Roadmap to Success: Business

Planning for Real Estate Professionals

Contents
The Purpose of Planning ..................................................................................................................................................... 2
Business Planning for the Business of Real Estate ......................................................................................................... 2
Competition and Competitiveness ................................................................................................................................. 3
Getting the Vision ........................................................................................................................................................... 6
Key Points: The Purpose of Planning .............................................................................................................................. 7
Self-Employment and Self-Determination.......................................................................................................................... 8
You as a Business............................................................................................................................................................ 8
Your Value Proposition................................................................................................................................................. 13
Goal Setting .................................................................................................................................................................. 15
Key Points: Self-Employment and Self-Determination ................................................................................................ 16
Developing Your Business Plan ......................................................................................................................................... 17
Leveraging Your Vision and Goals to Create a Solid Business Plan .............................................................................. 17
Markets and Marketing ................................................................................................................................................ 20
Marketing Strategies .................................................................................................................................................... 24
Key Points: Developing Your Business Plan.................................................................................................................. 28
Managing Your Business: Time and Money Management ............................................................................................... 28
Budgeting and Business Expenses ................................................................................................................................ 29
Productivity Calculations .............................................................................................................................................. 29
Time Management and Daily Activities........................................................................................................................ 31
Proper Record Keeping................................................................................................................................................. 34
Financial Management: Business Funds and Trust Funds............................................................................................ 36
Key Points: Managing Your Business: Time and Money Management ........................................................................ 36
Planning for Success and Putting Your Plan into Action ................................................................................................... 38
Business Focus Leads to Expertise and Effectiveness .................................................................................................. 38
Strategic Relationships: Your Sphere of Influence and Beyond ................................................................................... 39
Business Strategies to Avoid: RESPA Violations and More .......................................................................................... 43
Writing Your Business Plan and Tracking Your Success ............................................................................................... 45
Key Points: Planning for Success and Putting Your Plan Into Action ........................................................................... 46

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The Purpose of Planning
Unit Introduction

Entering the real estate business is a bit like merging onto a busy highway. You need to plan your move carefully, taking
into account the other cars, and where yours will best fit in. Plan ahead, and you'll find yourself ahead of the pack.

Unit Objectives

By the end of the Unit, learners will be able to:

• Describe how an effective business plan improves business processes.

Business Planning for the Business of Real Estate

You, the Entrepreneur

You are the president, CEO, marketing manager, IT director, the public relations manager, and the head of sales, for You,
Inc., the most important company in the world. As a real estate professional, you've launched your own business, with
all of the benefits and challenges that involves, and that makes you an entrepreneur.

Running your own business is, at its heart, the ultimate in freedom. You're creating something out of nothing: a business
that can have meaning and influence in the lives of hundreds of individuals and families.

Skyscrapers have blueprints, championship football teams have game books, armies have battle plans, and successful
entrepreneurs have well-formed business plans.

As an entrepreneur, your ability to plan your course of action and your understanding of your business will directly
affect your success. This course will help you look at your business in new ways and help you determine the direction
and the shape your business will take.

Your business plan will serve as your roadmap or guide to enable you to achieve your goals and objectives, and treat
your profession as just that: a profession. You’ll refer to it again and again when you decide on your next course of
action.

Business Purpose

If you’re like most real estate professionals, you got into this business because of one or more of the following key
factors:

• Independence: You wanted the chance to make a career on your own, set your own schedule, create your
own clientele, and build your own success.
• Service Mindset: You wanted the chance to help people buy, sell, or lease properties and make a difference
in their lives. You wanted the satisfaction of helping someone find their dream home, of building that
skyscraper, or of improving a community.
• Personal Growth: You wanted to become a trusted advisor, someone from whom others seek guidance and
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 advice. You wanted to help people, to educate them on the processes and steps involved in buying or selling
real estate, and to provide them with the expertise necessary to guide them through the process, from
contract to keys.
• Unlimited Income: You saw the potential of making an excellent income through the commissions you earn
by helping others buy and sell real estate. You realized that the harder (and smarter) you work, the more
income you can make. You wanted to write your own paycheck based on your efforts, perseverance, and
tenacity.

Ready for a sobering statistic? More than 80% of new licensees don’t last two years in this business. There are many
reasons for this, but the primary one is this: If you fail to plan, you plan to fail. Whatever your motivation for launching
your business, success requires developing and executing a solid game plan. This will document your vision and mission,
set goals for your business, and define the services you provide. Your plan will give you a structure from which you’ll
perform your daily activities, market properties, find clients, and generate sales. You’ll know exactly how much you have
to work to build the level of income you seek. You’ll have a clear understanding of what it takes, in terms of time and
money to achieve your objectives. Ready to get started? Let’s do this!

Offline Activity: Your Whys, Your Motivation

This course isn’t a passive educational course. It will require your involvement to get out of it what will serve you best
and put yourself on the right path to developing a solid business plan.

To aid you in this endeavor, we’ve created a business plan worksheet that you'll use to write down ideas and respond to
offline activities, such as this first one.

Open and print your own 31-page business plan worksheet.

Tennis great Arthur Ashe famously said, “Start where you are, use what you have, do what you can.” So, starting with
where you are right now, write down your current business information. For instance:

1. Write down the reasons you got into the real estate business. Be honest with yourself, and document why
you got into the business and what you wanted to get out of it when you began.
2. Write down what’s currently motivating you in your business. What’s keeping you going as a real estate
professional?

Competition and Competitiveness

Which Market Are You In?

The real estate industry can be incredibly competitive. Depending on the economic climate and regional factors, it’s
typically either a "buyer's market" or "seller's market.” What your business plan should help you do is to make it your
market, no matter the conditions.

Competition is usually based on the premise that there’s a limited supply, and each person wants to get his or her piece
of the business. The business world uses the term “market share” to describe a portion of this limited supply.

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A good business plan is built on solid information, so it's important for you to stay up to date on the current state of the
real estate industry.

Visit the National Association of REALTORS® website to review the latest research and statistics on the housing industry.
You can also check out the Economists' Outlook blog for daily updates on industry trends. Both are optional, but
recommended.

Abundance Mentality

Successful real estate professionals view the world in a different light. They operate from what’s been called an
abundance mentality. They don't look at the world as a fixed set of potential clients, but as an open field of opportunity.
With an abundance mentality, you can create your business plan based strictly on your own efforts, not the whims of
the market or the behaviors of your competitors. This creates a vision for the future based on what you want to create,
rather than taking what's already there from someone else.

In direct contrast with an abundance mentality is a scarcity mentality. Scarcity mentality asks, “How can I get my piece of
the pie?” An abundance mentality asks, “How can I make the pie bigger?” or “How can I increase my market by adding
new clients and helping them through my efforts?”

By creating an abundance mentality-based business plan, you create a business whereby your efforts and your
determination create your future, independent of your competition. You create an attitude that states:

• The smarter and harder I work, the greater my success.

• The more I produce, the more referrals I can obtain, which increases my market reach.
• The more I give, the more I receive, and therefore the more I will give.
• The more I can learn, the more I can share.
• The more people I help, the more fans I can create who will spread the word for me.
• If I need money, I will create the opportunities necessary to make money.
• If I need clients, I will create the opportunities necessary to find clients.

As you create a mental attitude of abundance, you’ll see that your resources are actually unlimited, and are only bound
by your efforts. You may create a business as big as your dreams. Your efforts will carry you. Your success or failure is
not dependent on market conditions or competitors. In fact, your success doesn’t mean that your competitors must fail.
As you create a positive, ethical business environment, you affect others in the industry in a positive way, thereby
increasing the industry as a whole. You make the pie bigger.

Creating Your Abundance Mentality Vision

As you create your business plan, below are some ideas that will help you create a vision that comes from an abundance
mentality.

• Create a vision for your business based solely on what you can do, what you can give, and what you can
contribute.
• Look at your competitors not as adversaries, but as colleagues in an ever-changing business climate. Find
successful people and learn from what they're doing. And share with others what you’ve learned.
• Commit to continuous improvement. Develop the habits of continually learning and continually being a
student of the business.

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 • Treat everyone ethically, and with integrity and honesty.
• Express gratitude for what you have and what you can contribute.
• Help others. The adage, “What goes around, comes around,” is true in this business.
• Focus on improving the overall industry and its reputation. President John F. Kennedy commented, “A rising
tide lifts all the boats.”
• Write down specific goals in your business plan. Have clear objectives about what you want to accomplish.
• Develop a habit of self-discipline, and develop your business plan based on your consistent efforts and
contributions.

Offline Activity: Take Stock of Your Abundance Mentality

On your business plan worksheet, write out your understanding of what it means to you to have an abundance
mentality.

What can you do in your business planning process to build and develop an abundance mentality? How will this help you
create the business you desire?

Examples include:

• Building networks and finding people willing to help you

• Reciprocating leads (finding leads for other professionals so that they will also find leads for you)
• Adding value to your services
• Creating new markets or new opportunities
• Becoming an innovator

Cooperation, Not Competition

One of the unique factors about the real estate business is that it’s actually built on cooperation, not competition. In
order to serve your clients and complete transactions, you must work with your competitors in a cooperative manner.
When you represent sellers, for instance, you work with prospective buyers' brokers in order to achieve a win-win
outcome, and you work cooperatively to smooth the bumps on the way to successful transactions.

The National Association of REALTORS® (NAR) feels so strongly about the importance of cooperation within the real
estate industry that it’s outlined a code of ethics directly relating to cooperation between professionals. If you're a
REALTOR®, you agree to abide by the NAR Code of Ethics. If you're not, these principles are still an excellent benchmark
to ensure a positive business environment.

Article 16 of the NAR Code of Ethics outlines the responsibilities of REALTORS® toward other professionals in the
industry. For example:

Article 16
REALTORS shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive
brokerage relationship agreements that other REALTORS have with clients. (Amended 1/04)

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Standard of Practice 16-4

REALTORS shall not solicit a listing which is currently listed exclusively with another broker. However, if the listing broker,
when asked by the REALTOR®, refuses to disclose the expiration date and nature of such listing; i.e., an exclusive right to
sell, an exclusive agency, open listing, or other form of contractual agreement between the listing broker and the client,
the REALTOR® may contact the owner to secure such information and may discuss the terms upon which the REALTOR
might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing
exclusive listing. (Amended 1/94)

Take the time to review all of the Standards of Practice listed under Article 16 in the NAR Code of Ethics.

