How to Create a Business Plan for a Real Estate Company

A good business idea is not enough to make your business thrive unless you have a consistent business plan to back it up and keep your business at the top of the game. Statistics show that 82% of small businesses fail due to cashflow problems. Two thirds of small businesses make it for at least two years, while approximately a third survive for more than 10 years. 

Even though real estate is one of the 10 most profitable small business industries by net profit margin, the same rules apply. To build your real estate company from the ground up and set it up for further growth, you must start with a plan, and avoid the most common pitfalls along the way, like real estate recruitment problems. Here are six steps on how to best do it.

Research the market 

Your market assessment should cover all the factors that can affect purchase and sales in the area of your choice so that you can easily identify both opportunities and potential challenges to your business success. When deciding on your target location, consider the past and current property values, trends in purchases, possible economic and other kinds of influences which could affect the market in the next five to ten years.

If you plan on doing business internationally, you also need to consider appropriate legal structure, as well as to make sure your practices are compliant with foreign ownership and investment laws. A good example is a property brokerage company Invest Islands, which takes into account economic landscape, demographics as well as the political environment in Indonesia, to be able to conduct their business properly. 

Also, you need to make sure you’ve researched your prospective clients thoroughly, and segmented those you will focus on. Be sure to gather enough information on their demographics (age, gender, income, employment…) as well as their lifestyle habits, needs, wishes and pain points your company will try to solve.

Research of your competitors is another crucial aspect to take into account when planning, as you need to determine the way in which the service you provide will differ from all the other companies at the market, making your company a more favourable choice.

Make an executive summary

An executive summary of your business will include a concise description of your plan. Basically, you need to provide answers on several questions, briefly:

• Who are you?

• What will your company do?

• What services will you offer?

•  Who is your target audience?

Three to five sentences are usually enough to create a great executive summary of your business. You can polish this summary at the end of your planning phase, when you’ve already answered all the questions and have set your path clear.

Define your mission statement

Use this section of your business plan to provide your answer to the “why” question.  Start with explaining your motivations for getting into the real estate industry, and the purpose of your company. Think about the impact you want to have in your community and the industry you are in. You should focus especially on aching pains of a certain group of people – your target audience, and how your company is going to offer them a solution, making their lives better. Don`t forget to always stay informed and up to date with the latest residential living and to follow reliable home improvement platforms, so that you can always adjust your business to the customer - a future homeowner. Your mission statement should also be brief and concise, but clear enough to engage your potential customers and employees. 

Your mission statement should also be brief and concise, but clear enough to engage your potential customers and employees.

Do a SWOT analysis

A SWOT analysis is also an important part of every business plan. It includes a thorough analysis of your strengths, weaknesses, opportunities and possible threats. Try to identify three to five factors in each category:

• Strengths. Your competitive advantages, such as the skills and knowledge of your team, valuable physical assets or successful business processes.

• Weaknesses. Identify your weakest points, such as a certain lack of resources, skills or knowledge, things you can improve.

• Opportunities. Determine whether there are any environmental factors which could contribute to your business success. Think about upcoming events, changes of regulations etc. which you can take advantage of.

• Threats. Identify external factors which could put your business at risk and which are beyond your control, such as legal and tax regulations, new franchise entering the market etc. 

Your SWOT analysis will also include the actions you will take to make use of your strengths and opportunities as well as the ways to minimize the risks related to your weaknesses and threats.

Define your goals

Once you’ve done the SWOT analysis, it’s time for making your plan more actionable, by setting your goals and defining the actions you’ll take to achieve them, within the possibilities of a realistic growth. 

While brainstorming, take into account your business ambitions as well as the achievements of your competitors, and cover all business areas, including sales, marketing, and HR. When you’ve had your goals listed, divide your goals into short-term goals, those you want to achieve in the next 18 months, and long-term ones.