In this blog we discuss The Buildify Method’s approach to putting together a functional business plan along with the different business systems that are used in an effective business plan for start-ups, fast growing companies, tech companies, and even large businesses: How to Build a Functional Business Plan.
Welcome! You’re about to read original content from The Buildify Method. As a nationally recognized business consultant, coach, and speaker, Aaron Keith is passionate about supporting the entrepreneur community by sharing his knowledge gained from coaching over 10,000 entrepreneurs in nearly 20 years. Companies ranging from billion dollar enterprises and celebrities, all the way to main street and small start-ups. We are committed to helping entrepreneurs take a business from one level to another. We have everything from a podcast to coaching programs, and software.
Today we are going to dive in and work on very specific performance-based systems and the importance of a business plan. Aaron has been coaching and consulting companies for about 20 years and has coached over 10,000 companies from around the world. We also share some information about some systems and processes that have helped all size companies, big and small.
The first topic is goals. Goal setting is absolutely critical, but it’s not just goal setting. It’s the systems behind the goals. The first system that comprises a proper business plan or an effective business plan is called a sales goal breakdown. Your sales goal breakdown is a document that takes your sales goal and breaks it down into minute detail.
Why is this needed? It’s needed so that your brain latches on. There’s a system, and there’s your brain. You want systems to impact your brain. Your brain is what causes performance. Just having a system on your computer isn’t going to do anything for you. Having a system that you’re interacting with causes the brain to move differently, which causes different actions, which causes different results.
Let’s focus on the system first. Here’s how you want to set up your sales goal breakdown document. First, the very top should have your sales volume. From your sales volume, that’s going to break down what your average sales price is. Once you have your annual sales price, it’s going to break down the number of units you need to sell per year.
So that first chunk is annual sales volume, average sales price, and number of units sold. Now, the next section is actually a little more important. It breaks it down for the month. So it’s going to show you, this is how much sales volume you need to do for the month. Then, from there, it’s going to reduce it again and keep breaking it down.
It’s going to then show you how many units you need to sell from the number of units you have to sell per month. It’s going to say how many active customers you need to be working with each month. From there, it’s going to reduce again and show you how many appointments you have to go on to get that number of active customers. Once we know how many appointments you have to go on, we reduce again, down to leads.
That way, from start to finish, you know how many leads you need to convert to appointments. And that many appointments convert to active buyers and sellers. This many buyers and sellers will close this many transactions per month. Don’t stress if this was too fast; we have a resource you can use that breaks it down for you.
Business Numbers are Critical
It is critical that you know these numbers. Why do you need to know these numbers?
If you don’t know these numbers, then your brain is not latched on to what you have to produce and cause in the world. Being present to what you need to produce is absolutely critical to increasing your performance as a real estate agent, as an entrepreneur. This document directly impacts your brain and causes you to perform at a higher level because you intimately know your numbers.
How do I know if the sales goal I set is too large?
If last year you did 20 million, don’t set this year’s goal at 100 million. If your goal is too large, there might be such a large disparity between here and there, that your brain can’t latch onto it as real. It’s too conceptual. You do not want that. You want to set a goal that should intimidate you, it should scare you. So if you did 20 million last year, maybe set your goal at 40 million or 50 million- doubling that business. That works.
Your goal should scare you a little bit but your brain should be thinking that it’s possible. That’s a good goal.
On the other side, you don’t want to play too small. You did 20 million last year, doing 25 million this year is not a goal; it’s too small. If you want ideal human performance, you need to cause stress or pressure to cause you to grow. It’s just like working out. If you work out with a 5 lb. weight all year, it’s not causing any stress on the body. The body doesn’t have to adapt, hence you don’t grow muscle. Your brain and your performance are the same way. There has to be some degree of stress or pressure on you for you to take yourself to the next level as an entrepreneur, and it’s why you need to learn How to Build a Functional Business Plan.
The Personal Calendar
This next system is critical for every entrepreneur, whether you’re in real estate, it doesn’t matter. This is a really critical system that we all have to master. It is also a system most of us need to improve, regardless of how many years you’ve been in business. This system is scheduling and task management.