Getting the Vision

So ... Why Planning?

Your planning process gives you a roadmap for success, but even that may require a mindset adjustment. Developing
your plan isn't drudgery; it's an exciting and engaging process where you can dream big, set your goals, and the steps to
achieve them so that your plan becomes your reality. Your business plan must be carefully constructed, starting with
your vision, goals, and desires for what you want your business to become.

What's in a Business Plan?

As you proceed through your course, you'll be drafting your own business plan. Your plan requires a foundation of
several key components, and each will require thoughtful effort. Allow yourself the time to create your business plan;
discuss your plan with trusted mentors and advisors as you identify the following components of your plan:

• Vision of the future: Start by creating a vision for what you want your business to become. Get a clear picture
in your head, and focus on the type of business you want to create. What do you want to do? Where will your
expertise lie?
• Goals and objectives: A solid business plan derives its power and efficiency from set goals and objectives.
Goals and objectives must be SMART: Specific, Measurable, Attainable, Realistic, and Timely.
• SWOT analysis: Be realistic in assessing where you are right now. Develop an analysis of your strengths, your
weaknesses, your opportunities, and the threats to those opportunities. Determine your value proposition,
your core competencies, the competitive landscape (this won’t be your focus, but you’ll need to keep it in
mind), and the areas in which you’ll work: geographic, such as “West end of town” and specialties, such as
“first-time home buyers.”
• End results: Determine how much net income you want to earn, and then calculate backward to your
necessary gross income level. Determine the number of sales, listings, clients, and contacts you’ll need to
make on a daily or weekly basis. (You will be provided worksheets that will help you make these calculations.)
• Branding: Create a vision of what you represent— your personal brand. Just as products have branding, so
will you. What will you represent? How will clients and customers tell you apart from everyone else?
• Marketing and production strategies: Goals are achieved through work, effort, and consistency. Create a
plan for how you’ll conduct your business, including marketing strategies, production methods, networking,
and more.
• Financial forecasting and operations: Take into consideration the following elements:
o Production: your day-to-day tasks and operational procedures
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 o Promotion: the costs involved in marketing and advertising
o Expenses: the costs of everything from office space and transportation, to technology,
communications, and office supplies
o Record keeping paperwork and documentation procedures, including those required for compliance
(e.g., transactional records) and those that will help you build your business (e.g., client relationship
management software)
o Financial management: accounting and financial tracking procedures
o Responsibility: business policies, regulatory compliance, and risk management procedures

Even if you're a business of one, each of these components is vital in developing sound, ethical, and legal business
practices, giving you the best chance of success.

Key Points: The Purpose of Planning

• Successful entrepreneurs have well-formed business plans.

• Your business plan will serve as your roadmap to enable you to achieve your goals and objectives.

• More than 80% of new licensees don’t last two years in the real estate business.

• A business plan will document your vision and mission, set goals for your business, and define the services you
provide.

• A business plan will give you a structure from which you’ll perform your daily activities, market properties, find
clients, and generate sales.

• Whether it is a "buyer's market" or "seller's market” depends on economic climate and regional factors.

• “Market share” describes a portion of the real estate business supply.

• Successful real estate professionals operate from what’s been called an abundance mentality. They look at the
world as an open field of opportunity.

• A scarcity mentality is the opposite of an abundance mentality. Scarcity mentality asks, “How can I get my piece
of the pie?” An abundance mentality asks, “How can I make the pie bigger?”

• Write down specific goals in your business plan. Have clear objectives about what you want to accomplish.

• Create a vision for your business based solely on what you can do, what you can give, and what you can
contribute.

• The real estate business is built on cooperation, not competition.

• Article 16 of the NAR Code of Ethics outlines the responsibilities of REALTORS® toward other professionals in the
industry.

• Article 16 states “REALTORS® shall not engage in any practice or take any action inconsistent with exclusive
representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.”

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 (Amended 1/04)

• Your business plan should be carefully constructed, starting with your vision, goals, and desires for what you
want your business to become.

• Your business plan should include Vision of the future, goals and objectives, SWOT analysis, end results,
branding, marketing and production strategies, and financial forecasting and operations.

Self-Employment and Self-Determination

Unit Introduction

The good and bad news about being a business of one is there's no one to tell you what to do. You decide. Your purpose,
your mission, your vision. To determine these, you'll need to know your value proposition and perform an analysis of
your strengths, weaknesses, opportunities, and threats.

Unit Objectives

By the end of the Unit, learners will be able to:

• Recall the purpose and power of a mission statement, value proposition, and SWOT analysis.

You as a Business
You're in Charge of Your Success

As an entrepreneur, you’re in charge of your own success. No one will give you business or make you do the work. Each
of your actions (or inactions) is your sole responsibility. So, let’s review your responsibilities as the leader of your
business.

• Compliance: You’re responsible for abiding by all federal and state laws regarding licensing, agency, trust
fund handling, fair housing, contracts—anything that relates to your industry and real estate practice.
• Income generation: Your actions result in sales, and the number and dollar amount of those sales are relative
to your personal production.
• Bill paying: If you're the broker, you're responsible for paying for office overhead, personal expenses, and
transaction-related expenses. In addition, you must pay for technology, communications (phones, fax,
computers, Internet, etc.), and transportation (car and other travel expenses). If you're an agent working
under a broker, some of your overhead expenses may be covered by your broker, but many may be your own
responsibility, such as commission splits with your firm.
• Generating a profit: Profit is income in excess of all operating expenses. Expenses accrue daily. When you
receive income, you must pay expenses before you can use the money for other things.
• Budgeting: When the market shifts and business slows down, it is important to have a “cash stash” to help
you make it through. You need to retain some profits to provide for lean times.
• Paying taxes: You’re both your own employer and your own employee. Paying taxes when you're self-
employed is different than when you have a nine-to-five job and receive a weekly paycheck. Talk to your
accountant about what this means for you and your business. The Internal Revenue Service (IRS) has

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 resources you can use to learn about small business and taxes.
• Planning for retirement: Since you're self-employed, you won’t have the opportunities to pay into a
corporate pension or retirement plan. This responsibility will fall to you. Make sure you plan for your
retirement through a regular savings plan, individual retirement plan (IRA), or other retirement savings
vehicles-IRAs are specifically geared toward self-employed individuals and allow you to put away much more
than other plans, provided you generate enough income to do so! If you have a spouse, partner, or other
source of income that provides for your living needs, you may be able to put a way a great deal more toward
retirement

Benefits of Owning a Business

Of course, owning a business comes with benefits in addition to responsibilities.

• Autonomy: You have the freedom to be in charge of your own success.

• Flexibility of hours: You can work when you want (keeping in mind the needs of your clients and your
marketplace). But consider that your family is also your client. If you receive a call requesting a showing at the
same time as your daughter’s soccer game, you can schedule it around that very important client meeting.
• Creating your own vision: You can help others and create something out of nothing, which increases your self-
esteem and personal satisfaction.
• Income potential: You can make as much money as your efforts and decisions dictate.

What's Your Mission? What's Your Vision?

It’s been said that actions follow expectations. Before you develop a business plan, or figure out how many closings
you’ll need to earn a six-figure income, you must be able to see yourself successfully prospecting, listing properties,
showing properties, and closing transactions. You must be able to envision yourself in the lifestyle you want, enjoying
the fruits of your labors. You must be able to see yourself as the type of professional you want to be respected, sought
after, honored, and admired. “Dress for the job you want, not the job you have” is a common recommendation, but if
you apply it to your mindset it means being able to envision that you’ve already achieved your dreams.

The first step in your business plan is to develop a clear understanding of two key elements: your vision and your
mission.

Your Vision Your Mission

A clear picture of your future, including such details as A clear understanding of your business purpose,
the: including:

• Outcomes you expect to achieve • What you stand for

• Targets or objectives you want to reach • How you will achieve your desired outcomes

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 • Details of your destination

Both your vision and your mission must be defined clearly and specifically before you can establish and work toward
your goals.

You may have a vision in your mind right now, but have never put it into words or written it down. One way to create a
written vision is to articulate your definition of success, both professionally and personally.

Vision and Mission Statements

As the foundation of your business plan, you’ll want to create a vision statement and a mission statement. You’ll use to
plan your goals and objectives, strategies, and tactics (activities).

We’ve provided a chart explaining the differences between a vision statement and a mission statement.

A Vision Statement A Mission Statement

Time
Future focus Present focus

• Describes what the future looks • Identifies what you and your organization
Function like for you and your organization stand for today
• Defines future results, • Defines your purpose, processes, and
achievements, and successes performances

Purpose Defines purpose: Defines purpose:

• What do I want to achieve? • What do I do?

• What do I want to become over • What do I stand for?
time? • How do I conduct business?
• How will others see me in the • How do I treat customers, clients, and
future? employees?
• What will be my reputation? • How will I accomplish my vision?

• Is communicated in clear and • Contains purpose and values

Structure unambiguous terms • Includes statements of being
• Is positive and inspiring • Includes statements of responsibility to
clients, employees, community,
shareholders, and so on

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Vision and Mission Statement: Stewart Title

On this and the following slides we’ll share some examples of vision and mission statements. You can compare these
samples to see how they relate to each other.

Organization Vision Statement Mission Statement

Stewart Title Be the global leader insuring, Deliver a magnificent customer experience through
Insurance managing, and supporting the innovation in the real estate transaction process.
real estate transaction.

Vision and Mission Statements: National Association of REALTORS®

Vision Statement Mission Statement

National Association of The NATIONAL ASSOCIATION OF REALTORS ®strives to The core purpose of the
®
REALTORS be the collective force influencing and shaping the real NATIONAL ASSOCIATION
®
estate industry. It seeks to be the leading advocate of OF REALTORS is to
the right to own, use, and transfer real property; the help its members become
acknowledged leader in developing standards for more profitable and
efficient, effective, and ethical real estate business successful.
practices; and valued by highly skilled real estate
professionals and viewed by them as crucial to their
success.

Working on behalf of America's property owners, the

NATIONAL ASSOCIATION OFREALTORS ®provides a
facility for professional development, research, and
exchange of information among its members and to
the public and government for the purpose of
preserving the free enterprise system, and the right to
own, use, and transfer real property.

