In reading about business plans, you may have heard the phrase "conservative projections" repeated a few times. Any projections of future revenues and costs for a business require assumptions, because, as we know, the future is always uncertain. However, to meet this definition of "conservative" projections, your assumptions must be reasonable in all areas. Here are a few ways to make sure they are suitably reasonable and your projections are conservative enough.
Market Conditions
Your projections shouldn't consider that the real estate market and general economy is always booming, nor that it is always in bust. If you lack reliable information with which to estimate how market conditions may affect your business for good or bad, then take a middle-of-the-road approach. Although you can generally prepare for market conditions in the coming six months, your launch may be a year out and you need to estimate five years beyond that. Be clear as to how you applied the effects of the market in general to your projections and find information on how other real estate agencies are affected by the market to back you up.
Effect of Marketing and Sales
You shouldn't assume that your marketing and sales efforts will work spectacularly at first. Instead of thinking in terms of the greatest possible returns from each marketing channel, think in terms of percentages. If base these estimates on specific percentages readers who ask can get an explanation of exactly how you determined them. For example, if you expect to have 5000 web surfers click on your pay-per-click ad in a quarter, explain that you believe 1% will go on to call, 50% of those will make an appointment to see homes, and 25% of those will make a deal for a home with you, resulting in 6 deals for those clicks. Make sure it is reasonable for you to spend the time needed with all of those calls and appointments to make those 6 deals.
Start From Where You Are
If you will start your firm's marketing post-launch, no one will believe projections based on sale coming in from day one. There must be a reasonable lag time for your marketing and sales efforts to take effect before deals are closed and revenues are earned in this case. However, if you have a track record of success with a past firm, or if you are already making deals with clients for your new firm, you can make the case that you will show sales from month one onwards.
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