Building your Real Estate Business

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--What skills do you excel at (listings, buyer representation, networking, etc.)? --What technological resources do you have that create an advantage for you and your clients?

SWOT Analysis: Strengths

-Analyzing your current position involves 4 key areas of consideration: Strengths, Weaknesses, Opportunities, and Threats (SWOT). -Strengths are those aspects about you and your business that bring value and advantage to your vision. Strengths may be your own personal attributes, those of your teammates or partners, resources you have available, or capabilities you may use. Understanding your strengths allows you to set goals that leverage your advantages and improve your strengths. --What strengths do you bring to your career? --What personal capabilities make you an exceptional real estate professional? --What are your competitive advantages? --What's unique about you that attracts and keeps clients? --What education and training do you have? What designations and licenses do you hold? --What services do you provide that add value for your clients? --What resources do you bring to your business (capital and financial reserves, client lists, etc.)?

Vision and mission statements

-As the foundation of your business plan, you'll want to create a vision statement and a mission statement. You'll use to plan your goals and objectives, strategies and tactics (activities). -We've provided a chart explaining the differences between a vision statement and a mission statement.

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-Bill paying: If you're the broker, you're responsible for paying for office overhead, personal expenses, and transaction-related expenses. In addition, you must pay for technology, communications (phones, fax, computers, Internet, etc.), and transportation (car and other travel expenses). If you're an agent working under a broker, some of your overhead expenses may be covered by your broker, but many may be your own responsibility, such as commission splits with your firm. -Generating a profit: Profit is income in excess of all operating expenses. Expenses accrue daily. When you receive income, you must pay expenses before you can use the money for other things. -Budgeting: When the market shifts and business slows down, it is important to have a "cash stash" to help you make it through. You need to retain some profits to provide for lean times.

Your Vision, Your Mission

-Both your vision and your mission must be defined clearly and specifically before you can establish and work toward your goals. -You may have a vision in your mind right now, but have never put it into words or written it down. One way to create a written vision is to articulate your definition of success, both professionally and personally.

Con...

-C-Corporation- Formed as a separate legal entity from the shareholder(s), Chartered with the state, Holds legal rights independent of shareholders, Liability for actions of corporations generally not passed through to the shareholders, Ownership and holding of corporate shares are transferable to others, Managed by officers and generally a board of directors, Pays tax on taxable profits -S-Corporation- Similar to C-Corporation except for the method of taxation on profits and distributions of income, Taxable profits are passed through to shareholders and reported on individual tax returns, Shareholders may receive profit distributions

Time to Get Real

-Creating a vision enables you to have a focus, destination, and target, but it's also important to understand where you are right now and what tools you have at your immediate disposal. --What talents, skills, expertise, and benefits do you bring to your business? --What is it about your way of doing business that will provide value to your clients and customers? --What are the weaknesses you must overcome? --What obstacles might get in your way? -Answers to these questions will help form your value proposition. Your value proposition is what will attract and keep clients, and generate long-term success. --Are you: A real estate licensee who's part of a brokerage firm? A member of a local chapter of the National Association of REALTORS? An employee or an independent contractor? Closely scrutinized by your broker or self-directed? --Do you enjoy: Working under a broker, or would you rather be the broker yourself? Working solo or with a team? Managing others?

Who's in your sphere of influence?

-Family: Your family usually has the most vested interest in your success. -Friends: Your friends want to see you succeed and will provide support. -Past clients: Satisfied past clients are an excellent source of business referrals. Even if past clients have moved out of the area, stay in touch. They might move back one day, and they most certainly still know others in your market. The very best prospecting technique is to take great care of your current and past clients. -Past prospects: Even though someone may not have listed or bought with you previously, your excellent service may be a source for future leads. -Current prospects: Your current prospects are also sources of new referrals. Don't be afraid to ask. -social/casual acquaintances: Who do you know at your place of worship? In the PTA at your child's school? In your bowling league? At the gym? These social acquaintances may be excellent sources of business and/or referrals.

