It’s common for a new real estate agent to fail within five years. In fact, 87% of new agents will do just this. The solution to this problem is creating a real estate business plan that tracks your leads, finances, expenses, and goals.
In this post, I share my exact business plan spreadsheet that I use as a real estate professional in my own business.
Real Estate Business Plan Spreadsheet
With my free business plan available for download below, you’ll have everything you need to start creating your real estate business plan, whether you’re in commercial real estate or the luxury market. Below, we’ll go through each tab of the spreadsheet.
Real Estate Business Plan Goals
The first thing you should do for your real estate business plan is make a list of goals.
A business goal can include your: finances, transactions, social media, target audience, client relationships, marketing strategy, education, or personal development.
Your goals need to be specific and measurable. Below is an example of my recent goals:
Sales Transaction Backlog
Maintaining a transaction backlog of the deals you close is key to achieving your goals. Additionally, knowing what you’ve already done is crucial for forecasting what’s possible in the future.
If you don’t have one to two years of your transactions tracked already, gathering this data may take some time.
If you are a brand new real estate agent, this tab will be blank until you start closing deals.
The COGS column stands for “Cost of Goods Sold.” Use it to document referrals you give to another agent or if you have to give back some of your commission on a deal.
If you enter your name in cell “T3”, then anytime you type the agent name as your own in column D, the spreadsheet will automatically assign the commission to either your personal or real estate team income.
Need help tracking your commission? Check out my real estate sales tracking spreadsheet.
Gross Commission Income By Year
In a new tab, transform all the data from your transaction backlog into a table. This involves an advanced spreadsheet skill called Pivot Tables.
You’ll notice in my table I separate “Team Income” and “Personal Income.”
Below you can see the same Pivot Table broken down into months and quarters. Breaking your data down into smaller increments can help you focus on the months and quarters that are most important for your business.
Gross Commission Income By Source
This tab allows you to analyze the effectiveness of your efforts and track your return on investment with different sources, such as Facebook Ads and referrals.
Once you’ve used this spreadsheet for a couple of years, you’ll be able to click the “+” sign to expand your data and compare your sources year-over-year, like in my example below.
Volume By Lender Tab
In this tab, you’ll find your transaction volume sorted by the lender that closed the transaction.
Having this data is important to track which lenders you are doing business with the most. This could help set up co-marketing agreements.
You’ll most likely want to filter out the listings since you are not typically referring business to the lender as the listing agent. To do this, click on the Pivot Table and go to the right-hand side of the spreadsheet to filter by buyers and listings.
Profit and Loss Planner
Keeping track of your business expenses is not just important for tax deductions, but also for business planning.
You can use the “P&L Planner” tab within the Business Planning spreadsheet. Or use a separate program like Quickbooks Online to track your business income and expenses, and create a Profit and Loss statement.
Using Quickbooks Online
If you are using Quickbooks Online to create your profit and loss statement, the first thing you’ll need to do is create your chart of accounts. Your chart of accounts is simply the different categories of income and expenses you make in your business.
For more information, check out my post on Quickbooks for real estate agents.
Annual Real Estate Business Plan
The “Business Plan (Annual)” tab is where you’ll analyze and forecast all of the most important sales and income metrics for your real estate company.
The left column holds all the actual numbers for your business in the current year. If you are using Quickbooks Online for your business expenses, you can copy over your information here. Otherwise, you’ll need to go through bank and credit card statements and categorize your expenses before manually inputting them.
The spreadsheet consists of editable green data cells and white data cells, which indicate numbers that have been calculated by the Excel formulas. You don’t need to change the data in the white cells unless there’s a specific reason.
There are five main categories included under the Business Plan (Annual) tab:
- Lead Sources
- Net Profit/Margin
- Met/Haven’t Met Database
If you want to include other categories relevant to your business, you can add rows into the spreadsheet, but keep in mind this could interfere with the formulas the spreadsheet is using.
Met and Haven’t Met Database
Your “Met Database” includes all the people in your personal and professional life who already know and trust you, like past and current clients and referral sources.
On the other hand, your “Haven’t Met” database consists of people you either haven’t met or seen in a very long time. These include internet leads, past acquaintances, and people you haven’t met yet but who could be an ideal client.
What you do with your “Haven’t Met” Database is up to you. There are many ways you can reach this target market. You can create a marketing plan, call them periodically, or try taking them out to lunch or coffee.
Of course, as more people become your client the number of contacts in your Met Database should ideally go up.
Organizing Your Databases
I like to break up my database into these two categories because I know that my conversion rates for these leads stay about the same year-over-year. For example, I typically close roughly one transaction for every six people in my “Met” database.
Keep in mind that the conversion ratio for your “Haven’t Met” database can vary widely depending on the sources of your lead generation.
By factoring in your conversion rate (in the example above it’s 6.8%) and your desired net profit (in the example it’s $200,000), you can figure out how many people you need to have in your Met Database to reach your goal. Excel will do the math for you, but you will need to have it recalculate if your conversion rate changes.
