So earlier tonight, I asked a simple question on Twitter:
Question: How many of you Realtors have a business plan? How many years does it cover?
The answers I got were somewhat amazing. The replies ranged from “I have a 1-year, 3-year, and 5-year business plans” to “Business plans are too complicated”. What an amazing variance!
So I ask a follow-up question:
so for those who said they don’t have a business plan, or a bizplan that is defunct, how do you know you’re successful at any given time?
The answers were as follows:
Such interesting responses there as well!
Realtors, it appears, have inverted the classic Jay-Z line, “I’m not a businessman, I’m a business, man!” A realtor is not a business, man, he’s a businessman.
This… has consequences.
Measuring Success or Failure
Startups and major corporations aren’t the only entities that need some sort of a business plan. In my view, every business of any size needs some sort of a plan. Even if it only lives inside the owner’s head, there has to be some sort of a plan that drives the business forward and measures success or failure.
Let’s say you do $1m in revenues in one year. That sounds absolutely fantastic, right? I mean, you’re in the money, baby! Time to party!
What if every single competitor of yours did $5m in revenues that same year. Still feeling successful?
Conversely, if your revenues are down 40%, but if your competitors are down 60%, maybe you’re not such a failure after all. Or if your revenues are down 20%, but your market share more than doubled, perhaps you’re not a failure.
The point is that it’s nearly impossible to measure success or failure without some sort of a business plan that contemplates what success and failure look like. A response like, “Hey, as long as I got some money in the bank” is the response of a businessman, not the response of a business, man.
Progress and Flexibility
Without some sort of a business plan that sets forth objectives, a path to those objectives, and some milestones along the way, I don’t know how one knows whether one is moving forward into the future, or regressing backwards. Since most businesses have multiple objectives and goals, it isn’t clear how one would know if making progress in one area while suffering setbacks in a different area is a good thing or a bad thing without some sort of a plan to compare against.
Furthermore, and even more importantly in some respects, when the unexpected occurs, and you need to make a change, how do you know if your reaction is good or bad? How do you know if you’re simply being reactive, a victim of circumstances, or if you’re at least being proactive, recognizing the changed circumstance, and modifying your plan to deal with contingencies? The former feels like being swept along in a storm, while the latter feels more like installing stormshutters. The former is emotional; the latter is rational. Businessmen may be emotional and still have money in the bank; a business must be rational if it’s to have sustained growth, success, and balance of present yield vs. future prospects.
I simply know of no way to anticipate needs without a plan in place. For example, suppose your sales are flat this quarter. What does that mean? If you have no plan, it may mean a great thing or it may mean a terrible disaster. Who knows?
If, on the other hand, your plan clearly specifies that your goal is to be up 20% in sales, then when confronted with a flat quarter, you can start looking at the rest of the plan. Perhaps you need to change some of your assumptions about growth, or conversion from your new website. That may mean you need to cut some expenses next quarter in anticipation of more bad times to come, or it may mean that you double up on your marketing investment because you think you’ve identified the problem that caused your quarter to go flat.
Conversely, if your plan called for being down no more than 15% in sales because you thought the quarter would be rough, then you might want to think about hiring more people, because results were better than expected.
None of this is possible, I think, without some sort of a plan. Without a plan, all you can do is react. And frankly, it might be too late by then.
What Planning Really Means
I know there are a lot of trainers, coaches, and programs that offer business plan writing to realtors. Um, go with ’em. Do whatever makes you comfortable. But jeez… write a plan. It doesn’t have to be complicated. It can be a one-page plan. There are no right and wrong ways to do a business plan, in my opinion.
Because business planning really means you’re thinking about the business. You’re taking a moment out, looking at your business as a whole, then in parts, then lifting your eyes and looking around you at the industry, competition, your market, the economic conditions, whatever, and thinking about your business. You’re identifying your strengths, your weaknesses, where you see opportunity, and where you see threats. You don’t need to do a fullblown SWOT analysis; you just need to think about them.
Since planning is thinking, you need not be bound by your business plan. Those things aren’t meant to be handcuffs on action. They’re meant to be guideposts as you descend into day-to-day operations and remind you what your goals were and how you were going to get there, and give you early warning signs if things aren’t working out as you thought. So change! But change proactively.
In fact, you don’t have to ever finish a business plan. Just try to write one. That alone will force you to think like a business, man — rather than like a businessman.