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-Financial forecasting and operations: Take into consideration the following elements: --Production: your day-to-day tasks and operational procedures --Promotion: the costs involved in marketing and advertising --Expenses: the costs of everything from office space and transportation, to technology, communications, and office supplies --Record keeping: paperwork and documentation procedures, including those required for compliance (e.g., transactional records) and those that will help you build your business (e.g., client relationship management software) --Financial management: accounting and financial tracking procedures --Responsibility: business policies, regulatory compliance, and risk management procedures. Even if you're a business of one, each of these components is vital in developing sound, ethical, and legal business practices, giving you the best chance of success.

A Vision Statement (Future Focus) / A Mission Statement (Present Focus)

-Function --Future Focus-Describes what the future looks like for you and your organization. Defines future results, achievements, and successes. --Present Focus- Identifies what you and your organizations stand for today. Defines your purpose, processes, and performances -Purpose --Future Focus- What do I want to achieve? What do I want to become over time? How will others see me in the future? What will be my reputation? --Present Focus- What do I do? What do I stand for? How do I conduct business? How do I treat customers, clients, and employees? How will I accomplish my vision?

What's your mission? What's your vision?

-It's been said that actions follow expectations. Before you develop a business plan, or figure out how many closings you'll need to earn a six-figure income, you must be able to see yourself successfully prospecting, listing properties, showing properties, and closing transactions. You must be able to envision yourself in the lifestyle you want, enjoying the fruits of your labors. You must be able to see yourself as the type of professional you want to be: respected, sought after, honored, and admired. "Dress for the job you want, not the job you have" is a common recommendation, but if you apply it to your mindset it means being able to envision that you've already achieved your dreams. -The first step in your business plan is to develop a clear understanding of 2 key elements: your vision and your mission.

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-Limited liability partnership (LLP)-Business interests are held by a small number of partners, function is similar to a general partnership but some partners may only have limited liability, formation may be restricted by state law to certain types of business, profits and losses are passed through to the partners -Limited liability Company (LLC)-blends elements of partnerships, function as a legal business entity registered with the state but considered unincorporated, considered a separate entity to reduce liability to individual owners, each member taxed individually like a partnership

Market segments

-Location: Develop expertise in specific neighborhoods or tracts. -Generations: Develop expertise in selling to seniors, first-time homebuyers, or other age-related segments (identifying age ranges of potential clients and knowing how to reach such generational segments can set you apart from your competitors). -Professions: Develop expertise in selling to attorneys, doctors, bankers. -Alternative choice markets: Develop expertise in working expired listings, For Sale by Owner (FSBO) properties, rent-to-own properties, and others. -Property types or lifestyles: Develop expertise in resort properties, vacation homes, luxury homes, investment properties, new homes, condos, farms and ranches, old other types. Note: that we don't say "go after," but "develop expertise." That's how you establish a market. By becoming g a knowledgeable expert who can provide a service no one else (or very few others) can.

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-Measurable: Your goals should include the ability to measure whether you've achieved the desired results. Such measurements must be objective and concrete, rather than subjective. Your measurements should also track your progress toward the goal. When you measure and track your progress, it helps you stay motivated and continue to move forward. For example, a measurable goal might look like: "I will acquire three new listings each month." -Attainable: Create goals in which each step leads to the next, and in which individual goals are attainable in the short term. As you link your short-term goals together, they should support your long-term goals. Set your long term goals high, but create a path that will allow you to attain your goals in a realistic timeframe that works for you and your business.

Offline activity: Take stock of your abundance mentality

-On your business plan worksheet, write out your understanding of what it means to you to have an abundance mentality. -What can you do in your business planning process to build and develop an abundance mentality? How will this help you create the business you desire? Examples include: -Building networks and finding people willing to help you -Reciprocating leads (finding leads for other professionals so that they will also find leads for you) -Adding value to your services -Creating new markets or new opportunities -Becoming an innovator

Cooperation, Not Competition

-One of the unique factors about the real estate business is that it's actually built a cooperation, not competition. In order to serve your clients and complete transactions, you must work with your competitors in a cooperative manner. When you represent sellers, for instance, you work with prospective buyers' brokers in order to achieve a win-win outcome, and you work cooperatively to smooth the bumps on the way to successful transactions. -The National Association of REALTORS (NAR) feels so strongly about the importance of cooperation within the real estate industry that it's outlined a code of ethics directly relating to cooperation between professionals. If you're a REALTOR, you agree to abide by the NAR Code of Ethics. If you're not, these principles are still an excellent benchmark to ensure a positive business environment. -Article 16 of the NAR Code of Ethics outlines the responsibilities of REALTORS toward other professionals in the industry.

