In a recent post, I talked about the 7Ps that I thought business owners should be looking at, which led me to want to expand on the need for a plan and performance management.
An overwhelming number of real estate agencies still do not have a business plan. Here’s why I think they should, and my opinion on the key areas that set great companies apart from others.
The man does not plan to fail… but often fails to plan. Anecdotal evidence suggests that up to 80% of real estate agencies do not have formal business plans or budgets. However, every business will demonstrate some level of vision and leadership. Often this comes from an individual or a group of individuals at the top but ideally, and especially as the business grows, from people at all levels.
However, a business without a plan will often find itself adrift in a sea of mediocrity. Leaders must:
- show high levels of commitment to the cause; otherwise, their teams may lack focus
- re-evaluate, step back and look in the mirror – without cutting corners or misleading their businesses, employees or customers
- use their vision and look for new opportunities, different approaches and new ways of doing things; few big companies succeed doing what everyone else does.
As is the case with education, the journey never ends. Successful companies and strong leaders are always looking to grow and evolve.
Planning is the key to success
A good plan is GPS for your business. If asked to drive from Land’s End to John O’Groats, most people would program the destination into their GPS. As you travel, the navigation system will constantly make adjustments to ensure you stay on your intended route. The shortest route is in a straight line, the GPS does not wait until you are a hundred miles away to offer you a change! The same goes with a business plan.
All good business plans are written down, like a map. This makes it easy to share, track and review and makes it easier to stay on track.
For example, many real estate agency owners want to grow their business.
Keep in mind that there are really only four growth strategies:
Market penetration: Take your existing products and services and sell more of them in your existing market – essentially increasing your market share
Market development: Take your existing products and services, but sell them in new markets and territories – these can be new niche markets or new locations
Product development: Add new products and services and sell them to your existing market
Diversification: Take a new product or service and sell it to a new market.
Some of these strategies can be implemented using existing resources in your business, while others will require the development or acquisition of these skills. But they will all need a plan, the same way there needs to be a strategy to consolidate or exit the industry. In fact, without a plan, the latter can happen, but not in the way intended!
A good business plan takes effort and background research, but it’s an important part of the process because it involves looking in detail at your business and the factors that impact it:
Know your competition and your market.
A SWOT (strengths, weaknesses, opportunities and threats) analysis will help identify key aspects of the strategy and plan. You need to know all about your competitors so you can identify their strengths and weaknesses and apply yourself accordingly. The strongest global brands know almost as much about their competitors as they do about themselves. Look at the market in which you are operating or targeting. What is his size? What is its value ? What position do you currently hold there? What demographics apply to it? Is it really a market worth tapping into?
Check your goals. All goals should be SMART (specific, measurable, agreed or achievable, relevant, timed). If they don’t pass this test, readjust them so they pass. Gain the edge over your competition. Look for elements that are difficult for competitors to replicate. Think of the 80:20 rule: 80% or more of what most companies do is about the same as the competition. These are the 20% that make a company stand out. If your plan includes elements that your competitors can’t or would struggle to replicate, this could give you the edge.
Key Performance Indicators (KPIs) often get a bad rap but, provided they are SMART, they are, in my opinion, a good thing. KPIs for KPIs sake are nonsense, but knowing your business and what drives it can help shape future actions and strategy.
Create an action plan. Ideas without action or strategy without implementation is a waste of time. Brainstorm and write down specific, detailed tasks and actions that need to be completed to bring your plan to life. Make sure they follow SMART principles.
Monitor and revise. Take the satellite navigation approach to managing performance. In business, as in life, this is how you learn and improve. Having a blueprint lying around in a drawer and gathering dust is pointless – it should be a living, breathing document. The better the thought processes in the initial plan, the better your chances of success, but while you can build contingencies into any plan, situations change. A good plan that is regularly followed and reviewed makes it possible to adopt, adapt and improve, to stay on course and to succeed.
Involve your team. Creating and implementing a plan is a fantastic opportunity to work as a team, involve everyone in the creative process and assign responsibility for what is agreed upon and implemented.
Together, everyone achieves more. It may sound like a cliché, but great companies invariably have great teams where everyone, regardless of their role, plays their part towards common goals. This does not happen by chance. Your staff members are your most cherished resource – make sure they are also your most valuable resource:
Engage. Incredibly, I still see many companies largely ignoring their employees, not engaging with them, or helping them reach their full potential. This approach invariably means that the business itself will not reach its full potential.
Coach and train. Invest, especially time and effort. Children generally receive an adequate education within the school system, but they will achieve more if their parents take an interest in them, encourage them, show them and help them explore and learn. The same goes for the staff. Poor business people often say that they would rather do a task themselves than guide someone else due to lack of time. Then they wonder why their employees keep asking the same questions and never seem to improve. Also invest time in your own personal development.
Have high expectations. Once you have the right environment in place, you and your people have the right to demand performance. In fact, not having high expectations is guaranteed to lead to a culture of mediocrity.
Conduct reviews. Regular, well-conducted performance reviews are rare in the real estate industry, but they are extremely valuable as they provide an opportunity to offer recognition, praise and encouragement. They also give you the opportunity to tackle areas of poor performance which, if not addressed, will continue.
Performance reviews also provide a platform for agreeing actions for the coming period, including training needs. As with a job interview, the interviewee should be prepared with performance information and talk most of the time. A monthly 45-minute session with each staff member is a small price to pay, considering the performance boost it can generate.
Manage performance. Some companies still think that incentive-based compensation “manages” people, but money will never solve problems. Bad performers may earn less than good performers, but they may be happy with the status quo. High performers, on the other hand, are likely to get frustrated with underperforming colleagues and may think that you don’t care or that performing well isn’t important. A failure to manage performance will likely lead to lower standards, and in the end, it may be the right people who leave.
If you have the leadership, the vision, the plan and the people who can make it all happen, you still, of course, have to get your message across to customers – another article looms!
Michael S Day MBA FRICS FNAEA FARLA, is managing director of Integra Property Services and director of teclet.
Are you and your business above the seven Ps?