approach to achieving them led me in directions I had not even
considered when I began my journey.
Over the years, I have scaled down my business plan to succinctly cover only the most important aspects of my business
1. Summarize the previous year’s success and failures
2. Describe your goals and objectives for the coming year
and five years out
3. Review your current book of business
4. Determine your market focus for the upcoming year
5. Derive the potential gross income in your market specialty
6. Review your market space, including competition, threats,
7. Prepare a sales plan to achieve your market share goal that
is consistent with your long range objectives
Let’s review each of these steps in greater detail.
Summarize the Previous Year’s Success and Failures
The first step in the process is to identify what went right and
what didn’t in the previous year. I am very candid with myself
about my failures and attempt to learn from them to improve in
the coming year. Failure is a reality in the commercial business,
but the lessons learned from these events can make you stronger.
I spend less time reflecting on my successes in the past year.
The reality is that the market and my competition are constantly
evolving, and what I did to succeed in the current year will likely
be outdated next year. It is important to write out your success
and failures, not just internalize them. Once you summarize
what worked and what did not work last year, you are ready to
turn your attention to your aspirations for the coming year.
Describe Your Goals and Objectives for the Upcoming
Year and Five Years Out
It is personal preference, but I like to start by reviewing where I
would like my career to be five years from now, and then work
backwards. As an example, if your goal is to gross $3,000,000 in
commission five years from now and you are currently grossing
$1,500,000 annually, you are not going to make that leap in one
year. Instead, you would need to look at the incremental steps
necessary to meet your commission objective. These steps could
include increasing your geography, working on more multi-mar-ket opportunities, and adding members to your team. In more
extreme cases, it may result in changing your specialty, switching firms, or changing your focus from landlord leasing to tenant representation or investment sales. This is entirely dependent
upon your market, your market share potential, and the audacity
of your goals. You pick the immediate and long-range goals, and
then the following steps should help you prepare a roadmap to
Review Your Current Book of Business
Before you can select a market focus for the coming year, it
makes sense to review how you generated income in the previ-
ous year. Take a look at the deals you completed last year, and
place them into categories such as tenant-representation, land-
lord representation, seller representation, buyer representation,
investment sales, consulting, etc. For each category, determine
the total number of transactions, the square footage per trans-
action, the total commission generated, and the average com-
mission generated per transaction. Now reflect on the amount
of time you spent in each segment. If you spent most of your
time representing buyers of industrial buildings last year, but
this only translated into 10 percent of your income, then maybe
this was not the most effective use of your time.
Determine Your Market Focus for the Upcoming Year
As a former hockey player turned commercial broker, I love
Wayne Gretzky’s quote, “Skate to where the puck is going,
not to where it is.” I specialize in industrial real estate, so my
focus would be on determining what segments of the Orlando
industrial market I want to compete in. This is very market specific. In a relatively small industrial market like Orlando, you
can specialize in multiple aspects, such as tenant representation
and building sales. In a major market, your objective may be
to establish yourself as the dominant landlord representative
in a specific submarket. Other brokers may be more corporate
services-based, and their market segment may be a representation of call center clients or food distributors on a national or
regional basis. The idea is to pick the focus that that will allow
you to achieve your short-term and long range goal. Remember,
you need to be energized and enthusiastic about your business.
If you do not like representing landlords, you are not going to
take a significant amount of market share in this segment.
Derive the Potential Gross Income in My Specialty
This is where grandiose thoughts intersect with reality. You
need to determine if your niche can support your income goals.
A simple way to do this using an office tenant representation
broker as an example is illustrated in the Figure 1.
Based upon Figure 1, the gross potential fees for an office
tenant representative broker in this hypothetical market would
be $13.6 million. Assuming a one year goal of generating $2
million in gross fees, this broker would need a market share of
approximately 14.71 percent. If you run these calculations, and
realize you would need something north of a 30 percent market
share to achieve your objectives, you may want to re-consider
your target market. One of the biggest mistakes I see when I
review business plans is underestimating the competition in the
market. If a broker determines she will need a 50 percent market share to reach her goal for the coming year, she will need
to completely dominate her market to even come close to this
objective—it is not going to happen. Likewise, if I see this
report and the broker determines he will only need a 5 percent
market share to reach his objective, his target market may be too
large to compete in effectively. He may need to segment further
to ensure he can take a lead role in his defined target market.
Review Your Market Space
This is the opportunity to review your competition and to determine any emerging trends or potential threats looming that can
impact you revenue goals. Are economic trends emerging that
could create new streams of business? What are your competitors in the market doing, who is increasing their presence in
the market, and who is vulnerable? Prepare a SWOT analysis
(strengths, weakness, opportunities, and threats) of your business plan as it relates to events occurring in the market.