New Office Start-Up
Our expert shows this broker how to start off smart with a business plan.
Starting a business without a business plan is a lot like heading out on a long journey without a map. If you don’t have any idea where you’re going, any old road will take you there. Dr. Aamir Khan, broker-owner of Kissimmee-based Real Estate Mogul’s Corp. admits that he probably put the cart before the horse when he opened his brokerage last year. But even though he might not have done his homework, he was far from inexperienced.
Khan, who holds both a master of business administration and a Ph.D., had worked for five years in Century 21’s commercial division, where he specialized in big-ticket properties like hotels. By the time he opened his own company, he and his business partner had a sizable referral network of South Asian expatriates like themselves, who were from India, Pakistan or Bangladesh.
Things were going well until those leads were exhausted. Now, without a business plan, the company is starting to struggle. One of Khan’s long-term goals is to expand his business by offering franchise opportunities—he’s also a licensed mortgage broker. In the short term, however, he says he’d be happy “making money.”
“The true measure of success isn’t what you have; it’s what you can do without,” says Khan. “Having talent offers no guarantee—nothing is more common than unsuccessful men with talent.
But he concedes that all the determination in the world won’t result in success if he doesn’t know where to concentrate his efforts.
Bring in the Expert
Real estate coach Bob Corcoran agreed to give Khan some guidance. “So many people fail to do the most critical step in business planning, which is to come up with a business plan,” he says, adding that it’s not too late for Khan to formulate an outline to guide him through the various steps of building his business. “It forces you to take a realistic look at things,” he says. “The beautiful thing is that you have a blank canvas and you can paint the picture any way you want.” Here’s his advice:
1. Define Your Role
Corcoran says Khan must decide what type of brokerage he plans to run. Khan had an office in a storefront location but decided to bring the operation home when business started winding down. “The most successful businesspeople get out of the house and go to work,” Corcoran says. “It takes a very disciplined person to run an efficient business out of the house. Agents should be out in the field working with the consumer, but if you’re anticipating bringing five, six or seven on board you’re going to need a place to congregate. And if you want walk-in traffic, you’d better have agents to man your store. Is your intent to grow the brokerage or be a boutique firm?”
Khan says he hasn’t made his mind up about the type of brokerage he hopes to build. Corcoran suggests that he come up with some clearly defined goals, such as what kind of sales associates he needs and what services he’s going to be offering consumers. “Most brokerages have a reputation,” says Corcoran. “If we look at Sotheby’s, for example, we see that they’ve got a reputation of selling high-end properties. You’re a local brokerage without a reputation, so you get to define that reputation. It really comes down to what you want, Aamir.”
Khan and his partner both sell full time, and Corcoran recommends that they figure out what additional responsibilities each will assume. “One of you should be involved in recruiting and training sales associates,” he says.
2. Put Your Plans on Paper
Corcoran mentions a study conducted by Harvard Business School, which revealed that 86 percent of businesspeople surveyed didn’t have defined goals. About 11 percent had goals but they weren’t written down. “Only 3 percent had goals that were written down and reviewed daily,” he says, “and they made 10 times more money than the [other] 86 percent. Obviously, you want to be in that 3 percent.”
The typical business plan weighs about 9 pounds and sits on a shelf, Corcoran says, but it should be comparable to a résumé (i.e., preferably one page, with two pages maximum). Corcoran’s company has a form, “The Essentials of a Business Plan,” that Khan can use as a template. All he has to do is fill in his answers to questions such as these: “What is the objective or concept of the business?” and “What is my vision statement?” (which tells how you see the business providing for the customer).
According to Corcoran, Khan’s well-thought-out business plan should also list the reasons why Khan is certain that his business will succeed or any other information he needs to persuade someone to invest in or finance his business when he’s ready to expand into franchises.
“Put service at the top of your organizational chart,” adds Corcoran. “Serving the client is the honor we are blessed with. It’s not about the money; it’s about serving the client.”
3. Study Demographics
Before Khan can sell prospects on his brokerage, Corcoran says he’ll need to identify who they are. “It all comes down to knowing your market,” he says. To do this, Khan will need to analyze a full-blown demographic study of the area. “You want to know where people are coming from,” Corcoran says. “There are 79.5 million baby boomers in the United States right now. How many every year are going to be retiring? What percent are [buying] primary residences vs. second homes? If people are coming over from the United Kingdom you may even look at what part they’re coming from and possibly advertise there. Know your demographics first and then look at advertising in those areas.”
To find this type of in-depth information, Khan can check with his local Board or the Florida Association of Realtors® (FAR). If he’s willing to pay for a study, Corcoran says, a company called Real Data offers them. “Some companies charge you $25,000 for the information, but Real Data is affordable,” he says. “They can also help you with recruiting [sales associates]. It befuddles me, but they can even tell you exactly where to open an office simply from interpreting data.” [For a list of companies that offer demographic data, see box on page 62.]
4. Differentiate Your Product
After Khan has determined what type of brokerage he’s going to create, he’ll need to find a way to stand out. “Let it be known how you’re different,” Corcoran says. “Why would an agent come to work for your brokerage? It depends on what other brokerages are offering. You might have plenty of leads but you just need agents to follow up on them. You could differentiate yourself by focusing on the higher-end listings. Remember, he who owns the listings owns the market.
“When clients or customers list or buy through your company how is it different? If the demographics show that your area gets relocation business from overseas, focusing on that would help to differentiate you. You could say, ‘List with my company and if we don’t sell your house in90 days, we’ll buy it at 90 percent of the market price. Companies are getting into different perks, but be careful of RESPA laws, and check with your attorney.”
5. Hire a Marketing Pro
Khan asks if he should buy a marketing program, and Corcoran suggests that he check out California-based Hobbs-Herder Advertising. “They help agents from a marketing perspective,” he says. “Once you’ve defined your market, they’ll come up with marketing pieces for your brokerage. [See page 62 for a list of marketing companies.]
“Aamir, it’s up to you how soon you want this to happen,” says Corcoran. “Don’t buy into the premise that it’s a slow market. In Bob Corcoran’s world, there’s no such thing as a slow market. Success comes down to an agent or a broker who has a vision, sees it and implements it. If you can see it and believe it you can do it.”
This column, designed to provide advice from industry experts to real estate professionals who need help with technology, business or marketing issues, won the Bronze Award in the 2006 Best Column category from the Florida Magazine Association.
• Lacking a business plan as well as demographic studies on area real estate market, buyers and sellers. AFTER:
• Written business plan, differentiate brokerage and product and expert help with marketing. Demographic Data Providers
1. Demographics Now, SRC, LLC, (888) 836-4274; www.demographicsnow.com
2. National Association of Realtors® (NAR), (800) 874-65004; www.realtor.org
3. Real Data Strategies, (714) 990-4411, ext. 111; http://realdatastrategies.com/sales.asp Real Estate Marketing
1. Hobbs/Herder, (800) 999-6090; www.hobbsherder.com
2. The Marketing Library, Pat Zaby’s Seminars and Systems, (972) 407-1337; www.patzaby.com
3. Rainmaker Lead System,Gooder Group, (703) 698-7750; www.gooder.com Meet the Expert
Bob Corcoran is a nationally recognized speaker and the founder of Corcoran Consulting Inc., an international consulting and coaching company. He specializes in performance coaching, and the implementation of sound business systems into the broker’s or sales associate’s existing practice. For more information, go to www.corcorancoaching.com
or call(800) 957-8353.