Everything that matters to you needs to be scheduled. The reoccur button needs to be set with no ending. Your personal schedule is designed to support your business in some way. A lot of your personal needs set you up so that when you’re in your business you’re performing at your best. Examples are haircuts, massages, facials, time off, vacations, date night, or just personal time where you’re just off the clock. I strongly recommend going into your calendar for the year and putting in all your vacations, your workouts, meditation time, date night, and all those things that matter to you so that you’ve seat a framework around your life that supports you.
That creates balance. When you have balance in your calendar, that balance gives you capacity. Capacity is critical. The more capacity you have, the more you have room to grow and expand and take on more. So that’s the personal calendar.
Again, anything that matters to you must be in the business calendar. There are a couple of things that are absolutely important that are nonnegotiable. They must be in your calendar.
First is business development time. Your business development time is that time where you’re working on your business with no interruptions. Your cell phone and emails are off and you are just cranking away on your business. Your business development time is when you get to work on your company and not in your company. That’s how your business grows and move to the next level.
You can’t just sit by a tree and wait for an apple to fall. You need to water the tree, prune the tree and eventually the tree will produce an apple. Most of you want clients, but you’re not taking care of the things that produce clients. Your calendar is one of the primary systems that remind you when and how frequently to do those actions. Your business development time is one of those main actions.
Marketing and Lead Time
All marketing and lead generation time must be built into your calendar. It should be reoccurred for the rest of the times. You need a market for the rest of your career; that doesn’t change. The calendar must include when you make phone calls, when you do networking, when you send out newsletters, videos and all the different marketing actions that you have. Make sure it is recurring and is a routine.
If you’re interested in performance, you want to have things in your calendar. When they become routine, you’re very effective. You want your week to be a routine that has all the things in it that matter to you. One of the things that has to be in there is your finances, your budget. Critical aspects also include when you’re doing your marketing and when you’re working on your business.
Questions on Calendaring
What are some of the questions we have around calendaring?
The number one question that we’ve got, is when is the best time to do my marketing and lead gen activities? The best time that I’ve found, for real estate, is before 11am-your mornings. After around 11am, your clients are going to start contacting you. Your mornings are more for you and working on your business than on your client. Our recommendation is that you schedule all of your marketing time before 11am.
Your calendar and task management are heads and tails of the same coin. They very much mesh together and come together in a unified system. Here’s the way I want you to set up your tasks. Number one is that you should have an Excel spreadsheet or Word document or some kind of technology that allows you to organize your tasks in the following fashion. First I want to see the task. Next column should be priority level (1, 2, or 3 based on if it needs to be done today, next couple of days, or next year). Then, we have the date the task needs to be completed by, followed by who is responsible for taking that action. In my companies we use Excel and Microsoft OneDrive, so I can see everybody’s tasks. It allows me to add things for all of my staff’s to-do. It’s shared so everybody can see everyone else’s to-do list. I recommend doing the same system for projects. Have a to-do list and a project list.
While a to-do list is a one-time action, a project list requires multiple occasions to get things done. The project list can be a list of things you are one day going to get around to; it is not a to-do list. It’s more of a holding or capture tool. Your calendar is actually your to-do list of what you’re going to get around to doing.
In the morning, I recommend having a calendar to occasion to look at your calendar and deal with your to-do items and take them from your to-do list and plug it into your calendar. This way, there is space and time dedicated to doing the task.
People asked how they can better use their to-do list. I think it was covered by saying the to-do list is a capture tool and the calendar is the real to-do list.
No we’re talking about performance-based systems. And we’re talking about the plan that embodies or encompasses a lot of these systems. So, the next main system that I want to move into are often systems that aren’t talked about; they aren’t addressed by a lot of entrepreneurs. It is absolutely critical that your business plan has a business budget and a personal budget.
How does your budget impact your company? Whether you’re a brand new real estate agent who has never done a transaction, or you have a team of 60, you absolutely have to manage your budget.
