Business development / finance
Many people that float around the real estate industry think that in order to build a successful holiday home rental business, creating a business plan is not necessary, as the business model for this operation is quite straightforward.
Well…NO, let us prove you wrong!
Same as every other business model out there there are many variables in play that can determine the success or failure of your enterprise. This is why you need a real estate business plan to get started.
If you are about to, or thinking of, creating your Airbnb business for the first time there is nothing better than some planning to set “things in order” before you get started.
In this short article you will learn the basic steps needed for you to create a successful Airbnb business from scratch by developing knowledge and insight that will shape your operation and will leave as little as possible in the hands of this random universe we live in.
A real estate business plan is a simple document that outlines the goals, strategies, and objectives of your real estate rental business. It can also include a market analysis and financial projections to help you or your investors determine if your business idea is viable and set some expectation benchmark for the future.
Creating a business plan can seem a daunting task, but you’ll see what a little bit of planning can do to your real estate enterprise if you apply the basic concepts in this article.
Here’s an outline of what should be included in your business plan:
This is a brief written overview of your rental business, including your mission statement, target market, and financial projections. Even though the executive summary will be “page one” of your business plan, is actually the last step in the creation of a business plan, first you will have to gather intelligence and create your financial projections.
A real estate competitive analysis is a process in which you identify your competitors and assess their strengths and weaknesses in relation to your own business.
This information can then be used to help you develop strategies to improve your own position in the market.
After you find the ideal location to establish your real estate rental business, it is vital that you start considering what other entrepreneurs are doing in your area and try to reverse-engineer their strategy.
The competitive analysis is particularly useful to you to understand:
There is a lot to cover when it comes to performing competitive analysis for real estate rental businesses and every individual entrepreneur usually finds its own way and develops a unique view of its market of reference.
Our suggestion is to take what applies to your case and develop insider knowledge of your market .
If you really want to study your competitors in an area you have no familiarity with, just go visit their businesses (undercover or not is up to you!) and get a real look and feel of their amenities and services then build a better offer that is more attractive.
This does not mean that you will be creating copycats of other properties and businesses or making industrial espionage (it’s unethical and unfair!), it means getting to know the industry standard in that area and then come up with your ORIGINAL solution.
Making copies will not benefit your business, as you probably will not have a clue about what you are doing and makes you play in a more competitive field. Always make informed decisions and be original.
First hand insights are extremely valuable because the data and intelligence you gather online does not always tell the full story of a business nor it explains its success.
Do not underestimate them.
Make sure to check our full article on competitive analysis to learn more.
Getting into the real estate business also means that you will have to attract customers and thus create a clear vision of your target market and the kind of visitors you want to attract early on.
This will be very important for helping you get more reservations.
To answer this question, you should make as many different buyer personas as you can for each of your target groups.
These "made-up" versions of the people you think will stay at your vacation rentals will help you in the future with all parts of your business, like writing content, marketing, bookings, social media posts, advertising, etc.
Since every holiday rental business is different, it's likely that each one has a different set of customers with different personalities.
When making your buyer personas, think about their normal needs, status, demographics, interest and where you might find them from a marketing point of view, e.g. online, tourism agencies, listing sites, social media etc.
This is crucial because the more you will be able to focus your efforts towards a specific niche of people the more chances of success you will have other than creating a great competitive edge in the market.
If you can’t beat the competition at their game, create your own ;).
Just make sure to create something that is unique and can be appealing to enough people to stay in business for longer periods of time without suffering too much from new competitors joining the area.
As mentioned in the competitive analysis section above, copycats go out of business quickly, the reason? Market saturation and lack of uniqueness!
As an example, let's say that your rental business is themed after “The Rolling Stones” and that everything in the house reflects the character of that band (from posters to stage lights, etc).
Who is going to be your typical client?
Although this is a tough question to answers (because many niches intersect with that particular music taste), you can guesstimate that Rolling Stones and rock listeners will be more likely to book your home or apartment, and so, if you would have to promote your business one of the key selling point of your rental business could be the main theme of the house.
I know this sounds like technical marketing “jibber jabber”, and it is.
If you have no time to invest in marketing operations, seek a professional marketer or marketing agency. The way you communicate is crucial.
The use of numbers in your business plan is important.
You must be able to describe your business's financing strategy in full in this part of your business plan, together with any projections for estimate future revenue and expenses of your holiday rental business.
Here's something that you should consider including:
If you find yourself in need of a free tool to calculate and generate financial projections for your holiday rental business head to our ROI calculator.
There you will be able, with few simple inputs to extract valuable data to use in your business plan.
The operations plan, which is sometimes called the management plan, needs to include the specifics of how you want to run your new business on a day-to-day basis.
In this case you can do it yourself if you want to save some money or rely on companies that can manage everything for you. It's your choice, but make sure to plan this in advance to avoid surprises.
As you see, there is a lot that goes into creating a holiday rental business plan. If you are just getting started make sure to plan everything before you start, the last thing you want, is to find a problem too big to overcome, especially if your budget is limited.
Creating a business plan for your rental business is a great way to get started on the right foot.
By outlining your goals, strategies, and financial needs, you can develop a clear roadmap for success.
While it may seem like a daunting task at first, with a little time and effort you can create a comprehensive plan that will set your rental business up for long-term success.
Creating a business plan It’s a one time effort in exchange for possibly a lifelong advantage.
It’s sure worth your time and attention!
Still convinced that this is a straightforward business model? Think again!
Thank you for reading!