By Tim and Julie Harris
- Tools to develop an actionable business plan.
- How to find the magic number you need to realize your business goals.
- A free download of our Real Estate Treasure Map.
Your 2021 real estate business plan should be all about the numbers—in other words, the revenue you’ll need for your business to be profitable in the year ahead. And since we believe that your profit is your product, you need to include very specific numbers upfront in your 2021 business plan. The sames goes for you team if you’re a team leader. Everyone must know what what they need to do in order to achieve their goal.
Our tips for your 2021 real estate business plan are based on our Real Estate Treasure Map, which helps agents examine their current financial picture and then do the math to come up with a plan of action. That math will tell you what you need to earn. Here are some examples:
- Know your core personal overhead. The core overhead includes non-negotiable expenses you have every month in order to keep a roof over your head, the lights on, and food on the table, as well as cover health insurance, car expenses, and other necessities.
- Know your personal overhead “add-ons.” These are all the additional expenses you choose to have every month, such as private school tuition for your children, gym memberships, Starbucks coffee, etc.
- Know your core business overhead. This includes association dues, MLS fees, internet, cell phone, office supplies, signs, electronic lockboxes, etc.
- Know your business overhead “add-ons.” These non-essential business expenses might include club memberships, subscriptions, marketing that doesn’t have a strong ROI, etc.
- Know your federal, state, county, and city tax responsibilities. Be sure you’re putting 20% of every commission check you earn in a separate account for taxes.
- Know your savings goals. Put a minimum 10% of every commission check you earn in a separate account for savings. Don’t co-mingle this account with your tax account.
Once you know your monthly personal and business costs as well as how much you need in order to meet your tax responsibilities and savings goals, write that number down. That’s your minimum target income per month.
Now, look at your sales in 2020. Figure out your average net commission per closing by dividing your total net commission income by your total number sales. Write that number down. Divide your monthly expenses by your average net commission. That’s how many sales you need to close each month to meet your income requirements.
Remember, there is a difference between the number of average net commissions you need every month to pay for your personal and business expenses, your taxes, and your saving, and the number of average net commissions you need every month in order to make a profit.
Now it’s up to you to establish your profit goals. Consider how much you want to reinvest back into your business to enrich it through advertising, charitable involvements, and upgrading your backend infrastructure and systems. For example, you may want to build in the average investment or profit you want to make per sale in your monthly expenses and apply the the same formula to figure out how many more closing you need to make your profit goals.
This number of listings you need every month to generate your profit—your product—is what we call your magic number.
Make the process of creating your 2021 business plan more concrete and less time consuming. We’re here to offer additional help if needed. Simply text 2021 to 855-685-1045 and download your free Real Estate Treasure Map today. No obligations and no contracts required. This is our gift to you this holiday season. Plus, you will be able to download six additional free books from us that will help you actualize your 2021 real estate business plan. Happy holidays!
Tim and Julie Harris have been leaders in the real estate industry for more than 20 years, first as top producing agents, and now as sought-after business coaches. Their latest book, Harris Rules: Your No-BS Practical Step By Step Guide to Finally Become Rich and Free, is an international best seller. Learn more at timandjulieharris.com.