Con...

-Paying taxes: You're both your own employer and your own employee. Paying taxes when you're self-employed is different than when you have a nine-to-five job and receive a weekly paycheck. Talk to your accountant about what this means for you and your business. The Internal Revenue Service (IRS) has resources you can use to learn about small business and taxes.

con...

-Planning for retirement: Since you're self-employed, you won't have the opportunities to pay into a corporate pension or retirement plan. This responsibility will fall to you. Make sure you plan for your retirement through a regular savings plan, individual retirement plan (IRA), or other retirement savings vehicle. SEP-IRAs are specifically geared toward self-employed individuals and allow you to put away much more than other plans, provided you generate enough income to do so! If you have a spouse, partner, or other source of income that provides for your living needs, you may be able to put a way a great deal more toward retirement.

Cont.,

-Realistic: Set your goals based on your strengths and your weaknesses. For example, if you're not very good at budgeting, create goals that take that weakness into consideration or that require you to build the skills necessary to overcome that weakness. -Timely: It's been said, and it's true: A goal is a dream with a deadline. Each goal (long term or short term) should have a time by which it must be accomplished. Deadlines create a sense of urgency and motivate you to achieve your goals.

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-SWOT analysis: Be realistic in assessing where you are right now. Develop an analysis of your strengths, your weaknesses, your opportunities, and the threats to those opportunities. Determine your value proposition, your core competencies, the competitive landscape (this won't be your focus, but you'll need to keep it in mind), and the areas in which you'll work: geographic, such as "West end of town" and specialties, such as "first-time home buyers." -End results: Determine how much net income you want to earn, and then calculate backward to your necessary gross income level. Determine the number of sales, listings, clients, and contacts you'll need to make on a daily or weekly basis. (You will be provided worksheets that will help you make these calculations.) -Branding: Create a vision of what you represent — your personal brand. Just as products have branding, so will you. What will you represent? How will clients and customers tell you apart from everyone else?

These groups fall into 3 basic categories

-Sphere of influence: These are people who know you personally and know that you provide real estate services. -Network: These people are additional contacts generated from your sphere of influence (e.g., friends of friends and family). These are the people who know people in your sphere of influence. -Cold contacts: These people are basically everyone else located in your geographic area, or to whom you have connections via your geographic area. This market will be the hardest and most expensive one to work, with the least chance for a short-term payoff. You can ignore this list and still be very successful. If you decide you need broader exposure, perhaps because your sphere of influence and network is all (e.g., you just moved into the area), you can obtain lead lists and contact sheets from a variety of sources. Note: Telephoning cold contacts requires adherence to federal telemarketing laws.

A Vision Statement (Future Focus) / A Mission Statement (Present Focus)

-Structure --Future Focus- Is communicated in clear and unambiguous terms. Is positive and inspiring --Present Focus- Contains purpose and values. Includes statements of being. Includes statements of being responsibility to clients, employees, community, shareholders, and so on.

Abundance mentality

-Successful real estate professionals view the world in a different light. They operate from what's been called an abundance mentality. They don't look at the world as a fixed set of potential clients, but as an open field of opportunity. With an abundance mentality, you can create your business plan based strictly on your own efforts, not the whims of the market or the behaviors of your competitors. This creates a vision for the future based on what you want to create, rather than taking what's already there from someone else. -In direct contrast with an abundance mentality is a scarcity mentality. Scarcity mentality asks, "How can I get my piece of the pie?" An abundance mentality asks, "How can I make the pie bigger?" or "How can I increase my market by adding new clients and helping them through my efforts?"

Which market are you in?

