February 7th - 2012

Slow seasons in real estate call for business plan

It’s a field known for seasonal ups and downs and market shifts.

It’s a field known for seasonal ups and downs and market shifts.

Winter scene with snowAs many real estate professionals can attest, this line of work is often marked by lean seasons when market activity slows greatly. The dead of winter can present a challenge to even the most experienced real estate professional, who still has bills to pay and mouths to feed -- even when it seems no-one is house hunting.

If you earned your registration during a booming market in the past decade, the prospect of a downturn or slow season may seem overwhelming. The state of the economy can also play a role in determining whether a market is “soft” or slow at this time of year.

Experienced REALTORS® who have been through it many times offer some reassurance. They note that real estate has highs and lows -- just as the harvest has fertile and fallow seasons -- but having a plan is crucial to manage in lean times.

Dianne Usher of Toronto and Jan Provence of Muskoka have experienced their share of market ups and downs over the years. The key to success in real estate, they emphasize, is to treat it like a business.

“Having a business plan is the only way to succeed under any market conditions,” says Usher, a former OREA president who has worked in the field for 30 years.  She advises her sales staff -- especially newcomers -- to conduct formal business planning each year. Plans should outline in detail the goals salespeople want to achieve, how much income they need and how to earn it.

The plan should also include marketing activities and projected focus, prospecting and professional development. “It’s about setting a goal and then working back to figure out how to reach it,” she advises. “The plan must be detailed and you should revisit it often.”

Setting a budget is vital to a proper business plan, says Usher. As well, a savings plan set up early in your career can help you handle both taxes and lean times. “New people often get into trouble because they don’t put enough money away for contingencies like the HST, income tax or periods when you bring in very little.”

Usher advises REALTORS® to open separate bank accounts for savings and government repayments and to hire a good accountant. “It’s not good business to try to do it all yourself, either in terms of time management or expertise.”

In cottage country, winter is a slow time regardless of the state of the economy, says Provence. “Using a business plan, I‘ve been able to rely on my reserves for the past two winters, which have been extremely slow,” says the Muskoka REALTOR®, who has almost two decades of experience in the field.

Her business plan is quite detailed and includes provisions for the field’s peaks and valleys, perhaps more pronounced in areas known for recreational properties. “If you stick to your plan, you should be able to leave enough funds in your business accounts for the months when you bring in much less.” 

After a two-and-a-half year recession in her region, Provence says her reserves are low and she will need to cut back on extras. Instead of booking an expensive vacation down south, she is planning a week off at home, but still expects to enjoy the break. “My grandmother used to say that you cut your coat according to your cloth. Given the state of the world economy, it doesn’t matter what profession you’re in -- you need to be practical. That may mean cutting down on some of the fun stuff until things turn around.”

Regardless of the swings in the market, Provence plans to carry on as a professional. Going into the office every day, connecting with clients, friends and neighbours, and being seen in her community, are strategies she employs to lay the groundwork for busier times ahead.

“It’s important to treat every day as a workday and not to sit around moping about the economy,” she says. “There’s always something you can do to further your business.” 

The hard workers in her area are still making a living despite a tough economy and slow season, she adds. “If you disappear off the radar in tough times, it will take a long time to rebuild when the economy picks up again.”

Although Usher stresses the importance of planning for slow times, she believes opportunities exist in any market. She recalls fall 2008, when economists predicted a recession and some of her real estate colleagues left the field. However, others found it a great time to sell to investors and people who wanted to move up and take advantage of lower prices on more upscale homes.

“When there’s a slowdown or if you’re struggling a bit, you can always go back to your business plan and adjust it if it’s no longer realistic.”

Both Provence and Usher say they lacked a business plan at the start of their careers because back then it was not encouraged. Today, many brokerages offer formal training in business planning. “See what your firm offers, or even before you choose a firm, look at its professional development and ask specifically about business planning,” Usher advises.

Many resources are available to help today’s REALTOR®, notes Provence. Checking out various industry websites, connecting with your real estate board and networking with experienced colleagues may also yield tips and training on business planning and strategies to help you through the lean times so you’re ready for action when the market picks up again. 

Woman working on business planSix tips for business planning
Real estate is an entrepreneurial business that requires vision and goals. Here are six tips for business planning from real estate coach Rich Levin.

1. Respect that real estate is an actual business - To start and grow a successful business, you need to embrace the ideas of strategic planning and implementation. The good news is that with deliberate decisions, conscious effort, and persistence, you can make these your most valuable business skills.

2. Determine what you really want - Strategic planning and implementation require you to set some big goals. Choose what you want from your business. You might want to pay your bills, own a nice car, buy a house, take vacations or fund your retirement. Regardless of what you want, you must continually ask yourself: "Why do I want these things?" The “why” is the emotional driving force behind your success.

3. Determine your measures - Pick a reasonable amount of income. There are two parts to this. First, determine the sales volume you need to achieve that income. Then identify the activities needed to generate the leads and turn them into those sales.

4. Analyze your progress all the time - Look at those measures weekly. Take at least a half hour to look at your results and decide what is working and what isn’t. What do you need to adjust to make it work better? One note of caution here: Don’t base these judgments on activities but rather on results.

5. Make time for the people and activities you love - Too many real estate pros burn out and leave the industry because they fail to meet their goals and are overcome by the stresses of the job. You have to schedule time for yourself and honour that time, or the business will leak over into your whole life.

6. Create a schedule of your daily habits, and stick to it - Your daily habits will directly determine whether you meet your goals. Set aside one hour a week dedicated to each of these priorities: Contact people to make appointments, advance your use of technology, implement a mix of traditional and new marketing methods, contact your pending clients and listed sellers to update them, rehearse your presentations, think and strategize about your business.

For more details, visit www.richlevin.com.

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