Let's Create Your Business Plan
Most realtors, tend to forget that they have a business to run and don't always put away a portion of their GCI to pay annual income taxes. Today I'm going to highlight the income side of the budget, and the process I take with my agents to determine your annual sales projections. This will help you really understand or modify the mechanics of how to plan for your annual income or revenue.
Creating a business plan
We typically work on your operating budget for next year in October. This is typical timing, as all budgets in a perfect world should be locked and loaded by the end of November of each year.
First we'll work on the revenue side of your budget. To get started you should ask yourself two questions.
- What is your average commission income - The whole dollar split that you received from your broker?
- How many seller listings are you going to sign and close and also, how many buyer clients are you going to help purchase a home?
As an example, let's say $9,000 was the average commission with 6 sellers and 10 buyers. Now you must ask yourself how much annual income do you wanna make? This will be your actual take-home on a net basis at the end of the year. As an example, let's say $150,000. With some quick math, 16 sales at $9,000 each closing will generate $144,000.
You can see the result is a little off from what your goal was. This is probably due to the two other big mistakes realtors typically make.
- Their sales projections aren't high enough and they are usually not supported by the right tactics and marketing efforts to achieve their numbers. As you see in the analysis we just discussed, expenses have not even been considered and you are already shy of your income goals, which leads to the next mistake.
- Most realtors don't properly consider their expenses when they kick off the start of the year because they don't have a comprehensive plan.
This is nothing to be discouraged by. In fact, this is very typical, and I'm here to help. If you'd like to talk through your personal sales projections, properly account for all of your expenses and formulate a real business plan, please reach out to schedule a call. I would love to help!