-The real estate industry can be incredibly competitive. depending on the economic climate and regional factors, it's typically either a "buyer's market" or "seller's market." What your business plan should help you do is to make it your market, no matter the conditions. -Competition is usually based on the premise that there's a limited supply, and each person wants to get his or her piece of the business. The business world uses the term "market share" to describe a portion of this limited supply. -A good business plan is built on solid information, so it's important for you to stay up to date on the current state of the real estate industry. -Visit the National Association of REALTORS website to review the latest research and statistics on the housing industry. You can also check out the Economist's' Outlook blog for daily updates on industry trends. Both are optional, but recommended.

Offline Activity: Your Why's, your Motivation

-This course isn't a passive educational course. It will require your involvement to get out of it what will serve you best and put yourself on the right path to developing a solid business plan. -To aid you in this endeavor, we've created a business plan worksheet that you'll use to write down ideas and respond to offline activities, such as the first one. -Tennis great Arthur Ashe famously said, "Start where you are, use what you have, do what you can." So, starting with where you are right now, write down your current business information. For instance: 1. Write down the reasons you got into the real estate business. Be honest with yourself, and document why you got into the business and what you wanted to get out of it when you began. 2. Write down what's currently motivating you in your business. What's keeping you going as a real estate professional?

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-Unlimited income: You saw the potential of making an excellent income through the commissions you earn by helping others buy and sell real estate. You realized that the harder (and smarter) you work, the more income you can make. You wanted write your own paycheck based on your efforts, perseverance, and tenacity. Ready for a sobering statistic? More than 80% of new licensees don't last two years in this business. There are many reasons for this, but the primary one is this: If you fail to plan, you plan to fail. Whatever your motivation for launching your business, success requires developing and executing a solid game plan. This will document your vision and mission, set goals for your business, and define the services you provide. Your plan will give you a structure from which you'll perform your daily activities, market properties, find clients, and generate sales. You'll know exactly how much you have to work to build the level of income you seek. You'll have a clear un

You, the Entrepreneur

-You are the president, CEO, marketing manager, IT director, the public relations manager, and the head of sales, for You, Inc., the most important company in the world. As a real estate professional, you've launched your own business, with all of the benefits and challenges that involves, and that makes you an entrepreneur. -Running your own business is, at its heart, the ultimate in freedom. You're creating something out of nothing: a business that can have meaning and influence in the lives of hundreds of individuals and families. -Skyscrapers have blueprints, championship football teams have game books, armies have battle plans, and successful entrepreneurs have well-formed business plans. -As an entrepreneur, your ability to plan your course of action and your understanding of your business will directly affect your success. This course will help you look at your business in new ways and help you determine the direction and the shape your business will take.

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-Your Vision: A clear picture of your future, including such details as the: --Outcomes you expect to achieve --Targets or objectives you want to reach --Details of your destination -Your Mission: A clear understanding of your business purpose, including: --What you stand for --How you will achieve your desired outcomes

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-Your business plan will serve as your roadmap or guide to enable you to achieve your goals and objectives, and treat your profession as just that: a profession. You'll refer to it again and again when you decide on your next course of action.

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-write down specific goals in your business plan. Have clear objectives about what you want to accomplish. -Develop a habit of self-discipline, and develop your business plan based on your consistent efforts and contributions.

Watch where you lean your ladder

Achieving a goal will have little meaning for you if where you end up isn't where you wanted to be. To avoid climbing a ladder and realizing it was leaning against the wrong wall, create goals that propel you to success based on your own personal motivators, including your core values.

You're in Charge of your success

As an entrepreneur, you're in charge of your own success. No one will give you business or make you do the work. Each of your actions (or inactions) is your sole responsibility. So, let's review your responsibilities as the leaser of your business. -Compliance: You're responsible for abiding by all federal and state laws regarding licensing, agency, trust fund handling, fair housing, contracts—anything that relates to your industry and real estate practice. Income generation: Your actions result in sales, and the number and dollar amount of those sales are relative to your personal production.

Creating your abundance mentality vision

As you create your business plan, below are some ideas that will help you create a vision that comes from an abundance mentality. -Create a vision for your business based solely on what you can do, what you can give, and what you can contribute. -Look at your competitors not as adversaries, but as colleagues in an ever-changing business climate. Find successful people and learn from what they're doing. And share with others what you've learned. -Commit to continuous improvement. Develop the habits of continually learning and continually being a student of the business. -Treat everyone ethically, and with integrity and honesty. -Express gratitude for what you have and what you can contribute. -Help others. The adage, "What goes around, comes around," is true in this business. -Focus on improving the overall industry and its reputation. President John F. Kennedy commented, "A rising tide lifts all the boats."

