Every good real estate investing career starts with a plan. Choosing to dive right into the business and take things as they come is often a recipe for disaster. Without a plan you will takes risks that often don’t match your personality. Eventually these decisions will come back to haunt you. Conversely with a solid business plan you can enter the business with a clear vision of where you want things to go. Things may not always go how you planned but you won’t regret the actions you take. Regardless if you only plan on closing a few deals a year or want to pursue real estate full time you need to need to have a firm business plan in place. Here are five tips to help develop a winning business plan for you.
- Think Short And Long Term. Things change in business, and in life, all the time. When developing your business plan there needs to be both short and long term thinking. You should have a plan for how you are going to close your first deal as well as where you want your business to be in twelve months. If you are slanted too much in either direction your business will not have balance. Things may start out great but you will be disappointed you cannot sustain your success. On the flip side if you are all about the future your business will never get off the ground. You should reassess your plan every 90 days. With every plan write down where you want to be in 30, 90, 180 & 360 days. Next to it write down what actions you plan on taking to achieve this. Your business plan shouldn’t be just how you are going to break into the real estate business but how you are going to stay there.
- Plan For Change. With any plan you make it is important that you always take a conservative approach. What if the way you want to invest doesn’t work out the way you planned? Without a steady backup plan you will spin your wheels for several months. Your business plan should have a best case and a worst case scenario in mind. You should have an exit strategy for what you want to do and how you will do it. As we mentioned things are always changing it the real estate world. It is always better to be a step ahead rather than a step behind. Being late to an investing trend or not getting out soon enough will leave your business in shambles. With every plan you make there should always be room for change.
- Specific Action Plan. Writing down that you plan on making a million dollars your first year in the business is not a plan but rather a wish. Wishing alone will not give you the success you are looking for. You can do anything you want in real estate if you have the right plan in place. As you write your plan you need to accompany it with what actions you will take to make them happen. If your plan is to send out direct mail to a thousand homeowners you should get as specific as possible. How do you intend to find the list of homeowners? Are you going to write the letter and address each envelope? What is your plan to handle income call volume? Do you have the capital to send the letter multiple times? With each part of your business plan you should have multiple lines under it detailing how you are going to achieve it. It is better to be specific before you start and discover any flaws then when you are in the middle of it. By being as specific as possible you can iron out the problems before you get too far.
- Finances. Most action plans in the real estate world revolve around finances. You don’t need millions to get started but depending on your plan you will need at least some capital. With every section of your plan you should attach what the costs are to achieve them. Even if the amount is small it can quickly add up over time. If the finances are large you can look for ways to generate capital or find a business partner. A lack of capital isn’t an excuse not to move forward. There are ways to make your plan happen regardless of the budget. By knowing exactly what you need you can find the capital you are looking for.
- Timeframe. The final aspect of your business plan should be the timeframe in which you will follow through with a plan or want to realize success. If you are doing a direct marketing campaign you should give it at least a few months before you move on to something else. There is always a fine line between getting off something too soon and giving it a chance. That is why it is so important to attach specific dates to everything you do. When your date ends it doesn’t mean you need to change but rather assess your results and make your decision based on that. Six weeks can quickly turn into six months if you are not careful. During those six months you could be throwing money away that could better be allocated elsewhere.
Your business plan doesn’t have to be long or elaborate. It has to be something you feel comfortable with that can help guide your business. Use these five tips to help write a business plan that works for you.