The auto-generated column in the middle will show you the number of people you need in your Met Database. In the example, it’s 533. That means you will need to add 107 new clients into your Met Database to meet your goals.
As you enter the new year, dedicate your efforts to meeting that number, if not surpassing it.
Forecasting Your Real Estate Business Plan
Once you’ve entered your data from the previous year, go to the “Next Year (Auto)” column. For this part, you’ll input your goal “Net Profit,” and Excel will calculate all of the other metrics and show you which ones you need to reach your goal.
Next, go to the “Next Year (Adjusted)” column. This is where you will take the automatically generated numbers and adjust them manually if the number seems unreasonable or you know there will be some major upcoming changes to your business goal. You can leave the auto-generated column alone as a reference.
For example, if you know you plan on hiring an assistant next year, you can manually factor that into your costs. Or if you know that your brokerage fees will go down, you can adjust for that as well.
Keep in mind that if you change a number manually, you’ll have to adjust the other numbers as well.
Changing Your Buyer Commission %
Say you change your average “Buyer Commission %” to 2.3%, and you still plan to sell the same amount of homes that year. You would need to change the “Buyer GCI” amount to reflect the resulting increase in profit.
To have Excel recalculate the value in a specific field, select the field you want to change (in this case the Buyer GCI field), and then hit the = sign. Click on the first category that you want to factor in (in this case the Buyer Volume), and hit the multiplication sign. Next, click the second category you want (in this example the Buyer Commission %). Excel will run the equation and update the numbers accordingly.
Likewise, since changing the Buyer Commission % will change the value of the Buyer or Listing GCI, you’ll need to update the overall GCI at the top under “Transactions.”
To do that, click the box you want to recalculate (in this case GCI), and hit =. Then click the first number you want to use (in this case Buyer GCI), the + sign, and then the Listing GCI. The new total will appear under the overall GCI.
Keeping your GCI up to date is important to ensure your net profit is accurate.
This spreadsheet will also set your expense budgets for these different categories for next year. By dividing by 12, you’ll know what you can spend per month. It’s best to have conservative estimates since the real estate market is always changing, and it’s impossible to predict what your expenses will be exactly.
Real Estate Business Plan Monthly
Under the Monthly Tracker tab, we begin to break down your number of transactions, gross commission income, expenses, and profit by month. Ideally, you’ll want to use historical trends you’ve noticed in your business to create a proper forecast.
For example, a real estate agent tends to sell more in the summer months than in the winter. Therefore, your summer months should show more transactions and commission income than the winter months.
This tab, as seen below, will keep track of your progress towards goals as you follow your real estate business plan throughout the year.
The goal you want to reach by the end of the year is on the right-hand side under the “Total” column. Take this number and divide it by twelve to come up with an average monthly goal. Then go back and adjust the numbers a bit for seasonality in your business.
At the end of each month, come back to this table and fill out how you did in the rows marked “Actual” so you can compare numbers and see where you are with your goals. The row below each “Actual” input will track how much you exceeded or missed your goal.
Breaking your goals down into smaller monthly or quarterly chunks is easier to manage and will help you stay focused on what’s at hand in your business.
Often, as agents earn more money they spend more money, causing them to stay on the hamster wheel indefinitely. To prevent this, you need to have a defined income goal.
To create a complete real estate business plan, I’ve found it beneficial to incorporate your personal finances.
Understanding your monthly living expenses and what you need to save or pay in debt will ensure your business goals align with your personal goals.
When it comes to logging personal expenses, I recommend a tool called You Need A Budget (YNAB).
If you don’t want to sign up for YNAB, I’ve included a tab in my business plan template spreadsheet that will allow you to categorize your expenses and get a better understanding of your personal finances.
Personal Net Worth
Tracking your net worth is one of the most important metrics for financial success in your real estate career.
Most real estate agents can forego a traditional Balance Sheet, since agents generally don’t have many assets or liabilities within their business. Instead, a Realtor mostly operates on cash flow (income and expenses).
That said, no matter what business you are in, tracking your personal assets, passive income, and liabilities is vital. Your net worth will give you the ability to slow down and retire one day.
You can use YNAB to track your net worth or use a financial plan spreadsheet like the one included in my real estate business plan.
The only way to increase your net worth is to either increase your assets or decrease your liabilities.
Knowing what you would like your net worth to be at the end of the year will help guide your real estate business plan.
Final Thoughts on Real Estate Business Plan
If you aren’t good with numbers or spreadsheets, consider hiring someone who can help.
Most importantly, remember that the year may not pan out exactly as you intend. However, the path to success in the real estate industry is made by establishing goals and holding yourself accountable to them.
Want to incorporate automatic advertising in your business plan? Check out my post on Adwerx for real estate agents.
Would You Like To Partner With Me?
Check out my Partner Page for details on the benefits of working with me at eXp Realty. I’ve helped hundreds of real estate agents, team leaders, & brokers all over the country, increase their business & build additional revenue streams. Together, we can make this year your best yet!