What's in a business plan?

As you proceed through your course, you'll be drafting your own business plan. Your plan requires a foundation of several key components, and each will require thoughtful effort. Allow yourself the time to create your business plan; discuss your plan with trusted mentors and advisors as you identify the following components of your plan: -Vision of the future: Start by creating a vision for what you want your business to become. Get a clear picture in your head, and focus on the type of business you want to create. What do you want to do? Where will your expertise lie? -Goals and objectives: A solid business plan derives its power and efficiency from set goals and objectives. Goals and objectives must be SMART: Specific, Measurable, Attainable, Realistic, and Timely.

Identifying your market

Before you begin promoting yourself and your business, you need to know who makes up your market. Who are the people to whom you will market your service? Which areas will you focus on? What types of properties will you focus on? Will you market purchases or rentals? Will they be low-end fixer-uppers or high-end estates? Are you going to focus on new homes or re-sales? Commercial or residential properties? Next, identify the groups to which you'll market and promote your business.

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By creating an abundance mentality-based business plan, you create a business whereby your efforts and your determination create your future, independent of your competition. You create an attitude that states: -The smarter and harder I work, the greater my success. -The more I produce, the more referrals I can obtain, which increases my market reach. -The more I give, the more I receive, and therefore the more I will give. -The more I can learn, the more I can share. -The more people I help, the more fans I can create who will spread the word for me. -If I need money, I will create the opportunities necessary to make money. -If I need clients, I will create the opportunities necessary to find clients. As you create a mental attitude of abundance, you'll see that your resources are actually unlimited, and are only bound by your efforts. You may create a business as big as your dreams. Your efforts will carry you.

3. Buyer's agent Chris isn't pleased with seller's agent Jonathan's response about Chris's client's request for repairs based on the home inspection report. Jonathan doesn't want to provide the seller with the repair request because he feels some of the requests are unreasonable. Which of the following is the best option for Chris when cooperating with Jonathan?

Chris should try to speak with Jonathan about what Jonathan feels is reasonable.

6. Luke and Mary are real estate agents who work for different brokerages. They both have a listing appointment with the same customer. Which term best describes this situation?

Competition

Develop concrete plans

Create concrete plans that will drive your business forward. Your business plan should leverage your vision statement, mission statement, and goals in order to generate 3 key strategies for your business: operational strategies, marketing strategies, and financial strategies. -Operational strategies: Policies and procedures, and business activities. -Marketing strategies: Advertising, networking, and promotion. -Financial strategies: expenses, investments, accounting.

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For example: --Article 16 REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients. (Amended 1/04) --Standard of Practice 16-4 REALTORS® shall not solicit a listing which is currently listed exclusively with another broker. However, if the listing broker, when asked by the REALTOR®, refuses to disclose the expiration date and nature of such listing; i.e., an exclusive right to sell, an exclusive agency, open listing, or other form of contractual agreement between the listing broker and the client, the REALTOR® may contact the owner to secure such information and may discuss the terms upon which the REALTOR® might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing exclusive listing. (Amended 1/94)

Goals are tangible

Goals statements aren't "if only" sentiments. They're realistic, tangible statements that focus your attention and direct your path. As mentioned, use this simple acronym to help you draft SMART goals: Specific, Measurable, Attainable, Realistic, and Timely. -Specific: When you write a goal, be as specific as possible, including detail. List who will be involved in achieving your goal, how you'll accomplish it, and set a time limit. You should also describe why the goal is important to you, because the motivations behind the goal will be just as important as the mechanics. For example, if your vision is to be a successful buyer's agent, one goal might be stated as: "I will achieve an Accredited Buyers Representative (ABR) designation by December of the current year."

8. Jim knows that in order to be successful in real estate, he must have an abundance mentality. Which of the following questions would demonstrate this thinking?

How can I make the pie bigger?