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Vision and Mission Statements: ABC Real Estate

Organization Vision Statement Mission Statement

ABC Position ourselves as the ideal solution for real Exceed expectations within the given lifestyle.
Real Estate estate, creating healthy relationships that With integrity, we stand for the welfare of our
demonstrate the value of our business. By clients, upholding the values of our corporate
accomplishing this, we contribute to the philosophy. Through these ideals, our
prosperity of associates, the company, and our achievements are reflected in the community
surroundings. we inhabit.

What Are Your Vision and Mission Statements?

To see how your vision statement and mission statement drive your business plan and achievements, study the chart
provided.

Offline Activity: Write Your Vision and Mission Statements

On your business plan worksheet, complete the following:

1. Complete the questionnaire to clarify your thoughts about your vision and focus.
2. Use the responses from your questionnaire to write your vision statement and your mission statement. Don’t
worry: This is a working document, and you can change this later if needed.

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Your Value Proposition
Time to Get Real

Creating a vision enables you to have a focus, destination, and target, but it's also important to understand where you
are right now and what tools you have at your immediate disposal

• What talents, skills, expertise, and benefits do you bring to your business?
• What is it about your way of doing business that will provide value to your clients and customers?
• What are the weaknesses you must overcome?
• What obstacles might get in your way?

Answers to these questions will help form your value proposition. Your value proposition is what will attract and keep
clients, and generate long-term success.

Are you:

• A real estate licensee who’s part of a brokerage firm?

• A member of a local chapter of the National Association of REALTORS®?
• An employee or an independent contractor?
• Closely scrutinized by your broker or self-directed?

Do you enjoy:

• Working under a broker, or would you rather be the broker yourself?

• Working solo or with a team?
• Managing others?

SWOT Analysis: Strengths

Analyzing your current position involves four key areas of consideration: Strengths, Weaknesses, Opportunities, and
Threats (SWOT).

Strengths are those aspects about you and your business that bring value and advantage to your vision. Strengths may
be your own personal attributes, those of your teammates or partners, resources you have available, or capabilities you
may use. Understanding your strengths allows you to set goals that leverage your advantages and improve upon your
strengths.

• What strengths do you bring to your career?

• What personal capabilities make you an exceptional real estate professional?
• What are your competitive advantages?
• What’s unique about you that attracts and keeps clients?
• What education and training do you have? What designations and licenses do you hold?
• What services do you provide that add value for your clients?
• What resources do you bring to your business (capital and financial reserves, client lists, etc.)?
• What skills do you excel at (listings, buyer representation, networking, etc.)?

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 • What technological resources do you have that create an advantage for you and your clients?

SWOT Analysis: Weaknesses

Weaknesses are aspects that need to be overcome to achieve your vision. Honesty in this area will help you to assess
your current situation in a true light and set achievable goals. With dedication, you can often turn weaknesses into
strengths.

• Where are the gaps in your personal capabilities or competencies?

• What about your business would some find disadvantageous?
• What are your personal vulnerabilities?
• What skills and knowledge are you lacking that keeps you from obtaining your vision?
• What additional licenses or education do you need (a broker’s license, etc.)?
• What tangible resources do you lack that are required to attain your vision (capital and financial reserves,
office location, technology, etc.)?
• What business resources do you currently lack (client lists, a large network of contacts, etc.)?

SWOT Analysis: Opportunities

Opportunities are those facts or situations that you may use as a guide to achieve your goals. It takes research and
experience to recognize the potential around you. When you see opportunities, you can optimize your strengths to
achieve success.

• What market potential do you have?

• Which areas in your market are ripe for development or are being underserved?
• What technological advancements would give you a competitive advantage?
• What ideas or innovations do you have that can jumpstart or improve your business?
• What partnerships or connections do you have that would be an advantage?

SWOT Analysis: Threats

Threats are external factors that may require additional attention in order for you to achieve your vision. They’re not
necessarily the boogie man, simply hurdles to overcome. Identifying potential issues in advance will help you maneuver
around them or know how to counter them if and when they occur.

• What are the current market and economic conditions in your area?
• What competitive pressures do you face in your market area?
• What negative publicity or impressions must you overcome?
• What are the license requirements for your state (real estate licenses, business licenses, etc.)?
• What federal and state laws must you comply with in order to do business(fair housing laws, agency laws,
contract laws, license laws, etc.)?
• What ethical standards must you follow (NAR Code of Ethics, etc.)?

Honest self-analysis helps you determine your course and allows you to construct a plan that’s workable for you.

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Goal Setting
What Are Your Goals?

Now that you've established a clear vision and analyzed your strengths and weaknesses, you're prepared to set goals
that will give you a roadmap for achieving your vision. These goals will be your foundation to creating your business
plan.

Goals Are Tangible

Goals statements aren’t ”if only” sentiments. They're realistic, tangible statements that focus your attention and direct
your path. As mentioned, use this simple acronym to help you draft SMART goals: Specific, Measurable, Attainable,
Realistic, and Timely.

Specific: When you write a goal, be as specific as possible, including detail. List who will be involved in achieving your
goal, how you’ll accomplish it, and set a time limit. You should also describe why the goal is important to you because
the motivations behind the goal will be just as important as the mechanics. For example, if your vision is to be a
successful buyer’s agent, one goal might be stated as:

• “I will achieve an Accredited Buyers Representative (ABR) designation by December of the current year.”

Measurable: Your goals should include the ability to measure whether you’ve achieved the desired results. Such
measurements must be objective and concrete, rather than subjective. Your measurements should also track your
progress toward the goal. When you measure and track your progress, it helps you stay motivated and continue to move
forward. For example, a measurable goal might look like:

• “I will acquire three new listings each month.”

Attainable: Create goals in which each step leads to the next, and in which individual goals are attainable in the short
term. As you link your short-term goals together, they should support your long-term goals. Set your long term goals
high, but create a path that will allow you to attain your goals in a realistic timeframe that works for you and your
business.

Realistic: Set your goals based on your strengths and your weaknesses. For example, if you’re not very good at
budgeting, create goals that take that weakness into consideration or that require you to build the skills necessary to
overcome that weakness.

Timely: It’s been said, and it’s true: A goal is a dream with a deadline. Each goal (long term or short term) should have a
time by which it must be accomplished. Deadlines create a sense of urgency and motivate you to achieve your goals.

Watch Where You Lean Your Ladder

Achieving a goal will have little meaning for you if where you end up isn’t where you wanted to be. To avoid climbing a
ladder and realizing it was leaning against the wrong wall, create goals that propel you to success based on your own
personal motivators, including your core values.

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Offline Activity: Create SMART Goals

On your business plan worksheet:

• Create five SMART goals that will enable you to begin the process of achieving your vision.
• Review your SWOT analysis to make sure your goals meet all five parts of the SMART model.

If it helps, here are additional examples of SMART goals:

• “By the end of the year, I will have closed 60 residential sales and three commercial sales.”
• “By the end of the month, I will have added 50 new contacts to my prospective client list.”
• “By August, I will have completed all of the educational classes I need and will have passed the test necessary
to acquire my broker’s license.”

Key Points: Self-Employment and Self-Determination

• As the leader of your business, you’re responsible for compliance: Abiding by all federal and state laws regarding
licensing, agency, trust fund handling, fair housing, contracts—anything that relates to your industry and real
estate practice.

• As the leader of your business, you’re responsible for income generation: Actions which result in sales, and the
number and dollar amount of those sales are relative to your personal production.

• As the leader of your business, you’re responsible for bill paying: If you're the broker, you're responsible for
overhead, personal and transaction-related expenses, technology, communications, and transportation.

• As the leader of your business, you’re responsible for generating a profit: Income in excess of all operating
expenses.

• As the leader of your business, you’re responsible for budgeting: When the market shifts and business slows, it is
important to have a “cash stash” to help you make it through.

• As the leader of your business, you’re responsible for paying taxes: Talk to your accountant about what this
means for you and your business.

• As the leader of your business, you’re responsible for planning for retirement: Make sure you plan for
retirement through a savings plan, individual retirement plan, or other retirement savings vehicle. SEP-IRAs are
geared toward self-employed individuals

• Develop an understanding of two key elements: your vision and your mission. Your vision is a clear picture of
your future. Your mission is a clear understanding of your business purpose.

• A vision statement describes what the future looks like for you and your organization; it defines future results,
achievements, and successes.

• A mission statement identifies what you and your organization stand for today; it expresses your purposes,
processes, and performances.

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 • Analyzing your current position involves four key areas of consideration: Strengths, Weaknesses, Opportunities,
and Threats (SWOT).

• Strengths are those aspects about you and your business that bring value and advantage to your vision.

• Opportunities are those facts or situations that you may use as a guide to achieve your goals.

• Threats are external factors that may require additional attention in order for you to achieve your vision.

• Weaknesses are aspects that need to be overcome to achieve your vision.

• Goals are realistic, tangible statements that focus your attention and direct your path. Use this acronym to help
you draft SMART goals: Specific, Measurable, Attainable, Realistic, and Timely.

• Specific: When you write a goal, be as specific as possible, including detail.

• Measurable: Your goals should include the ability to measure whether you’ve achieved the desired results.

• Attainable: Create goals in which each step leads to the next, and in which individual goals are attainable in the
short term.

• Realistic: Set your goals based on your strengths and your weaknesses.

• Timely: Each goal (long term or short term) should have a time by which it must be accomplished.

Developing Your Business Plan

Unit Introduction

Who's your customer? Who would you like your customer to be? The better you're able to define that, the more fine-
tuned and effective your marketing will be.

Unit Objectives

By the end of the Unit, learners will be able to:

• Define your client and customer base and identify the importance of branding within ethical and regulatory
requirements, and recall how marketing strategies can help to support business goals, compliance
requirements, and market needs.

Leveraging Your Vision and Goals to Create a Solid Business Plan

Develop Concrete Plans

Earlier in your course, you took time to create a vision for your business, write a vision statement and a mission
statement, and set some goals that will help get you to your destination. Didn’t do that yet? Now’s the time!

From these activities, you’re ready to create concrete plans that will drive your business forward. Your business plan

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should leverage your vision statement, mission statement, and goals in order to generate three key strategies for your
business: operational strategies, marketing strategies, and financial strategies.