Let’s start with your personal budget. Your personal budget impacts your business budget because your business budget has to pay your personal budget. If your personal budget is wrong, then your business budget is wrong. Then your sales goals are wrong because your sales goals have to make enough money to pay your business budget. Your business budget has to pay your personal budget and it gets worse.
If your personal budget is off it affects the business budget, if the business budget is off it affects the sales goal. If your sales goal is off, your entire business plan is off because your business plan is predicated on generating enough money to run the company. So this is the little rock at the bottom that has a huge cascading effect across your company. And I get that most of us were not taught a lot about money.
My finance coach sat down with me and really taught me about finances years ago. So I am passionate that entrepreneurs learn about this topic. If you want to email me directly, I’ll send you some books that are very, very good at teaching you about finance and budgeting.
So, let’s go over some of the thing we have in our personal budget. You should have the following in there: travel, cash reserves for a rainy day, and another line item for investment and retirement. Let’s just focus on these three because they are variable.
Your travel budget can be $50 or $50,000. You need to set real numbers around what you want your travel budget to be, what you want your cash reserves to be and what you want your investments and retirement to be.
You may need to meet with a financial advisor or do some research. Take some time to start putting some numbers in the budget around these line items because they vary so greatly. They’ll have a massive impact on your business budget, and then later on your sales goal.
Next we will look at the business budget. You need to have taxes built into your business budget. Business reserves need to be set aside as well as profit, our fixed expenses and variable expenses.
What should I use to manage my money?
For your business and your personal, I would recommend using QuickBooks. I would not use QuickBooks online, get QuickBooks desktop. They do not function the same and the online version has some glitches. You can open a company for your business and another for your personal. You can open as many businesses as you want in QuickBooks. That way, your business and your personal both reside there; that’s important. And QuickBooks is very inexpensive.
Second is budgeting. The QuickBooks budget and most accounting software budgeting system do not work perfectly. You want to use Excel. It makes it very simple to track your budget, your actual and your difference.
Lead Source Breakdown
We are starting to acquire more and more of our business systems. The next one I want to look at is called a lead source breakdown. What is a lead source breakdown? It’s absolutely critical that you understand where you want your leads to come from and how many leads from each one of those sources.
Your first system was the sales goal breakdown and it broke down all of the aspects of your sales goal. And the last aspect of it was how many leads you need per month and per year. That’s how these two connect. We know how many leads we need per month.
Your lead source breakdown then starts to take these leads that we need per month and break it down by the source. Say you need 25 leads a month. Your lead source breakdown is going to show you that you need five leads from business alliances, three leads from online, and eight leads from your database. That way you can start to predict where you want your business to come from.
This is where you get to impact how your business functions.
What are some of the key sources your leads should be coming from in a successful real estate business?
If this was my company, these would be my top pillars:
-Business alliances (CPA, wealth manager, architect, divorce attorney, interior designer, etc.)
-Sphere (my database-absolutely critical to the growth and development of your company)
-Networking (another big, big, big pillar)
-Open houses (great way of bringing in new business)
Now we need a marketing plan that’s going to produce all those leads. I’ve worked with and coached over 10,000 companies from around the United States. Most businesses do not have a marketing plan that they can hand me. Your marketing plan should be something printable. You should be able to touch it and it has to do a couple of things.
It needs to look at all of the marketing actions and the frequency and duration of those actions. Your marketing plan is the absolute most important thing that’s going to generate new leads. If you know how many leads and you know the sources of those leads, your marketing plan is designed to bring you those leads from those sources. This is something that you’re going to have to spend some time building out.
We have a Buildify Business Plan and inside that we have our marketing plan.
What are the biggest challenges you see with real estate agents in their marketing?
There are a couple of them. I would say the size of your database is a huge challenge. So many of you reading need to do a little gut check and ask yourself if your database is actually large enough to fulfill on the sales goal that you set. So you need to get out there, meet some new people, start networking, join some groups and just be out in the world more.
That is one of the number one challenges; that people aren’t setting a KPI (key performance indicator) around how many new people they need to bring in per week, per month, per quarter, per year of your business to fulfill all of your sales goals.