7. Chris is creating a business plan. What would abundance mentality in Chris's plan reference?

How he can grown his market

Business purpose

If you're like most real estate professionals, you got into this business because of one or more of the following key factors: -Independence: You wanted the chance to make a career on your own, set your own schedule, create your own clientele, and build your own success. -Service mindset: You wanted the chance to help people buy, sell, or lease properties and make a difference in their lives. You wanted the satisfaction of helping someone find their dream home, of building that skyscraper, or of improving a community. -Personal growth: You wanted to become a trusted advisor, someone from whom others seek guidance and advice. You wanted to help people, to educate them on the processes and steps involved in buying or selling real estate, and to provide them with the expertise necessary to guide them through the process, from contract to keys.

7. Julie is a real estate agent who wants to beat out her competition and take all their business. Which of the following best describes Julie?

Julie is using scarcity mentality

4. Larry is a real estate agent in a transaction with. Charlie, who works for a separate brokerage. Larry has a disagreement with Charlie regarding some items in a contract. What should Larry do to handle the situation with Charlie?

Larry should work for a win-win outcome for his client

6. Lillie is developing a solid business plan with which to run her business. Lillie knows she will need to address her financial situation. Which of the following is the most important factor for Lillie to consider regarding her finances?

Lillie will need to consider her monthly expenses to do business, including production and promotion costs.

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National Association of REALTORS -Mission Statement The core purpose of the NATIONAL ASSOCIATION OF REALTORS is to help its members become more profitable and successful.

Vision and mission statements: National Association of REALTORS

National Association of REALTORS -Vision Statement: The NATIONAL ASSOCIATION OF REALTORS strives to be the collective force influencing and shaping the real estate industry. It seeks to be the leading advocate of the right to own, use, and transfer real property; the acknowledged leader in developing standards for efficient, effective, and ethical real estate business practices; and valued by highly skilled real estate professionals and viewed by them as crucial to their success. Working on behalf of America's property owners, the NATIONAL ASSOCIATION OF REALTORS provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system, and the right to own, use, and transfer real property.

Analyzing market segments

Newcomers to the real estate business, when asked, "What's your market?" might be tempted to answer, "Everyone of course!" However, trying to be everything to everyone is a poor strategy, and doesn't serve anyone well. Savvy entrepreneurs narrow their focus to key market segments, concentrating their efforts, energy, and marketing dollars where they'll more easily pay off. Pick the low-hanging fruit first. With hundreds or thousands of other real estate professionals working in your area, what will set you apart? Business author and speaker Tom Peters once said, "You will become distinct, or you will be extinct." Which market segments will you target?

What are your goals?

Now that you've established a clear vision and analyzed your strengths and weaknesses, you're prepared to set goals that will give a roadmap for achieving your vision. These goals will be your foundation to creating your business plan.

Benefits of owning a business

Of course, owning a business comes with benefits in addition to responsibilities. -Autonomy: You have the freedom to be in charge of your own success. -Flexibility of Hours: You can work when you want (keeping in mind the needs of your clients and your marketplace). But consider that your family is also your client. If you receive a call requesting a showing at the same time as your daughter's soccer game, you can schedule it around that very important client meeting. -Creating your own vision: you can help others and create something out of nothing, which increases your self-esteem and personal satisfaction. -Income potential: You can make as much money as your efforts and decisions dictate.

SWOT Analysis: opportunities

Opportunities are those facts or situations that you may use as a guide to achieve your goals. It takes research and experience to recognize the potential around you. When you see opportunities, you can optimize your strengths to achieve success. -What market potential do you have? -Which areas in your market are ripe for development or are being underserved? -What technological advancements would give you a competitive advantage? -What ideas or innovations do you have that can jumpstart or improve your business? -What partnerships or connections do you have that would be an advantage?

Vision and Mission Statements: ABC Real Estate

Organization: ABC Real Estate Vision Statement: Position ourselves as the ideal solution for real estate, creating healthy relationships that demonstrate the value of our business. By accomplishing this, we contribute to the prosperity of associates, the company, and our surroundings. Mission Statement: Exceed expectations within the given lifestyle. With integrity, we stand for the welfare of our clients, upholding the values of our corporate philosophy. Through those ideals, our achievements are reflected in the community we inhabit.