Operational Strategies

Whenever you establish a new business, ask yourself what type of business you'll be creating. How will your business be
organized and structured? What business will you conduct?

The first section of your business plan should be an overview of your operational strategies and should include:

• Background information about yourself

• A written mission statement
• A description of your services (general business activities)
• The key values that drive your business
• The type of business entity that you want to establish (e.g., sole proprietorship, general partnership, limited
partnership, limited liability corporation)
• Your value proposition (what sets you apart from your competitors, and what gives you a competitive
advantage)
• A description of the services you offer

Business Entity Types

The type of business entity you create will vary based on your goals and objectives. If in doubt, consult with legal counsel
and tax advisors to determine which type is right for you.

• Basic level business entity

Sole Proprietorship • Unincorporated
• Independent contractor
• Single person (or married couple) holds ownership and bears all of the
liability risks
• Taxable profits are reported on personal income tax returns

• Business interests held by a small number of partners

General Partnership • All partners share liability risks
• Partners distribute profits/losses according to percentage of ownership
• Taxable profits pass through to partners and reported on own individual
income tax returns

• Business interests are held by a small number of partners

Limited Liability • Function is similar to a general partnership, but some partners may only
Partnership (LLP) have limited liability
• Formation may be restricted by state law to certain types of business
• Profits and losses are passed through to the partners

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 • Blends elements of partnerships and corporations.
Limited Liability Company • Function as a legal business entity registered with the state, but considered
(LLC) unincorporated
• Considered a separate entity, to reduce liability to individual owners
• Each member taxed individually, like a partnership

• Formed as a separate legal entity from the shareholder(s)

C-Corporation • Chartered with the state
• Holds legal rights independent of shareholders
• Liability for actions of corporations generally not passed through to the
shareholders
• Ownership and holding of corporate shares are transferable to others
• Managed by officers and generally a board of directors
• Pays tax on taxable profits

• Similar to C-Corporation except for the method of taxation on profits and

S-Corporation distributions of income
• Taxable profits are passed through to shareholders and reported on
individual tax returns
• Shareholders may receive profit distributions

Sources: The Company Corporation; The Internet Legal Research Group

Offline Activity: Complete Your Operational Strategy

You’ll complete the linked 14-page business plan template over the remainder of your course. Please download and
print it now. Begin by completing the first section in the template: operational strategy.

1. If your business is already established, write your operational strategy based on the current aspects of your
business.
2. If you're creating your business plan in anticipation of a new business model, write your operational strategy
as though it already exists. For example, if your goal is to own your own brokerage firm, but you haven't
created it yet, write as though your brokerage firm already exists, including the name of your brokerage firm.
3. If you're writing your operational strategy as an individual contributor to a larger brokerage firm, write your
business plan as though you’re a company of one. Your brokerage firm may have its own business model,
policies, and procedures, so you can write your own plan while adopting the brokerage firm’s models as your
own.

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Markets and Marketing
Your Business Plan Focus

The focus of your business plan shouldn't be on what you sell, but on how you sell.

Marketing is all about promoting:

• Yourself
• Your services
• Your properties
• Your expertise
• Your business

Everything you do during the day relates directly to how well you market.

Identifying Your Market

Before you begin promoting yourself and your business, you need to know who makes up your market. Who are the
people to whom you will market your service? Which areas will you focus on? What types of properties will you focus
on? Will you market purchases or rentals? Will they be low-end fixer-uppers or high-end estates? Are you going to focus
on new homes or re-sales? Commercial or residential properties?

Next, identify the groups to which you'll market and promote your business. These groups fall into three basic
categories.

• Sphere of influence: These are people who know you personally and know that you provide real estate
services.
• Network: These people are additional contacts generated from your sphere of influence (e.g., friends of
friends and family). These are the people who know people in your sphere of influence.
• Cold contacts: These people are basically everyone else located in your geographic area, or to whom you
have connections via your geographic area. This market will be the hardest and most expensive one to work,
with the least chance for a short-term payoff. You can ignore this list and still be very successful. If you decide
you need broader exposure, perhaps because your sphere of influence and network is small (e.g., you just
moved into the area), you can obtain lead lists and contact sheets from a variety of sources.

Note: Telephoning cold contacts requires adherence to federal telemarketing laws.

Analyzing Market Segments

Newcomers to the real estate business, when asked, “What's your market?” might be tempted to answer, “Everyone of
course!” However, trying to be everything to everyone is a poor strategy, and doesn't serve anyone well. Savvy
entrepreneurs narrow their focus to key market segments, concentrating their efforts, energy, and marketing dollars
where they’ll more easily pay off. Pick the low-hanging fruit first.

With the hundreds or thousands of other real estate professionals working in your area, what will set you apart?

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Business author and speaker Tom Peters once said, “You will become distinct, or you will be extinct.”

Which market segments will you target?

• Location: Develop expertise in specific neighborhoods or tracts

• Generations: Develop expertise in selling to seniors, first-time homebuyers, or other age-related segments
(identifying age ranges of potential clients and knowing how to reach such generational segments can set you
apart from your competitors)
• Professions: Develop expertise in selling to attorneys, doctors, bankers
• Alternative choice markets: Develop expertise in working expired listings, For Sale by Owner (FSBO)
properties, rent-to-own properties, and others
• Property types or lifestyles: Develop expertise in resort properties, vacation homes, luxury homes,
investment properties, new homes, condos, farms and ranches, or other types

Note that we don’t say “go after,” but “develop expertise.” That’s how you establish a market: By becoming a
knowledgeable expert who can provide a service no one else (or very few others) can.

Offline Activity: Record Your Market Segments

Using your business plan worksheet that you've been developing throughout the course, record the market segments in
which you plan to specialize.

Analyze Your Geographic Market

To begin analyzing your geographic market, start with a detailed market analysis. This means doing your homework and
learning all you can about your geographic area and what’s happening in your real estate market. What are the current
economic conditions? Are there municipal or governmental pressures on the market?

Look at the following factors:

• Business environment
• Natural environment
• Political environment
• Mortgage climate and interest rates
• Housing availability
• Development activity (new homes springing up)
• Sales rates (including short sales, foreclosures, bank owned properties, etc.)
• Property values
• Community resources (parks and recreation departments, police, fire, etc.)
• Community improvements
• Employment availability

Offline Activity: Geographic Market Analysis

On your business plan worksheet:

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 1. Conduct a geographic market analysis of the area in which you’ll work.
2. If the area is large, divide it into sections and conduct analyses for each section. You can even do this for each
neighborhood or subdivision.

Analyze Your Sphere of Influence

Your sphere of influence is crucial to your business. The goal of marketing to your sphere of influence is to inspire those
in your sphere to become supportive of your real estate business and interested in helping you become successful.

Who’s in your sphere of influence?

• Family: Your family usually has the most vested interest in your success.
• Friends: Your friends want to see you succeed and will provide support.
• Past clients: Satisfied past clients are an excellent source of business referrals. Even if past clients have
moved out of the area, stay in touch. They might move back one day, and they most certainly still know
others in your market. The very best prospecting technique is to take great care of your current and past
clients.
• Past prospects: Even though someone may not have listed or bought with you previously, your excellent
service may be a source for future leads.
• Current prospects: Your current prospects are also sources of new referrals. Don't be afraid to ask.
• Social/casual acquaintances: Who do you know at your place of worship? In the PTA at your child's school? In
your bowling league? At the gym? These social acquaintances may be excellent sources of business and/or
referrals.
• Business acquaintances: Your dentist, doctor, accountant, attorney, banker—anyone you do business with—
is a potential client or a source of referrals.

Even though a person in your sphere of influence may not be a candidate for your services, remember that each person
has their own sphere of influence. By asking those people for referrals from their sphere, you begin to build a cluster of
spheres, exponentially improving your ability to make new connections.

Adding to Your Sphere

In order to continuously add more people to your sphere of influence, always strive to meet new people!

The best way to find new contacts is to meet people through your existing friends and acquaintances. Activities to
consider include:

• Attending your friends' parties and offering to help host, set up, or clean up.
• Hosting a housewarming party for a client.
• Hosting an impromptu happy hour get-together at a local pub and encouraging your friends to bring other
friends.
• Dropping by your spouse's work and chatting.

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Groups

You may also become involved in groups that are designed for networking purposes or that put you in places where you
have the ability to interact with lots of people, such as:

• Chambers of commerce
• Lead clubs (meet for breakfast and exchange leads)
• Service clubs (Lions, Rotary, Kiwanis, etc.)
• Volunteer organizations (PTA, soccer, or softball leagues, etc.)

Be on alert for opportunities to make a good impression and get contact information. Giving your business card out is
fine, but obtaining business cards is even better, because it puts you in control of the contact and helps you build your
database.

When you’re alert to possibilities, you may be surprised how many people you meet during the course of your day.
Encounters may include a receptionist, a pest control person, a house cleaner, your veterinarian, or that friendly person
you always run into in the elevator.

When you do meet new people, don’t immediately go into sales mode:

• Listen to the other person with genuine interest.

• Share your excitement for your career, when appropriate.
• Don't pitch yourself in the middle of dinner!
• People love to buy, but they don’t like being sold.

Offline Activity: Determining Your Sphere of Influence

On your business plan worksheet, complete the following sections:

• Sphere of Influence
• Networking Groups

In the beginning, your sphere of influence (those who know you and know you’re a real estate professional) may not be
very large, and that’s fine. As you develop and implement your plan, your sphere of influence will expand. Remember to
capture not just contact information, but important details about each person’s life. This information is valuable for
communication and marketing efforts, and for working with them as a client.

Your networking groups are those groups to which you belong that are excellent resources for obtaining and sharing
referrals. As you look to grow your networking groups, consider the following:

• What groups do you currently belong to?

• What other networking groups are available in your local area?
• Of the groups identified by the above questions, which would present the best networking opportunities?
• What other networking groups are you interested in joining?

World-renowned author and speaker Harvey Mackay came up with a customer profile that lists 66 different items you

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may want to record about your prospects, such as their special interests, business background, etc. This type of
information will give you valuable insights into your sphere’s mindset, needs, and desires.

CRM Software

As you develop your list of contacts to help grow your business, you can keep track of the details using contact
relationship management (CRM) software. With it you can store, organize, group, and recall your contact information.
Most CRM software consists of four basic features.

