The National Association of Realtors reports that 87% of all new agents fail within five years of getting into the business. The solution to this problem is creating a real estate business plan that details how you are going to get business, invest your resources, and get the most out of each day.
I’ve been creating a business plan every year since I got started in 2013. I attribute my success, including how I was able to net over $100K in my first year, to this somewhat simple discipline.
Follow along as I share my exact business plan spreadsheet and detail my thought process, which has been refined over the years.
Downloadable Real Estate Business Plan Spreadsheet
With my free downloadable spreadsheet, you’ll have everything you need to start creating your real estate business plan today. Let’s jump right in and go over all the details of how to fill it in with your own information.
The tabs in the spreadsheet include:
- GCI by Year
- GCI by Source
- Volume by Lender
- Profit and Loss Planner
- Business Plan (Annual)
- Business Plan (Monthly Tracker)
- Personal Budget
- Personal Net Worth
Real Estate Business Plan Goals
The first thing I like to do when I start my real estate business plan is come up with a list of the goals for my business.
Start by typing out anything that comes to mind. Think outside the box here; we can go back and refine the goals later. Your goals can include a variety of things from finances, transactions, your health, relationships, education, personal development, or spiritual growth.
The most important factor is that your goals be specific and measurable.
Below is an example of some of my recent goals to show my thought process when drafting the goals I set for myself.
Now that you’ve written down most of the goals that come to mind, let’s shift gears and work on a new tab for tracking your past and current deals.
Keeping a transaction backlog of all the deals you make is key to staying organized and will give you a quick temperature read of where you are at with your production goals. Additionally, when it comes to business planning, knowing what you’ve already done is the first step to forecasting what’s possible in the future.
If you don’t have all of your transactions tracked somewhere already, it may take some time to go back one to two years and pull up this data, but it is worth it.
If you are a brand new agent, this tab will be blank for now. Go ahead and set it up now, and as you begin to close deals, come back and fill in the details. Organizing your transactions here from day one will make it easier to create business plans in the future.
The column labeled COGS stands for “Cost of Goods Sold”. I use this column to document referrals I pay out to another agent, or if I have to give back some of my commission to the deal for some reason.
If you enter your name in cell “T3”, anytime you type the agent name as your own in column D, the spreadsheet will automatically assign the commission to either your personal or team income.
GCI - Year
You can then create a new tab and transform all the data from your transaction backlog into a table that summarizes some key data points. This involves an advanced spreadsheet skill called Pivot Tables.
You’ll notice in my table, I separate income out by “Team Income” and “Personal Income”.
Below you can see the same Pivot Table broken down into months and quarters. Breaking your data down into these smaller increments can help you figure out which months and quarters are most important for your business so you can focus on those.
GCI - Source
In the “GCI - Source” tab you’ll see your commissions organized by their source. This 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
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 be helpful in setting up co-marketing agreements.
You’ll most likely want to filter out the listings since as the listing agent you are not typically referring business to the lender. To do this, click on the Pivot Table and go to the right hand side of the spreadsheet to filter by buyers and listings.
Just like tracking your real estate transactions is important, so is tracking your business expenses. Keeping track of your business expenses is not just important for tax purposes, 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.
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.
These categories include your GCI, brokerage fees, marketing expenses, and any other business-related items.
One tip is to keep your chart of accounts as simple as possible. Having fewer accounts (categories) with more transactions is better than many accounts with only a few transactions.
Breaking your profit and loss statement down to months and quarters can be helpful, and Quickbooks Online makes it easy to create reports that do just that.
Business Plan (Annual)
The “Business Plan (Annual)” tab is where you’ll analyze and forecast all of the most important sales and income metrics for your business.
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 as well as white data cells, which indicate numbers that have been calculated by 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 that are 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
Think of your “Met Database” as a compilation of all the people in your personal and professional life who already know and trust you, like past and current clients or referral sources.
Your “Haven’t Met” database on the other hand consists of people you either haven’t met or haven’t seen in a very long time. These include, for example, internet leads, past acquaintances, and people you know of but haven’t met personally.
What you do with your “Haven’t Met” Database is up to you. There are all sorts of ways you can reach this group. You could start by creating a marketing plan, whether that involves mail outs, live events, or parties that you host for your clients. Make it a routine to call them periodically and check-in, or depending on your comfort level and situation, try taking them out to lunch or coffee.
Of course, as you meet more people and help more clients, the number of contacts in your Met Database should ideally go up.
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, historically I’ve closed 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 its 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. I’ll go into that in more detail in the section below.
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.
Using the Spreadsheet to Plan for Next Year
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 what metrics 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. 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.
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 markets are always changing and it’s impossible to totally predict what your expenses will do.
Business Plan (Monthly Tracker)
Now that we’ve identified where you want to go and where you’re starting from, we will break down your annual sales goal into a monthly tracker.
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, we as realtors tend 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 were over or under your goal by.
Breaking your goals down to smaller monthly or quarterly chunks is easier to manage and will help you stay focused on what’s at hand in your business.
To create the most complete real estate business plan, I’ve found it beneficial to incorporate your personal finances into the equation.
This doesn’t need to be as detailed, but understanding your monthly living expenses and what you need to save or pay down 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 real estate business plan spreadsheet that will allow you to categorize your expenses and get a better understanding of your personal finances.
The benefit of YNAB is two-fold. First, YNAB can link directly to your bank account so that your data imports automatically. Second, you’ll be able to create reports to analyze your spending, which will lead to a more complete picture of your business plan as mentioned above.
Oftentimes, as agents earn more money they spend more money, causing them to stay on the hamster wheel indefinitely. YNAB is a great ongoing resource to ensure your business success translates into hitting your personal goals.
Personal Net Worth
Tracking your net worth is one of the most important, yet often overlooked, metrics for financial success. Your net worth can be calculated by adding up all of your assets and subtracting your liabilities.
From a business standpoint, this would be done on what is called a Balance Sheet.
Most real estate agents can forego the traditional Balance Sheet, since agents generally don’t have many assets or liabilities within their business. Instead, real estate agents mostly operate on cash flow (income and expenses).
That said, no matter what business you are in, tracking your personal assets and liabilities is vital. Your net worth is what is going to give you the ability to slow down and retire one day.
You can use YNAB to track your net worth, or you can use a separate 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.
Real Estate Business Plan - Closing
I hope this definitive guide to creating a real estate business plan will help you in whatever stage of business you are in.
Whether you’re a new agent or you’ve been working in real estate for years, keeping spreadsheets of your data will make it easier to define your goals, track your numbers, and build a predictable and sustainable business.
If you aren’t good with numbers or spreadsheets, consider hiring someone who can help.
And most importantly, remember that even with the best historical data and forecasting, the year may not pan out exactly like your real estate business plan had hoped. However, the path to having a successful business is made through establishing goals and holding yourself accountable to meeting them.