Vision and Mission Statement: Stewart Title

Organization: Stewart Title Insurance Vision Statement: Be the global leader insuring, managing, and supporting the real estate transaction. Mission Statement: Deliver a magnificent customer experience through innovation in the real estate transaction process.

1. Thad is planning his business and wants to make sure he uses abundance mentality. Which of the following is an example of abundance mentality?

Taking classes to achieve advanced certifications

Your business plan focus

The focus of your business plan shouldn't be on what you sell, but on how you sell. Marketing is all about promoting: -Yourself -Your services -your properties -Your expertise -Your business Everything you do during the day relates directly to how well you market.

Business entity types

The type of business entity you create will vary based on your goals and objectives. If in doubt, consult with legal counsel and tax advisors to determine which type is right for you. -Sole proprietorship-basic level business entity, unincorporated, independent contractor, single person (or marred couple) holds ownership and bears all of the liability risks, taxable profits are reported on personal income tax returns -General partnership-business interests held by a small number of partners, all partners share liability risks, partners distribute profits/losses according to percentage of ownership, taxable profits pass through to partners and reported on own individual income tax returns

SWOT Analysis: threats

Threats are external factors that may require additional in order for you to achieve your vision. They're not necessarily the boogie man, simply hurdles to overcome. Identifying potential issues in advance will help you maneuver around them or know how to counter them if and when they occur. -What are the current market and economic conditions in your area? -What competitive pressures do you face in your market area? -What negative publicity or impressions must you overcome? -What are the license requirements for your state (real estate licenses, business licenses, etc.)? -What federal and state laws must you comply with in order to do business (fair housing laws, agency laws, contract laws, license laws, etc.)? -What ethical standards must you follow (NAR Code of Ethics, etc.)? Honest self-analysis helps you determine your course and allows you to construct a plan that's workable for you.

5. Tim is a new licensee who's excited to get started on his business. Which of the following is the best option for Tim to have ready for running his business?

Tim should have a business plan in place

Analyze your geographic market

To begin analyzing your geographic market, start with a detailed market analysis. This means doing your homework and learning all you can about your geographic area and what's happening in your real estate market. What are the current economic conditions? Are there municipal or governmental pressures on the market? The factors: -Business environment -Natural environment -Political environment -Mortgage climate and interest rates -Housing availability -Development activity (new homes springing up) -Sales rates (including short sales, foreclosures, bank owned properties, etc.) -Property values -Community resources (parks and recreation departments, police, fire, etc) -Community improvements -Employment availability

What are your vision and mission statements?

To see how your vision statement and mission statement drive your business plan and achievements, study the chart provided. GOALS -Operational Strategies: Policies and procedures, and Business Activities. -Marketing Strategies: Advertising, Networking, Promotion. -Financial Strategies: Expenses, Investments, and Accounting.

SWOT Analysis: weaknesses

Weaknesses are aspects that need to be overcome to achieve your vision. Honesty in this area will help you to assess your current situation in a true light and set achievable goals. With dedication, you can often turn weaknesses into strengths. -Where are the gaps in your personal capabilities or competencies? -What about your business would some find disadvantageous? -What are your personal vulnerabilities? -What skills and knowledge are you lacking that keeps you from obtaining your vision? -What additional licenses or education do you need (a broker's license, etc.)? -What tangible resources do you lack that are required to attain your vision (capital and financial reserves, office location, technology, etc.)? -What business resources do you currently lack (client lists, a large network of contacts, etc.)?

3. Jeff wants to strengthen his position when selling real estate. Answers to which of the following questions will allow him to set goals?

What are your competitive advantages?

5. Jeff wants to strengthen his position when selling real estate. Answers to which of the following questions will allow him to set goals?

What are your competitive advantages?

Operational strategies

Whenever you establish a new business, ask yourself what type of business you'll be creating. How will your business be organized and structured? What business will you conduct? The first section of your business plan should be an overview of your operational strategies and should include: -Background information about yourself -A written mission statement -A description of your services (general business activities) -The key values that drive your business -The type of business entity that you want to establish (e.g., sole proprietorship, general partnership, limited partnership, limited liability corporation) -Your value proposition (what sets you apart from your competitors, and what gives you a competitive advantage) -A description of the services you offer

4. Ralph is new to real estate and wants his business to run effectively. Which of the following should Ralph consider as part of his business plan?