• Address books: These help you keep track of names, addresses, and phone numbers, as well as personal
information, like birthdates and names of family members. You can also track who referred the contact to
you and what services you’ve provided to them.
• Organization tools: Group your contacts by associations or market segments. This allows you to plan
marketing campaigns and track marketing results by those categories.
• Communication tools: This feature lets you send out automated e-mail campaigns, form letters, newsletters,
and other types of communications.
• Tracking tools: You can track conversations with clients, customers, and prospects in order to record vital
information from those conversations and to track the success of marketing campaigns. Depending on the
software you use, you may be able to run reports to see how successfully your marketing dollars are being
applied. You may also have the ability to add event timelines, which will not only keep your contacts
organized over the course of a transaction, but will also track the status of a transaction and notify people
accordingly. For example, if a particular sale is prepared and ready for the final closing, you can set your CRM
software to automatically notify everyone involved that the sale is ready for closure, and then notify them
again when the date of the planned closing has been established. CRM software has the ability to keep
everyone connected and may streamline the transaction process for you.

Whatever CRM tool you use (and we've provided you with some examples), make sure that you have access to it at all
times, especially when you're out of the office. Synchronize your contact database with your mobile devices, such as a
smart phone, tablet, or laptop computer.

Note: The CE Shop, Inc. does not specifically endorse any CRM products.

Marketing Strategies
Acquiring New Clients

One of the key components of your business plan is to define how you’ll communicate with others and how you’ll
acquire new clients. Like any business owner, you must establish a reputation within your market that communicates
and serves your vision. The purpose of marketing and prospecting isn’t to make sales, but to acquire leads. Once you
have a lead, you then make contact to get listings or acquire buyers for properties.

• Marketing: Promotion, advertising, or demonstration of goods or services for sale.

• Sales: The action of transferring goods or services in exchange for remuneration.

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Developing a Referral-Based Business

The real estate business isn’t about selling properties. It's about serving buyers, sellers, tenants, and landlords.

A primary marketing strategy should be to generate a solid referral stream. Develop a business in which people in your
network want to volunteer referrals to you. You want to make them feel so confident in your professionalism and
service that you’re the only person they think of when one of their contacts mention an interest in real estate.

Developing a Referral-Based Business (continued)

Below are some guidelines for developing a referral-based business.

Provide exceptional service.

Reputation is everything when building a business. Exceptional service is so rare that when a person receives a higher
than usual level of service, it’s memorable. When your clients receive exceptional service from you, they tell their friends
and associates.

Go beyond the expected.

Every client is different and expects and needs different things from you. As you meet with your clients, determine what
they expect and then exceed those expectations. If a client expects you to conduct open houses as part of your services,
then conduct exceptional open houses.

Continue relationships after closing sales.

Relationships shouldn’t end just because you got the sale closed and you got paid. What kind of message would that
send to your clients? That it was transaction-based and not relationship based. Look at each client as a long-term
relationship for which you can provide services for years to come. If you stay in this business long enough, you’ll
definitely have clients who buy and sell multiple homes. In fact, even their children or grandchildren may become clients
one day. Keep in touch with all your clients, present and past, and provide excellent service when you work with them.

Be consistent.

Do what you say you are going to do, when you say you are going to do it, and do it every time. Consistent actions,
consistent performance, and consistent results cause your clients and your network contacts to want to refer others to
you, because they know their friends will receive the same great level of service they did.

Volunteer in the community.

Extend your reach by volunteering at community events. Holding and sponsoring events can put your name out into the
community and demonstrate dedication to your market area. Volunteering will build your reputation and increase the
number of referrals you receive.

Thank referral sources.

Make sure that you communicate back to those who have given you referrals and thank them for their efforts. When
they feel that their efforts are appreciated, they’re more willing to refer again. A phone call and a sincere, handwritten

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thank you note can go a long way.

Refer others.

When you refer people to others, they’re more likely to refer to you. If you know of someone who needs a plumber,
carpenter, or landscaper, be willing to refer them to qualified people in your sphere of influence who could meet their
needs.

Offline Activity: Client Acquisition Brainstorm

In your business plan worksheet, brainstorm answers for the following questions:

• What can you do to provide exceptional service to your clients?

• How can you go beyond what’s expected by your clients?
• How do you plan to continue relationships after the sale closes?
• What can you do to maintain consistency with every contact, every client, and every transaction?
• What can you do to volunteer in your community?
• What other ideas do you have for generating referrals?
• How can you thank people for providing referrals? (Monetary gifts to unlicensed people for referrals is illegal
in most areas.)
• What can you do to reciprocate referrals?
• How can you show that you’re willing to make referrals to others?

Branding

Companies and business all over the world use branding when for instant recognition when marketing their products
and services. They establish logos, symbols, colors, and packaging that help consumers to identify their products. Brands
such as Coca-Cola®, Target, Harley Davidson, Ford, and Microsoft are instantaneously recognizable by their symbols
alone.

A logo isn’t a brand. A “brand” is what comes to mind when a person sees your logo. Your brand is built by the services
you provide, the reputation you establish, and the quality of your actions.

Offline Activity: Branding

In your business plan worksheet, brainstorm answers to the following questions:

• How can you establish your own personal brand?

• If you were to create a logo, what would you like that logo to look like?
• How can you provide service to make your brand memorable?

Marketing Channels

Someone once said that the way to make money in real estate is “sell stuff to real estate agents.” You’ll have multiple

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opportunities, methods, and channels to market your business. Determine which methods fit your plan and how you’ll
use them. Each method has its own level of effectiveness and associated costs that you’ll want to weigh against your
budget. Real estate is a relationship business. The most effective marketing requires minimal monetary investment.

Below is a list of potential channels you can use for real estate marketing. We won’t go into the details of each channel
in this course.

Personal Marketing

• Personal networking
• Business lead clubs
• Chambers of commerce
• Social events
• Volunteer work
• Cold calling from lead lists

Online Marketing

• Personal website (search engine optimized)

• Social networking websites (LinkedIn, Facebook, Twitter, etc.)
• Blogs, forums, articles, and e-books
• Auto-responders, newsletters, discount coupons, and other e-mail campaigns
• Online checklists, guides to preparing a home for sale, and other online guides
• Online advertising (banner ads, block ads, cross-marketing ads, etc.)

Print Marketing

• Letters, postcards, and newsletters

• Holiday, birthday, and anniversary cards
• Promotional items (calendars, magnets, buttons, pens, T-shirts, etc.)
• Tip cards, check lists, and other house hunting or house selling aids
• Printed guides

Display and Broadcast Advertising

• Newspaper
• Real estate magazines (grocery store freebies)
• Radio, TV, and other media
• Billboards and signs

Offline Activity: Marketing Channels

In your business plan worksheet, brainstorm ideas on which marketing channels you want to incorporate into your own
marketing plan. Use the space provided in your Business Plan Worksheet for this purpose.

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Pricing Strategy

Your marketing plan should include an analysis of how much you’ll charge for the services you provide, taking into
consideration what that market will accept in the way of commissions and fees. People will pay more if they feel they
see the value. Consider how you will add value for the fees you charge.

Also, determine what leeway you have in adjusting your pricing during negotiations. How much of a percentage can you
take off your commission rate in order to secure a deal? Knowing what you can do and where your limits are makes you
a more effective negotiator and improves your overall success.

If you work under a broker, discuss your pricing structure with your broker. Discuss how you can add value, even if your
pricing levels are determined by your broker.

Offline Activity: Pricing

In your business plan worksheet, record your ideas regarding pricing and any pricing adjustments you might make during
negotiations.

Key Points: Developing Your Business Plan

• Your business plan should leverage your vision statement, mission statement, and goals in order to generate
three key strategies for your business: operational strategies, marketing strategies, and financial strategies.

• The first section of your business plan should be an overview of operational strategies and include: Background
information, mission statement, description of services, key values, the type of business entity, your value
proposition, and services offered.

• Types of business entities include Sole Proprietorship, General Partnership, Limited Liability Partnership (LLP),
Limited Liability Company (LLC), C-Corporation, and S-Corporation.

Managing Your Business: Time and Money Management

Unit Introduction

Success: Doing the right thing enough times consistently. Let's look at what the right thing is, and how many of them it
takes to help you achieve your goals.

Unit Objectives

By the end of the Unit, learners will be able to:

• Identify business productivity tools to achieve income and profitability goals, methods to create a business
budget, manage expenses, and create financial forecasts; recall proper record keeping and fund management
strategies.

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Budgeting and Business Expenses
Crunching Numbers

Without a budget, you can't plan your activities in a way that produces the results that you personally require and
desire. Some real estate professionals like to use as little credit as possible, while others choose to run a line of credit to
cover expenses, and then pay off the line as sales close. A reasonable budget is a crucial component of a successful
business plan.

It's important to evaluate equipment needs and budget for major items, as well as monthly expenses, such as telephone
and Internet fees. During your number crunching, consider your personal income needs.

Productivity Calculations
Where Will the Money Come From?

The previous lesson required you to create a budget. You should now have a clear picture of how much revenue you
must generate in order to meet your goals. So, what do you have to do to generate that revenue? The first thing is to
determine how many closed transactions you’ll need per month and per year.

Determine:

• Average sales price in your market: Determine the average sale price of properties in your chosen market.
• Your commission structure (firm and personal):What percentage of the sale price will you commonly receive
as a commission, both at a firm level and at a personal level? For example, if your firm usually receives 3% (or
.03) of the sale price as its commission rate, and you personally share that commission at a 50/50 split (50%
or .5) with your broker, then your personal commission percentage rate is 1.5% (3% x 50% or .015).

Now, use the following formulas to calculate your productivity requirement.

• Average revenue per transaction: Multiply the average sale price in your market by your firm's commission
percentage rate and then by your personal commission split rate. This formula will estimate what you can
expect to earn for each closed transaction you produce. For example: $200,000 x 3% (or .03) = $6,000 x 50%
(or .50) = $3,000.
• Multiply the average revenue per transaction by the number of the average closed transactions you expect
to produce. This will tell you how much you can expect to make per month or per year if you close sales at
your target sales frequency. Make these calculations both for your firm and yourself.

