Real estate investors should consider one thing before they even think about starting a company: learning how to write a business plan. Nothing, for that matter, will serve as a better compass for future reference. A well-devised business plan is entirely capable of guiding real estate investors on the path to success and keeping their actions in line with their goals. Even the best investors sometimes need a reminder as to why they are in the game.
It’s not a foregone conclusion to assume every real estate investor should know how to write a business plan. Yet, it is safe to assume that not everyone knows how to write a business plan that can actually contribute to the growth of a company.
I am convinced that the best business plans can help entrepreneurs for years, but they need to have the right elements in place to do so. If you want to learn how to start your own business off on the right foot, consider a sound business plan. In drafting a real estate business plan, be sure to include the following:
An Executive Summary
The executive summary is essentially an elevator pitch for your company and should include the following:
When drafting your executive summary, be sure to organize it in a concise manner; the more you can say with less, the better. Above all else, make each word count. This part of the business plan will provide people with a first impression, and shouldn’t be taken lightly.
It is also important to note that those starting a brand new business will not be able to provide as much information on their executive summary, especially in the growth section. If you haven’t had a chance to scale your business, there is no need to mention it here. If you fall under this category, highlight your experience and background rather than object growth data. It also wouldn’t hurt to include an explanation as to why you got started in your respective industry.
Immediately after the executive summary should be a description of the company. At this point, you will want to include an in-depth review of each individual element of the business, not excluding the company name itself. In fact, if you want to learn how to write a business plan that will have a lasting impact, think of this section as an extenuation of your elevator pitch. The idea is to paint a picture for readers; one that will leave them with a good understanding of your goals and why you deserve to be a part of this industry.
In drafting a company description, you will want to include the following:
It is important to remember that this description is as much for you as it is for others interested in learning more about your company. Use this section to clarify your intentions, as it will serve as a great reference in the future. At the very least, it will be a great reference in tough times, or when you need a reminder as to what you founded the company for in the first place.
Any attempt to learn how to write a business plan must include a bit of research on behalf of the company’s founder. If for nothing else, identifying market trends will illustrate your knowledge of the industry. Of particular importance, however, is the impact said data will have on the future of your company. The more you know about your market, the better equipped you will be to handle what comes next. You will want to make sure your market analysis has the following:
Organization & Management
Understanding the organizational structure of your company will help you write a more comprehensive business plan, and nowhere is the organizational composition more apparent in your business plan than this section. According to SBA.gov, it should include “your company’s organizational structure, details about the ownership of your company, profiles of your management team, and the qualifications of your board of directors.” Provide a detailed overview of the positions your business currently has, who is responsible for them and what they do. Again, this section should answer more questions than it asks.
Take this time to lay out how you intend to maintain your employees. Compensation and benefits packages should be included in each of your descriptions. Learning how to write a business plan requires entrepreneurs to think about how they will take care of those working under them.
Not surprisingly, this section is more for those on the outside looking in, as smaller businesses should already have a strong idea of who is doing what. Nonetheless, it is important to delineate who is in charge of doing what.
Services And/Or Products
A well-devised business plan should not focus solely on the infrastructure and internal components of a respective company. That said, a portion of your business plan should be dedicated to the products or services you intend to offer consumers. Don’t neglect to address the very reason you went into business in the first place.
This section of the business plan should provide viewers with a description of your product and/or service. Be sure to place an emphasis on the benefits your particular offerings provide for a respective market. Specifically, how does your product meet the needs of the demographic you are targeting? What reason, if any, would consumers choose what you have to offer over the competition?
Since most real estate investors offer more of a service than anything else, it is important to identify why the services you provide are better than others in the industry. Now is not the time to be humble; give readers a reason to want to work with you.
Any company offering a product must come up with a way to get it into the hands of consumers. As a real estate investor, however, your marketing strategies are contingent on whether or not you you know how to write a business plan that incorporates strategies to market yourself. While slightly different from marketing a product, the concept remains the same: increase the exposure of whatever it is you are trying to bring to the public. At this point in your business plan, identify how you intend to market yourself to those you want to provide a service for.
According to SBA.gov, “there is no single way to approach a marketing strategy; your strategy should be part of an ongoing business-evaluation process and unique to your company. However, there are common steps you can follow which will help you think through the direction and tactics you would like to use to drive sales and sustain customer loyalty.”
Finding a real estate investment property is crucial for any investor, and laying out the plans in this section will go a long way. Don’t for one second, think you can skip this section, as it will help you down the road more than you know.
Understanding how to write a business plan, real estate professional or not, is invaluable to any small business owner. Nothing that I am aware of has the power to put you on the path to success quite like a well written business plan.