The next is consistency. A lot of us are just not super consistent when it comes to marketing. When your business is going great and moving fast and furious you stop marketing. Then when your escrows start to close everything gets calm and you realize you haven’t been marketing in weeks.
So there’s this up and down cycle to your marketing actions. Consistency comes back to your calendar. If marketing is in your calendar, it’ll solve that.
Most of you don’t have a plan. If you had a solid plan followed consistently, your results would be spectacular.
Lead Tracking Form
The lead tracking form is another system we have at Buildify. It’s a beautiful document and it tracks two specific things. It attracts the volume of the leads that are brought in and the source of those leads. Your lead tracking form should break down the date of the lead so that we can see how many leads you brought in per month and the source of those leads and where they came in. It’s also going to track your conversion ratio. Most entrepreneurs don’t know their lead conversion ratio.
What if I’m not bringing in enough leads each month?
If you’re not bringing in enough leads each month, it’s most likely because you’re not following your marketing plan. That is the system that generates leads. If you’re using a lead tracking form, you’ll be able to see where the leads are coming from. This tells you a couple of things. It also gives you ROI (return on investment) and it gives you ROT (return on time).
If you’re spending a lot of time on your database and only getting a few leads, something’s off. This is a very important feedback mechanism. It’s giving you information around your performance and performance of the systems that encapsulate it.
The Pipeline Report
The last system we have is a pipeline report. Your pipeline report is also one of the primary systems that make up your business plan. We keep it very simple and structured. Your pipeline report is tracking by month and by quarter. So the way we structured the Buildify pipeline report, it shows your production, all your buyer and sellers that you’re working with by month and by quarter. You can see how much sales volume you have scheduled to come in per month and per quarter against your goals.
Your pipeline report is designed to hold you accountable to your production. Most of us are numb to our numbers. We are not paying attention to the goal. Real estate is one of those businesses you need to ahead of your company, dealing with the month you’re in isn’t going to impact anything.
The pipeline report will show you in real time how much you have coming in per month per quarter against your goal and it causes performance. It gets you engaged and motivated. That’s why the pipeline report is one of our primary systems. It’s foundational and critical.
How often should we be looking at our pipeline report?
Good question! Your pipeline report is something that you should be looking at on a daily basis, even just for a few minutes. Just a glance so you’re always staying present. For those of you that have assistants, your assistant would be the one maintaining your lead tracking form. They’re going to maintain your pipeline report for you. This is not just for the lead agent or the owner. If you have a team, every agent on your team needs the system we’ve mentioned today. Make sure each agent has their own documents and they need to be discussed at weekly team meetings.
They are designed for an entrepreneur and real estate agent to perform at a higher level.
Another question asked was “How will this help with the up and down cycle of my business?”
Your pipeline is keeping your brain out ahead of the business. Many get enthralled with the day to day and stop marketing. They stop focusing on the goal, which diminishes your intention. Every morning when you look at your pipeline report, you’re staying present to where you’re going, where you’re supposed to be. Intentionality increases focus and your commitment and actions follow suit. So you end up taking more action, and more importantly intentional action.
So your performance as an entrepreneur changes because the pipeline’s impacting your brain, it’s impacting your thinking and your focus.
Look at your notes and make sure that you have the following in your business plan.
- Sales goal breakdown (documents breaking down your sales goal in granular detail)
- Business Budget and Personal Budget (finances managed with integrity)
- Lead Source Breakdown (breakdown the source of those leads and where you want those leads to come from)
- Marketing Plan (core system to generate those leads in those key areas)
- Lead Tracking Form (track those leads based on where we wanted them to come from)
- Pipeline Report (going to track active customers-buyers and sellers, how much money coming in per month against monthly and quarterly goals)
- These are some of the core systems that make up your business plan.
We’re committed that you take your business from one level to another using the Buildify processes and systems designed to help you do that. So here’s what we recommend- visit Buildifysystems.com. At the top of the page you’ll see ‘Business Plan’. We have the gold standard of business plans in the real estate industry. Our business plan is not just a comprehensive, interactive business plan. It’s very simple to put together, we walk you step by step. It also comes with a suite of performance based systems, most of which we spoke about today.
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