After reviewing these numbers, you may want to review your budget in your business plan worksheet and make changes
that will ensure you’ll meet your revenue requirements.

Note: The commission and pricing percentages used in this course are for training purposes only and in no way
constitute any form of recommendations or statements of standards.

Janice Calculates

Janice, who works as an agent with a 50/50 commission split with her broker, has completed her revenue calculations,
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and determined that she needs to earn $72,000 per year to meet her goals, which breaks down to $6,000 per month.

Below is the market data she collected:

Productivity Calculations (Data Collection) Monthly Annual

A. Total revenue required (from the revenue worksheet): $6,000 $72,000

B. Average sale price in the market: $150,000 $150,000

C. Firm commission rate:

3% 3%
(Record this as a percentage of the sale price, for example 3%, or .03.)

D. Personal commission split rate:

50% 50%
(Record this as a percentage of the office commission, for example 50%, or .50.)

Productivity Calculations (Needs Analysis) Monthly Annual

E. Firm revenue per transaction: $4,500 $4,500

(Average sale price multiplied by the firm commission rate.)

$2,250 $2,250
F. Personal revenue per transaction:
$4,500 x .50 $4,500 x .50
(Firm revenue per transaction multiplied by personal commission split rate.)

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 G. Number of transactions required to meet revenue projection requirements: 2.67 sales 32 sales

(Total revenue required divided by personal revenue per transaction.)

What this means: Janice needs to close 32 transactions per year or 2.67 transactions per month to meet her revenue
requirements.

Offline Activity: Productivity Calculations

Perform your productivity calculations for your own market and your own business in your business plan worksheet.

You can calculate your requirements by using either your firm commission percentage rate (if you plan on being an
independent broker) or your personal commission split percentage rate (if you plan to be an agent working under a
broker).

Forecasting and Planning

At this point, you can use your revenue projections and budget figures to get a better sense of what you can expect after
one year, two years, or even three years. Forecasting helps you determine what you need to accomplish each year.

For example, you may not have enough capital to do much media advertising in your first year, but if you meet your
expected profits in the first year, you might decide add media advertising in your second year.

If you don’t plan for growth, you may not do any more or earn any more than you do right now.

Example
Rachel works independently, and her future plans include hiring an assistant to take care of administrative issues
that aren’t directly involved in growing her business. She knows she can’t show properties, work with buyers,
meet with inspectors, appraisers, and mortgage lenders, attend closings, or prospective for new business if she’s
busy with bookkeeping or filing tasks.

Whatever your plans are, plan for the future as well as the present.

Time Management and Daily Activities

Time Management and Daily Planning

You’ve determined how many transactions per month and per year you need to close in order to meet your goals. To
break this down further, you’ll want to determine what you’ll need each day, week, and month to achieve those goals.
How will you close your projected number of transactions?

Time management consists of two components: planning and performance.

Planning includes the weekly actions of calendar management, creating to-do lists, and scheduling activities for the

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coming week or month.

Performance (or productivity) includes the daily actions you do to generate business, such as make phone calls, send e-
mails, attend showings, conduct interviews, set up sales calls, schedule listing presentations, and deposit those
commission checks.

Conduct your planning on a weekly basis. Time management tools abound. Whichever method you use, be consistent in
planning your week to maximize your efforts without redundancy or duplication. Determine what works best for you
and be consistent.

Time Management and Daily Planning (continued)

Suggestions to help you stay focused include:

• List the top three to six priorities to accomplish each day.

• Plan for the week, but create daily schedules of events, appointments, and tasks.
• Be flexible. Unexpected issues arise, so be prepared to adapt.
• Don’t get consumed by busy work (Don’t be busy; be productive. Or, as Henry David Thoreau said, “It’s not
enough to be busy, so are the ants. The question is, what are we busy about?”)

To better manage and block your time include:

• Block out your time specifically, conscientiously, and consistently.

• Block out time to make phone calls, answer e-mails, and do follow-ups.
• Block out time to contact new prospects and people in your sphere of influence.
• Block out time for your family. Their support and happiness is vital to your success.
• Make use of travel time.
• Use a good calendar system, CMS, or both.
• Have a defined workspace. Whether in your house or in an office, this is a must.

Productivity and Activities

When considering what you need to do on a daily, weekly, and monthly basis to achieve your productivity goals, ask
yourself some questions. The answers should be based on the SWOT analysis you did earlier in your course. The process
is similar to looking at your productivity in a funnel.

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How many closed transactions in the next 12 months do you need in order to reach your goals?

• If you're focusing your activities on listings:

o How many listing agreements do you need to have to acquire the required number of closed
transactions to meet your goals?
o How many listing appointments do you need to have to acquire one listing agreement?
o How many contacting phone calls do you need to make to secure one listing appointment?
o What marketing activities do you need to do to acquire one prospect to contact?

If you’re focusing on buyers:

• How many offers do you need to close the number of required transactions?
• How many buyer/broker agreements do you need to acquire the necessary number of offers?
• How many property showings do you need to acquire one closed transaction?
• How many prospective buyers do you need to acquire one buyer/broker agreement?
• How many prospects from your network do you need to contact to acquire one prospective buyer?
• What marketing activities do you need to accomplish to acquire one prospect?

The activities you put into your funnel will vary, but it’s the same premise. The more you do at the top of the funnel
(effectively), the more closed transactions you reap at the bottom.

Below are examples of daily, weekly, and monthly activities you may need to do to meet your objectives. Your list may
be different from the examples shown.

Daily Activities

• Meet with at least two prospective buyers and one prospective seller.
• Update the MLS (automate this process).
• Follow up on yesterday’s leads.
• Prospect for new leads (start with your sphere of influence, and then, after you’ve gone through that list, call
10 people you’ve never met).
• Make an appointment with a For Sale by Owner (FSBO) seller.
• Complete tasks from existing appointments or transactions.

Weekly Activities

• Preview five listings from your firm or other firms.

• Visit a business and ask to handle their relocation activities, or otherwise offer your assistance.
• Learn about the current market inventory; focus on the market segments you want to work consistently.
• Communicate with your market. Send out at least 25 “just listed” postcards, “just sold” postcards, and/or
open house invitations.
• Attend at least one networking event, and add at least five names to your prospect list.
• Write a new blog entry or post a response to someone else’s blog.

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 Monthly Activities

• Create a neighborhood newsletter.

• Solicit local businesses to advertise in your newsletter publication (free initially) in exchange for the use of
their site as a distribution point.
• Find new marketing sources.
• Review your progress and activities with your advisor or mentor.

Offline Activity: Planning Your Time

On your business plan worksheet:

• List what you must do each day, each week, and each month to generate your required closed transactions
per year.
• List the ideas you’ll use to plan effectively each week.
• As you develop your business plan, discuss your calculations and task lists with your advisor or mentor. This
person may have additional ideas and best practices you can incorporate.

Proper Record Keeping

Records to Keep

Throughout your daily activities, you’ll create hundreds of records. A record is anything that you generate or document
as part of your business. It may include:

• Paper documents, such as a hand-written memo or a hardcopy report

• Electronic records, such as databases or e-mail
• Graphic images, such as drawings or maps in photographic, electronic, or hard-copy formats

Why to Retain Records

So, why do we keep records? Four primary reasons:

Legal

You're required by law to keep all transaction documents, listing agreements, sales contracts, disclosures, etc., for a set
period of time. These include phone logs, meeting notes, client correspondence and e-mails.

Organizational

You’ll likely want to retain information and statistics regarding your marketing research and advertising campaigns, so
you know what worked and what didn’t. Also, if you hire staff, you must keep employee records.

Decision Making

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You’ll want to retain information and reports to help you make business decisions: statistical information about the
number of sales you've closed, the number of listings you've acquired, the number of prospects you've called each day,
the number of leads you've generated by a specific marketing effort, etc. This data can help you determine what you are
doing right and what needs to be changed.

Administrative

You’ll also want to retain operational information such as accounting records, receipts, etc. This establishes a paper trail
of your business activities and is used during tax time, audits, and business reviews.

Record Classification

Records that should be maintained are classified into two general categories.

• Vital records: These are records that are necessary for you to be able to continue to do business in the event
of a disruption or disaster. These include:
o Client documents and case files
o Listing agreements and client contracts
o Accounts receivable records (commission records)
o Corporate documents
o Bank records, deposit receipts, trust account records, etc.
o Client phone lists
• General records: These are records that you would deem important enough to manage and keep. These
might include records like accounts payable (money you owe others). They’re not vital, because if you lost an
invoice, your creditor would be happy to send you another one. Some additional examples are listed below.
o Bills and invoices
o Employment records
o Expense receipts
o Travel logs
o Prospect and referral correspondence
o Referral phone lists

Record Management

It should come as no surprise: To manage your business records, you must create a records management system. Such a
system includes five key components:

Creating records: Since almost everything you do creates records; be mindful of the records you create and care for
them appropriately.

Storing records: Create a filing system and a method of categorizing documents (called “taxonomy”). You should store
your records in a way that allows you to easily find them in the future. Electronic documents may be stored on your
computer’s hard drive or on a server. Whenever you store electronic files, make sure you keep backups.

Searching and retrieving records: Records management is all about your ability to find what you need, when you need
it. Whether you need to review a document or produce a record in accordance with a court order or audit of your firm,

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your ability to find information in a timely manner is critical.

Securing records: Records regarding information you receive from and discuss with your clients are confidential and
must be kept safe. Your records management system should include data protection through the use of passwords or
encryption.

Keeping confidential records unsecured puts you at risk for identity theft. Firms have been successfully sued for failure
to safeguard sensitive client information.

Destroying records: A well-designed records management system includes a retention schedule that outlines exactly
when a document may be destroyed and is based on both business needs and legal requirements.

Never throw sensitive records in the trash, where they could fall into the wrong hands.

Financial Management: Business Funds and Trust Funds

Business Funds, Trust Funds

Real estate involves financial transactions. You’ll need to manage your business funds, and you’ll occasionally work with
funds belonging to clients and customers, which are called trust funds.

Business funds must be accurately accounted for. Use accounting systems that will allow you to track revenue and
expenditures. This will make it easy for you to know the balances of your accounts, pay bills, and prepare reports and
financial statements for your tax professional. Use generally accepted account principles (GAAP)at all times.

