Download - Creating a Useful Business Plan
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Source: Timmons, J. and Spinelli, S. (2007) New Venture Creation: Entrepreneurship in the 21st Century, 7th Edition, McGraw Hill.
How do I add value to the
clients I serve?
How do I solve a specific
pain for which clients are
willing to pay a premium?
Potential market share
and profitability analysis:Is my target market large enough?
Is there growth potential?
Strong/early/sustainable cash flow?
High profit margin?
Risk vs. reward
analysis:Is there a high return on investment?
Chung Phan is a Vietnam native who immigrated
here after graduating with a masters degree in
computer engineering. He is 46 years old with a wife and
3 children. He works as a systems analyst at Comco, and
earns $92,346 per year. He lives in Stonewood
Springs, plays golf and loves technology.I interact with Chung at church
and local civic organizations.
I will build trust by becoming the first Vietnamese-speaking agent in our community, and I will work hard to become a
credible professional in my community by being active in it.
SWOT analysis of competitor Mark Witherspoon
I have the opportunity to win
market share from Mark by
relating to the Vietnamese
community by speaking
their language and being a
part of it.
Mark has sold to some in the
community and has a lot of
resources to advertise
should he decide to market
more heavily. He could even
invest in having a translator.
Mark does not speak
Vietnamese and is not active
in our community.
Mark is a recognized, high
producing professional who
has marketed and sold to
several Vietnamese
families.
•Broker
•Lender
•Coach
•Closing attorney
•Inspectors
•Contractors
•Sphere of influence
•Referring closed clients
• What are my major
business goals?
• Short-term
• Mid-term
• Long-term
• How will my business change?
• Are there buyout opportunities?
For agents, this has to be very specific.
Keep a strategic daily calendar defining your work
habits and what specifically you will do.
Know your waterfall:
75 sales calls = 1 appointment
3 appointments = 1 signed listing/buyers agreement
2 signed agreements = 1 ratified contract
1.5 ratified contracts = 1 closed transaction
Know your cash flow.
Monetize all costs into each closed transaction.
$12,000/yr marketing
+ $3,000/yr franchise fee
+ $600/yr E&O insurance
+ $4000/yr office/gas/business
$19,600 total expensesdivided over 18 transactions in 2012
$1,089 per transaction
Know your cash flow.
Using this method, subtracting “cost of goods”
expenses from each transaction gives me my
positive, pre-tax cash flow projections.
Example:
I close as the buyer’s agent on a $200,000 home
offering 3% to the buyer’s agent. I grossed $6,000.
I split 40% with my broker, I’m left with $3,600.
$3,600 - $1,089 (Cost of goods) = $2,511 profit.
What is my product?
• Service : how do I market myself?
• Listing : how do I market my listing?
Who is my target?
What medium does my target
consume?
Get specific about your waterfall.
• Where do continued flow of clients come from?
• Provided the waterfall works as projected, how
does that translate to profitability?
75 calls = 1 appointment
3 appointments = 1 agreement signed
2 signed agreements = 1 ratified contracts
1.5 ratified contract = 1 closing
Average home price is $200,000
Cost of doing business = $1,089 per transaction
Take home $2,511 per transaction with current broker split
What is my breakeven?
• The point at which I have all my bills paid, and I
become profitable.
What is my profitability time projection?
• How long before my initial investment is returned?
• How many sales must I make to breakeven?
• How many sales must I make to meet my
profitability projections?
Be able to explain in 15 minutes in simple terms:
• Industry problem and your solution
• Size and viability of your specific market
• Technology plan
• Your competitive advantage
• Your team
• Operating strategy
• Your financials
• Your breakeven and profitability projections