Creating A Business Plan (Part Four)


If you have followed the last three articles, you will have completed the personal evaluation process. Next we will analyze the number of days we worked last year as well as the number of hours we worked each day. We will also determine the number of listing we took during the year, and how many of those listings actually sold. We’ll also determine how many buyers we work with and how many actual sales we closed during the year. This is very important for you to determine so you can establish the number of transactions you need to close to equal your previous year performance. As previously stated, we need to know our current level of production in order to know how many transactions we need to close during the next year in order to increase our level of production and reach our desired goals.

If you were not in real estate last year don’t worry about it. We will cover your information next week but go ahead and write down the topics we discuss so you’ll know what you need to track for next year. Everyone else, take a piece of paper and let’s complete the following steps.

  1. Write your gross income (before expenses) for the past twelve months. This will be very important next week when we begin building your action plan.
  2. Break down your annual income into four quarters. Enter the income in each quarter just like it was produced. Don’t simply divide the annual income by four. We need to be able to tell your most productive time of the year.
  3. This one requires total honesty from you. Write down the average number of hours you worked each week during the last 12 months. If you haven’t work consistently, take a guess but don’t exaggerate. FYI, successful real estate agents work 40-50 hours per week.
  4. Next take your annual income and divide by the total number of weeks worked in the last 12 months and then divide by the number of hours you worked each week. The results will be the average income you earned per hour of work time. This is what your time is worth.
  5. List the average sales price per closed transaction. If you closed 36 transactions last year, add all total actual sold prices and divide by 36 for an average sales price.
  6. Write down the actual number of listing you took during the last 12 months.
  7. Write down the number of listings you had to expire during the last 12 months.
  8. Write down the actual number of active listings you currently have.
  9. Write down the number of listings you currently have that are pending; under contract but have not closed.
  10. Write down the average number of listings you take per month during the year.
  11. Write down the average number of hours you spend each week in lead generation.
  12. Write down the most productive sources of lead generating for new listings. For example it could be farming a particular area, mailing out fliers, advertising in real estate books or a number of other methods. List three things that work best for you.
  13. Write down the total number of transactions you closed during the last 12 months; include listings and buyer sales.
  14. Write down your average net commission earned per transaction during the last 12 months.
  15. Here comes the part you had rather forget. Write down the number of transactions (listings and sales) that fell apart and never closed during the last 12 months.

I have used parts of various business plans to formulate the plan I have been using. They are all similar but derive at the same results, just from different angles. When I help someone personally build a business plan I ask a few more questions than those we looked at today. It depends on the results a person wants to accomplish. Using various parts of this business plan has proven successful for sales people in non-real estate related businesses.

Next week we will focus on building a personal income plan. It will be very detailed and maybe a little confusing but it will tell you exactly what you need to do to accomplish your personal goal.

Should you have specific questions concerning various issues, please let me know and I’ll research the answer for you. I also want to encourage you to subscribe to our “News & Updates” weekly report so you can stay abreast of issues that might affect you when buying or selling real estate. If you haven’t visited my website, please go to  and view previous articles.