Most state laws require you to deposit trust funds into a special trust account. All funds received for a specific
transaction, including earnest money deposits, must be deposited into your trust account, and may not be used for any
other purpose.

Note

Familiarize yourself with the rules and requirements in your state regarding trust fund accounting. This is a huge are of
litigation and license law sanctions. Your state may have specific limits and restrictions regarding trust fund accounts and
how you must record transactions. Accounting systems and documentation for trust fund accounts may also be dictated
by state law.

Brokerage firms are required to adhere to strict policies and procedures surrounding when handling trust funds and
accounts. Never use client funds for business purposes or business funds for client purposes.

Key Points: Managing Your Business: Time and Money Management

• A budget is a crucial component of a successful business plan.

• Evaluate equipment needs and budget for major items, as well as monthly expenses, such as telephone and
Internet fees.

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 • To determine the amount of monthly revenue you need to produce to meet your budget, consider personal,
business, and marketing expenses.

• Determine how many closed transactions you’ll need per month and per year to generate the revenue you must
generate in order to meet your goals.

• Determine what percentage of the sale price will you commonly receive as a commission, at a firm level and at a
personal level.

• To calculate your average revenue per transaction, multiply the average sale price in your market by your firm's
commission percentage rate and then by your personal commission split rate. This estimates what you can
expect to earn for each transaction.

• Multiply the average revenue per transaction by the number of the average closed transactions you expect to
produce. This will tell you how much you can expect to make per month or per year if you close sales at your
target sales frequency.

• LESSON: TIME MANAGEMENT AND DAILY ACTIVITIES

• Time management consists of two components: planning and performance.

• Planning includes the weekly actions of calendar management, creating to-do lists, and scheduling activities for
the coming week or month.

• Performance (or productivity) includes the daily actions you do to generate business, such as make phone calls,
send e-mails, attend showings, conduct interviews, set up sales calls, schedule listing presentations, and deposit
those commission checks.

• List the top three to six priorities to accomplish each day.

• Plan for the week, but create daily schedules of events, appointments, and tasks.

• Block out your time specifically, conscientiously, and consistently: administrative tasks, prospecting tasks, and
family time.

• A record is anything that you generate or document as part of your business.

• Paper documents, electronic record, and graphic images are all examples of records.

• Keep records for legal, organizational, decision-making, and administrative purposes.

• Records that should be maintained are classified into two categories: Vital records (client and corporate
documents, case files, listing agreements, contracts, accounts receivable, bank records), and general (bills,
invoices, receipts, employment records)

• To manage your business records, you must create a records management system. This system includes five key
components: Creating records, storing records, searching, and retrieving records, securing records, and
destroying records.

• Never throw sensitive records in the trash.

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Planning for Success and Putting Your Plan into Action
Unit Introduction

Ready, shoot, aim, isn't a recipe for success. You need to aim your focus on your target--as soon as you find it, that is.

Unit Objectives

By the end of the Unit, learners will be able to:

• Recall the importance of developing a niche to increase expertise and business results; recall the importance of
cultivating a sphere of influence and strategic relationships; identify how to avoid RESPA violations and common
business errors; recall how to track business results, analyze productivity, and where to find support in creating
and implementing a business plan.

Business Focus Leads to Expertise and Effectiveness

Why and Where to Find Your Niche

It's been said "The riches are in the niches." A niche is an area of focus for your business. You can have a niche based on:

• Geographics (e.g., specific neighborhoods)

• Demographics (e.g., first-time home buyers, empty nesters, golfers)
• Property type (e.g., new construction, historic homes, condos, lakefront properties, expired listings)
• Property value (e.g., $250,000-$500,000)
• Client type (e.g., landlords, investors, people selling their own homes)

You may have more than one niche, of course, but focus is optimal. The point of a niche is to create a laser for your
efforts so you aren’t spread too thin, unable to get noticed by anyone. Specializing conserves your energy and resources
and makes you the expert.

How to Find Your Niche

There are many avenues to a niche. Here are the most common:

• Your market. Filling an unmet need is the best way to establish a niche.
• Your niche finds you. You may find yourself just naturally working with a specific market segment. Perhaps a
tightly knit group of people refer business to you.
• You seem to like working with a specific group of clients more than others. You may find that high-wealth
individuals aren’t your cup of tea, and that you prefer young families.
• You may have a hobby or group you belong to that becomes a niche. For instance, if you’re an avid sailor and
become active in the sailing community, you may find that selling waterfront properties is a natural fit.
• You may live in a unique property and end up specializing in buyers and sellers of that property type. For
instance, you may have just finished restoring a Victorian home. In your search for finishes and contractors,

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 you meet other Victorian homeowners and enthusiasts who may become your clients.
• You may turn a talent or skill into a niche. If you speak Spanish, for instance, you might develop a niche
serving Spanish-speaking clientele.
• You may have a spouse, partner, parent, or sibling who is connected in some way to your niche. For instance,
if your brother is a builder, through him you may connect with other builders who want you to list their
properties.
• A former job can lead to your niche. If you were previously a teacher, for instance, you may find that serving
teachers comes naturally to you.

These are just a few ideas. The possibilities for niche creation are endless, and the more creative you are in establishing
your niche, the less competition you will have.

How NOT to Find Your Niche

Don't select a niche you won't enjoy working in, because if you're successful, you're stuck. If you don't like working with
buyers, focus on sellers. If you don't like farm properties, refer them. Anything outside of your "sweet spot" (your target
market, your core business) will take you longer to close (due to a lack of expertise in the area) and will take you away
from the more lucrative part of your business. So:

• Don't diffuse your focus.

• Remember the lost opportunity cost of your decisions.

Note: Don’t target protected class categories either (e.g., Hispanics, singles) or you could find yourself in violation of fair
housing laws.

Strategic Relationships: Your Sphere of Influence and Beyond

Don’t Let Fear of Sphere throw a Wrench in Your Gear

A mistake that a lot of real estate licensees make is letting “fear of their sphere” dictate their actions. They’d rather
market their real estate knowledge to strangers than risk looking like a pushy salesperson by promoting their services to
friends and family.

Don’t be that licensee.

The failure rate in this business isn’t more than 80% for no reason. Many people launch their real estate business with
unrealistic expectations about what it takes to succeed. Here’s what it takes:

Enough people who like you and trust you well enough to refer you and do business with you.

That’s it. So unless you’re willing to wait until you’ve had time to build up trust and likability with strangers, focus on
you’re already known, you’re already liked, and you’re already trusted. Those people are your sphere.

Identifying Your Sphere

If you’ve not done so yet, now is the time, before you launch your new, improved “this is for real” business. Start
identifying your sphere by writing down a list of your contacts, including:
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 • Friends
• Family
• School friends
• Groups and associations you belong to
• Neighbors
• Vendors you do business with regularly
• Former customers from other businesses where you’ve worked
• Professionals, such as your doctor, accountant, or lawyer
• Teachers and professors

Thumb through your email account address list, your holiday card list, your checkbook register, and your tax receipts to
jog your memory.

Announce Your Career

Even if you’ve been hesitant to do so before now, and even if you’ve been in the business for a while, send an
announcement to your sphere that you’re in business. If an embarrassing amount of time has elapsed since you received
your license, this will have to take on a new spin. Instead of, “I’m now in business,” you’ll want your message more along
the lines of “What I’ve learned in my first [90 days, year, etc.]. But don’t let this opportunity pass you by: It’s crucial that
everyone in your sphere knows you’re a practicing real estate professional.

Many real estate firms will provide branded cards for announcements, etc. If not, you can have your own printed or use
pre-made ones.

Personalize your message. Link your decision to start your real estate business to something the recipient already knows
about you. For instance:

• You worked with them at a fast-food restaurant: “I’ve gone from flipping burgers to flipping houses! I’m
happy to announce that I’ve just joined …”
• You were in sales in another profession: “Instead of selling ______, I’m now selling houses. This month, I
joined …”

You get the idea. Try to help them see why you made the shift and remind them of how they know you, and how that
connects with your career.

Tip: Include two business cards. One is for them to keep, the other is for them to give to the next person they meet
who’s looking for a real estate professional. Mention that’s why you’re enclosing two cards.

Ask for Business

Always ask for the business. Brian Buffini of the real estate coaching firm Buffini & Company recommends concluding
every communication with, “By the way, I’m never too busy for any of your referrals.” You can modify this in your
announcement depending on how long you’ve been in the business: “I’m off to a great start, but I’m never too busy for
any of your referrals,” or “Although business is booming, I’m never too busy for any of your referrals.” This tells your
contacts that you value them enough to value anyone they refer.

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Cull Your List

After you get your initial announcement out, you’ll want to pare your list down based on whether people will refer you.
For instance, you probably wouldn’t keep someone on the list whose brother is a real estate licensee in your area. Why
spend time marketing to someone who will never refer you?

Buffini & Company recommends refining your list by sorting it into these categories:

A+:People who have given you multiple referrals or who have worked with you several times, and you enjoyed the
experience.

A: People who have given you one referral and from whom you would like to receive more.

B: People who would refer people to you if they were asked to do so and shown how.

C: People who might refer to you in the future.

D:People who can be deleted from your list. In fact, do that now, before you ever send them anything. You know who
they are.

The Mayoral Campaign

Now you’re asking: “How do I know if they would refer me?” That’s where qualifying the list comes in. Pick 10% of your
list to work with at a time and contact them. Ask each one, “If you wanted to buy or sell a home, or had a friend or
family member who was in the market, do you have a real estate professional you would refer them to?” This helps you
avoid wasting your time and theirs marketing to someone who’d never refer you. Buffini & Company calls this the
“Mayoral Campaign,” because it’s similar to what a mayoral candidate would ask if running for office: “Would you vote
for me?”

Stay in Touch

We’ve mentioned this before, but it bears repeating, because surveys have shown that, although most people had a
good experience with the real estate professional they worked with to buy or sell their home, they never heard from
them again! Try to meet face to face with each person in your sphere at least quarterly. Keep a log so you don’t let
anyone drop off your list. Listed in order of impact, some ways of staying in touch include:

1. Face-to-face meetings
2. Phone calls
3. Hand-written notes (These are so rare that people love getting them. Make sure to write a note after every
face-to-face meeting. Do not enclose a business card here. This is a relationship-building activity, period.)
4. Newsletters

Although monthly newsletters are last in this list, so few real estate salespeople bother that they can really make a
difference in your business. But don’t make it a marketing piece—make it an informational vehicle. That’s far more
effective in establishing trust and credibility. No one likes to be “sold to.” Email is fine, if that’s your thing, and if a
professionally designed printed piece is beyond your reach, or you know you won’t keep up with it, a monthly letter on

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stationery is fine as well, and may even be better received than a slick marketing piece.

