How to Review Your Last Year in Real Estate to Set Goals for the Next
This is the first in a short series designed to provide you with a framework, tools and downloads to review your real estate or note business last year and plan for your business for the coming year.
One of the biggest mistakes I see people make when announcing New Year’s goals and resolutions is that they’ve failed to fully analyze their business from the previous year.
Don’t do this.
If you try to set real estate goals without the information you need about your past performance you’re murdering your chance of succeeding with your new plan. In this post you’ll learn why and how to review your year and you’ll get tools for doing it well.
Open up a new document or gab a pad and pen and let’s get to work creating your upcoming year.
Step 1: Gather your critical business stats
If you’ve never done a deal before that doesn’t mean you skip this step. If you’re new you’re going to use some guesstimates and available market info. You can’t proceed without a baseline don’t skip this.
The first step in making goals and plans in your real estate business is to gather all deal related information from last year. What’s deal related info? Its everything that contributed to the deals you did (or didn’t do). Here are the questions we need to be able to answer:
- How many deals did I close?
- Who were the parties involved in those deals?
- How did I first find or how was I first introduced to the above-mentioned parties?
This is a great start… its also the bare minimum that you can proceed with. It would be waaaay better if you also answered the following questions.
- How many leads did I get last year?
- Group the leads by source.
- How many contracts or offers did I make?
- How many of the offers made it to escrow (or similar)?
- How many deals closed and what was the value of each?
And finally if you’re a real pro then you should also get together your activity (output) or marketing investment (expanse) information:
- List all the types of prospecting you did
- Estimate the amount of time you spent on each prospecting activity (be realistic dammit). I suggest you pull out a calendar and review it month by month. You’ll be amazed at what comes back to you. Of course it would be better if you tracked last year like you will this year….
- Gather and have ready your marketing expenses
Step 2: Add your stats to a spreadsheet so you can analyze your business
I’ve created 2 worksheets that you can use to layout all the deals you did last year so that you can identify your strengths and weaknesses and so you can get an honest look at your business.
I also created a video to show you how to use one.
These worksheets will help you get an honest look at where your deals are coming from.
The first worksheet covers the basic requirements (1-3) that I listed for you above. I built it as a Google Drive template (free, easy to use) so you’ll need to be signed in to your google account to use it. This worksheet will help you get a real look at where your deals are coming from both in terms of lead source and by customer or client.
It’s called the “Real Estate Transaction Tracker”
The second worksheet will give you insight into the month by month numbers in your business but more importantly than that it will let you see the ratios that you have in your funnel so you can identify the things that are holding you back.
Not enough leads?
Use These Worksheets to Set Your Real Estate Goals
The exercises I’ve asked you to do above are the first steps in your annual planning and goal setting.
If you have no numbers because you are new to the business…
If you’re in a position where you have no numbers to look at yet then its time to take an honest look at yourself and your activities.
What has prevented you from doing your first deal? Is it a lack of knowledge? Is it capital? Is it that you really just didn’t try?
In most cases if you have been poking around at the real estate or note business and you have yet to do a single deal, then your problem is FEAR.
Your problem is probably that you’re not taking bold action because you’re afraid. Most of the time when you’re afraid its because there’s something that you don’t understand. Ignorance breeds confusion breeds fear. Fear kills motivation and activity.
Its possible that you still need to learn the business. If that’s the case then make a goal for your education.
If the truth is that you’ve already learned everything that you need to and since then you’ve been lazy or afraid then over the next posts in this series I hope we can help you get past that with a real actionable plan.
What are you going to do this year to make your real estate or note business more prosperous and more productive than last year?
That’s where my thoughts turn each New Year’s Day.
If you’re a success minded individual then I’d wager that this is where your thoughts are also. (If you’re reading this later in the year then all is not lost. Its never too late to make a plan.)
Your biggest wins in business and life come when you plan, execute, review, and repeat.
How you plan can mean the difference between failing and succeeding with your goals.
Open up a new document or pull out a pad and pen and let’s design your success for the coming year.
In the previous goals post I asked you to gather all the information you have about your performance over the past year.
Now that you have that information together and you’ve put it in the worksheets it’s time to spend a little time understanding what happened and where your biggest wins would come from this year.
What Are Real Estate KPIs (Key Performance Indicators) and How to Use them to Grow Your Business
There are only a few key top level indicators that you need to focus on in your real estate or note business.
These will vary depending on the exact structure and niche you’re in but here they are:
If you’re someone who lists property or notes for sellers then you should include a line for listing presentations.
