans the penultimate step is to list down all the actions required from all those key strategies in chronological order. This is what goes in YOUR DIARY OR ON YOUR WALL SO IT’S PLAIN TO SEE WHERE YOUR FOCUS MUST BE

Whilst this is only a brief outline of the Key Ingredients of setting out to do a Business Plan it does indicate the steps in the process. The homework you do beforehand is as crucial as the picture you paint of the ideal business.
They key to making the changes rest with you the business owner.
The new financial year is not far off and now is a great opportunity to take the time to Assess both where you are and where you want to be.

Plans are best kept simple – in logical steps that can be implemented in some sort of order. Experience so far has shown that the key factors revolve around the following:

How many controlled listings per month is each sales person bringing in?

And

What is the clearance rate of those listings?

Focus on these 2 factors and you will find all the other issues:

The need to recruit, train, coach and do great marketing. The need to provide what customers want, to use technology for an edge, to provide great systems and to be the best manager and leader you can be.

As I said earlier there are operators who have already embarked on strategic plans to lift their game, to grow their business by having all their team telling the same story, performing at higher skills levels and focusing on those tasks which really are dollar productive.

Writing a Business Plan is not hard. It’s just the challenges of facing up to some of the Strategies that will need to be introduced and then being prepared to benchmark your performance alongside the targets. There are plenty of examples of business owners and managers who in the last year or so have taken the challenge and are on the way to building businesses which generate growing and sustainable profits and thence increased value. These owners are building their businesses so they can fund the life they want.

In any business environment there are people who prosper – perhaps this year it could be your turn.

IAN KEIGHTLEY