If you don’t do this—if you don’t build and qualify that list and continually refine and add to your list as you meet new
people—your career in real estate may be very short lived. If you do keep your list updated, you’ll be among the few
who do make it in this business, and if you do it consistently and maintain contact and do solid work as a real estate
professional, you can be a top producer.

A Final Note

One final note about working with your sphere: You shouldn’t be a pest about it. Making your career known to your
sphere shouldn’t turn into trying to guilt-trip your friends into referrals. You’ll just lose your friends that way, not win
business! Instead, make sure people know you as someone who is reliable, positive about your career, and a person
they like so much that they would love to help you succeed with a referral, if they get the chance. As long as they know
you’re in the real estate business, being a person who is nice to know will win you more clients than any sales pitch.

Other Strategic Relationships: Establishing Your Network

For smoother transactions, it pays to develop a network of professionals you can count on. Essential relationships
include mortgage brokers, title representatives, inspectors (home, roofing, structural, sewer), contractors of various
types (e.g., roofing, electrical, HVAC, plumbing), and vendors, such as surveyors, remodelers, and home warranty
providers. When providing a referral, be sure to offer several names of qualified professionals and allow your clients to
make their own decisions. This helps minimize liability. Let’s take a look now at three essential professional relationships
for a real estate licensee.

• Title company
• Title representative/closing officer
• Mortgage broker

Title Company

The marketing department within title companies can provide you with mailing lists tailored to specific criteria such as:

“All owner-occupied homes with tax values above $300,000 that have not sold in the last three years in the following
three zip codes …”

They also often have lines on inexpensive websites, postcard mailing services, etc. They’re not allowed to violate RESPA,
so keep in mind that if there’s a cost for the service, you’ll have to pay. It’s generally reasonable, however, and mailing
lists are free.

It’s common practice for your clients to do business with the same title company that you use for marketing services. It’s
not a requirement, however. For a title company to suggest that their marketing services are dependent on your
business would be a RESPA violation.

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Title Representative/Closing Officer

Good title representative/closing officers can keep a transaction on track. Ask around the office for who other agents
use. The client chooses who to use, of course, but if your client needs a referral, having a good name (or three) to
provide is important. A good title rep can make problems disappear by keeping track of paperwork that’s due, reminding
the parties of upcoming events and deadlines, making sure all signatures are there, etc. Meet with the representative
before referring them. Make sure you’re comfortable with their professionalism and courtesy. Just because another
agent refers someone doesn’t mean that person is right for you, or your clients.

Mortgage Broker

A great working relationship with a mortgage broker can lead to cross referrals over time. A good mortgage broker may
will likely have referral relationships with many real estate licensees, so the ratio of referrals may be something like
10:1. But that’s okay. Referrals are only a small reason this relationship matters. Mortgage brokers can assist your buyer
clients with finding the right loan for their situation. They also act as a liaison between a lender and the client to keep
the client’s loan progressing through underwriting. This is a good thing. Establish a relationship with a mortgage broker
(or two or three), and refer them as appropriate.

Business Strategies to Avoid: RESPA Violations and More

RESPA Violations: A Mistake that Can Cost You Your Business

The Real Estate Settlement Services Protection Act is designed to protect consumers from increased fees when obtaining
loans or other financing by requiring full disclosure of business relationships and prohibiting kickbacks. RESPA violations
are serious and can cost you your reputation, your license, and your business.

RESPA Don’ts

Following are big RESPA no-no’s:

• You can’t pay someone for referring business to you unless that person is a real estate licensee. (You might
want to have that tattooed on your forehead, because this is a very common violation.)
• You can’t own (and your brokerage can’t own) an interest in another settlement service business (e.g., a title
company) without disclosing that every time you refer clients to that business.
• You can’t let a title company, mortgage broker, or other settlement service provider pay for your website,
advertising, or anything of value.
• You can’t let a title company, lender, mortgage broker or other settlement service provider print open house
flyers for you or provide anything of value at no cost to you unless their logo and name are prominently
displayed. If it’s free, it should be their marketing vehicle, not yours.
• Don’t unfairly split advertising costs. If you share advertising with a mortgage broker, title company, lender or
other service provider, the cost of advertising should be split equitably between you. For instance, if your face
and contact information take up 75% of an ad with just a small section for a mortgage broker, then you must
pay for 75% of the ad’s cost.

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Top 10 Mistakes You Know Not To Make (Right?)

Besides noncompliance with RESPA, there are many mistakes licensees make that can derail their business. Avoid these.

1. Not maximizing your sphere. In the beginning, 60% of your business will come from here, and it costs you pennies to
manage it effectively. After a couple of years in the business, you may get 80-100% of your business from your sphere.

2. Not managing time well. Time is money! Don’t waste your time—spend it on activities that will make you money.
Make it a goal to connect with at least five people every day (in your sphere and out) about real estate. If you’re not
picking up a commission check, what’s the next most important thing you can do that will get you closer to one?

3. Not qualifying buyers and sellers. You must only spend time with those people who will bring you business.

4. Spending marketing dollars ineffectively. Buying into leads programs, over-the-top web sites, or splashy advertising
that bring you no return on your investment except a little ego stroking is a critical error. Be strong—plenty of people
will be after your money.

5. Not using social media effectively. This is a practically free medium that can cost you a lot of time if you don’t use it
effectively, and cost you missed opportunities if you don’t use it at all. Twitter, Facebook, YouTube, Instagram, and blogs
are all opportunities for marketing yourself and your listings.

6. Not narrowing your focus. As mentioned, select a niche or geographical area to hit, and keep hitting it hard. You may
not get results right away. That doesn’t mean it’s not working; it means you have to keep working it. It used to take six
impressions to make an impression. With the bombardment of advertising messages people now receive, it takes 10-15.
Don’t give up three feet from the goal.

7. Not staying in touch with clients. Every time you do business with a client that you’d like to work with again, add
them to your database, and stay in touch. Clients know other people who need services. Surveys show that 80% of real
estate licensees don’t stay in touch with their clients!

8. Not using technology effectively. You don’t have to have the latest gadgets, but you do need to leverage technology.
At minimum, find and use a solid contact management system that you can learn and use effectively.

9. Not firing customers. You get to decide who you work with, too. Don’t spend time with people who don’t respect you
as a professional or who won’t offer you quality referrals.

10. Not continuing to educate yourself in the field. The difference between a dabbler and a professional is that a
dabbler works in the profession of real estate; a professional continues to work on, as well as in, the profession. Get a
mentor. Volunteer for your local real estate board. Attend the meetings. Connect with other licensees. Watch YouTube
videos. Read books. Attend seminars. Add credentials. Go to every open house in your farm area. That way, when a
client asks you about a house, you can speak from the perspective of already having seen it. Be a credit to your
profession, and your career will benefit.

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Writing Your Business Plan and Tracking Your Success
Creating Your Plan

Throughout the first four units of your course, you came up with some excellent ideas, developed strategies, and
calculated the production requirements for your business. Now you’ll take all of the information in your business plan
worksheet and create a formal written business plan, something very few entrepreneurs ever get around to doing (so
you’ll be ahead of the pack already).

We’ve provided you with a template that you can use to create your business plan. Take the time to complete your
business plan after you have completed this course. You may use the template provided or any other template you
choose.

Tracking Your Progress

How can you tell if you're meeting your goals? Yes, you might look at your bank account to see if you have enough
money to pay your bills. But that won't give you any indication of whether you'll be able to do so in the future.

You need the ability to track your progress and measure your results and successes. You can do this by keeping statistics
about every part of your plan.

Each week during your planning sessions, record the results of the previous week, such as:

• Number of phone calls to prospective clients

• Number of e-mail correspondence
• Number of meetings with prospective sellers or buyers
• Number of listing appointments
• Number of properties shown to prospective buyers
• Number of listing agreements acquired
• Number of buyer brokerage agreements acquired
• Number of transactions closed

Compare your numbers with your plan to determine if you are ahead or behind of your goals.

Make sure you also track all of your expenses and review them on a weekly basis. This way, you can compare your actual
expenses to your budgets and determine if you're spending money faster than you're earning it.

Getting Advice, Support, and Assistance

Building and refining a business plan is a long process, and you should feel free to seek guidance from trusted mentors
or reliable resources.

Ask your mentor to review your ideas and plans with you. Get constructive feedback.

As you begin working your plan, check in with your mentor periodically to talk through your progress and productivity
goals. Making yourself accountable to someone else will motivate you to work on your goals each day and achieve your
Copyright © The CE Shop. All rights Reserved. 45 of 46
results.

We’ve provided links to sources where you can find additional information on developing a successful business plan.

Some books you can read on this subject are:

• Trust Agents, by Brogan & Smith

• Blue Ocean Strategy, by Kim & Mauborgne
• The Age of Engage, by Denise Shiffman
• The Real Estate Agent’s Business Planning Guide, by Carla Cross
• The Millionaire Real Estate Agent, by Gary Keller
• Shift, by Gary Keller
• The E-Myth Revisited, by Michael Gerber
• Getting Things Done, by David Allen

Best wishes in your career!

Key Points: Planning for Success and Putting Your Plan Into Action
• A niche is an area of focus for your business. You can have a niche based on geography, demography, and
interests, for instance.

• By focusing business on a niche, a licensee can save money and have a bigger impact in less time.

• Succeeding in business requires enough people who like you and trust you well enough to refer you and do
business with you.

• Always ask for referrals.

• Ask each contact, “If you wanted to buy or sell a home, or had a friend or family member who was in the
market, do you have a real estate professional you would refer them to?” This helps you determine whether to
add the contact to your database.

• Essential relationships for licensees include mortgage brokers, title representatives, inspectors, contractors, and
home warranty providers.

• Common business mistakes licensees make include not maximizing their sphere, not managing time well.

• You can’t pay someone for referring business to you unless that person is a real estate licensee.

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