If you are raising money then you should list the investor inquiries (leads), investor presentations, and money raised.
If you’re in the note business then you want to know how many (legitimate) tapes you were sent and how many LOIs you put it in.
What I’m saying is – change the language to match your business but don’t add unnecessary complexity.
I could go on but I hope you get the picture. You’re looking for your KPIs. You’re not looking for every random bit of info you can gather
If you’re looking across the top line of the chart and you have very few leads… then you already know your problem.
Your business STARTS with leads. NOTHING happens until you get a lead.
There are a few ways to get leads and to plan goals around your necessary lead volume and I’ll cover this in the next post.
If You Don’t Know Your KPIs Then You Don’t Know Where You Need to Improve and You Can’t Set Real Goals
Here’s what I mean.
Say “I want to make $1Million in 2015” but last year you made $200k.
Well that’s a wonderful goal but now you have to find a 5X multiplier in your business ($200,000 X 5 = $1MM).
Sometimes the multiplier will come from improvements across a number of KPIs.
Sometimes you have one big obvious problem.
If you did $200K last year and it took you 20 transactions then you made an average of $10K per transaction.
If you want to do a million this year then you’d have to do 100 transactions. Is this realistic?
Maybe but you’ll need to get 5X the leads…
You’ll need to be able to handle 5X the paperwork…
Maybe what you need to focus on is doing bigger deals!
What if you can double your transaction size?
Now you only need to double your lead volume to reach your goal AND you don’t have to 5X your transaction volume.
Finding a way to double or triple your deal size should be your goal.
Not quintupling your paperwork and leads.
Am I making sense?
Analyzing the worksheets you completed from the 1st post will help you see the gaps.
If You Did Little or No Business Last Year (But You Were “in the business”)…
Then I can with about 95% accuracy say that you did not get enough leads. Which means you weren’t marketing or prospecting enough. Period.
In order to set goals this year you’re going to need to come up with reasonable numbers. How much are others in your area making per transaction?
All this brings me to the next phase in your goal setting.
How to Set SMART Real Estate Goals
SMART is mnemonic device that instructs how your goals should be written and I’m going to borrow it so we remember what our goals should look like.
- Specific – Your real estate goals need to be specific.
- Measurable -How will you know when you’ve achieved your goal?
- Attainable – If your goals are too lofty you will not be motivated to achieve them because you won’t really believe that you can!
- Relevant – The goal must be relevant to your business.
- Time-bound – Goals need to have dates associated with them.
In addition to being SMART your goals should also adhere to the “3 Ps”:
- Positive – Don’t say “I don’t smoke in 2015” say “I’m cigarette free in 2015”
- Personal – You start goals with “I”
- Present tense – Your goals should be stated in the present tense, as though they already exist
The reason we use the 3 Ps in goal setting is that one of the biggest benefits of approaching your goals correctly is that it programs our subconscious to go to work to achieve the goals.
I realize its reckless to just throw a statement out there like that and if you’ve never read success literature or goal theory then maybe this idea is off-putting for you. For more information I suggest you read some of the basics like Think and Grow Rich.
So let’s bring it together.
Here’s what your goals should not look like.
- I want to make $100,000 dollars
Here’s what that goal would look like written SMARTly and in the Positive, Personal, Present Tense
- I gross $100,000 in 2015 by completing 10 brokered residential REO transactions at an average of $10k per transaction.
Is This a SMART Goal?
Its specific, it says what you will do and a formula for how.
Its measurable, there will be no doubt as to whether or not you hit that goal by year’s end.
Is it attainable? Thats up to you.
Is it relevant to your business – for our purposes it is.
Is it timebound? Yes, we’ve given ourselves this year.
Does it Meet the 3 Ps Requirement?
Positive? Yes, we’re not using “I don’t, I won’t, I’m not” etc. (example “I don’t smoke” isn’t positive. “I’m smoke free” is)
Personal? Yes, it starts with “I”.
Present tense? Yes, it doesn’t say “I will/must/want to/can/” it says “I gross” you could also say “I’m grossing”.
Set Real Estate Activity Goals In Addition to Results Goals
If you want to lose weight and you say “I weigh 180 lbs by March 2015” as a goal… well that’s all well and good but HOW are you going to get there? Will you exercise? How often? What exercises will you do? Where?…
In the next post I’m going to address how to set the right kinds of activity goals and I’m going to give you the tools to do it.
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