Which hours he will be available to his prospects and clients

Cont...

You'll have a clear understanding of what it takes, in terms of time and money to achieve your objectives.

10. Which of the following is a key factor of being your own boss as a real estate broker?

You're able to become a trusted advisor

So...Why planning?

Your planning process gives you a roadmap for success, but even that may require a mindset adjustment. Developing your plan isn't drudgery; it's an exciting and engaging process where you can dream big, set your goals, and the steps to achieve them so that your plan becomes your reality. Your business plan must be carefully constructed, starting with your vision, goals, and desires for what you want your business to become.

Analyze your sphere of influence

Your sphere of influence is crucial to your business. The goal of marketing to your sphere of influence is to inspire those in your sphere to become supportive of your real estate business and interested in helping you become successful.

Cont....

Your success or failure is not dependent on market conditions or competitors. In fact, your success doesn't mean that your competitors must fail. As you create a positive, ethical business environment, you affect others in the industry in a positive way, thereby increasing the industry as a whole. You make the pie bigger.

2. Which of the following is the best option for how a SWOT analysis is used?

a SWOT analysis is an assessment of the current situation

5. Which of the following is true as it relates to a business plan?

a business plan establishes the goals for the business

10. Which of the following is true of goal setting?

a goal must be specific and measurable

5. Which of the following best option describes a mission statement?

a mission statement is a clear idea of what will drive the business plan and the achievement of goals

1. What's the term for creating a unique identity in the marketplace to stand out from the competition?

branding

1. Millie, a real estate agent, is creating a business by using an abundance mentality. Which of the following is the best option for Millie that uses abundance mentality thinking?

commit to continuous improvement

7. Lydia and David, who work for different brokerages, both list properties on the same block and hold open houses on the same weekend. Which of the following is the best term for Lydia and David's relationship?

competitors

1. What's the term for a licensee's requirement to learn and keep current on laws and regulations?

compliance

8. Which of the following is a component of creating your own vision when you run your own business?

creating something from nothing

3. Which of the following is a good example of what's included in a mission statement?

definition of the organization today

9. Which of the following will help create an abundance mentality?

do an excellent job for clients, anticipating future referrals

7. Financial strategies that drive a business include ___.

expenses

6. Susie wants to run her own real estate brokerage to be her own boss. Which of the following is a benefit of being the boss?

flexible work hours

8. Tad is an independent contractor licensee running his own real estate business within XYZ Brokerage, which is owned by Bill C. Which of the following is one of Tad's responsibilities?

generating revenue

9. Which of the following is a component of a business plan?

goals and objectives

Which of the following will lead to a successful business plan?

having an abundance mentality

2. Jim wants to become a respected real estate professional in his market. For business planning purposes, what's this called?

his mission

8. Tristan is a real estate agent and wants to build and develop a solid business plan for himself. Which of the following will help Tristan get on the right path?

knowing the motivation of why he's in business as a real estate agent

6. What does a vision statement do?

lays out what an organization envisions for its future

9. In SWOT analysis, which of the following might be a threat to your business plan?

new city ordinance

4. Lucy wants to earn as many opportunities as she can while selling real estate. Which of the following best describes an opportunity?

opportunity optimizes your strengths for business gain

2. The NAR Code of Ethics, Article 16, states REALTORS® should do which of the following?

respect the exclusive representation or brokerage relationship of others

9. Tim believes that the world has a fixed set of potential clients. What kind of perspective does Tim's belief describe?

scarcity mentality

3. Which of the following would be best to include in a business plan?

the amount of income required to meet objectives

10. Which of the following is a reason for a business plan?

to shape the course of your business

2. Sally is a real estate agent focused on creating a business plan with a vision of abundance mentality. Which of the following is an example of abundance mentality?

treat everyone with integrity

4. Analyzing your current position involves 4 key areas, which together are called a SWOT analysis. What's one of those areas?

weaknesses

10. You're completing the business plan worksheet. Which item is included on the worksheet to help you get on track?

your current position