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The key drivers of increased revenue will be improvements in the lead conversion rate and more overall leads. Increases in the average commission as more luxury and standard homes are sold relative to condominiums will also contribute the revenue growth. These critical numbers will be tracked by salesforce.com, the firm's sales and lead information database, and QuickBooks, the firm's accounting software. Additional software will pull results from both programs into custom reports.

Sales Forecast

The commissions on home sales are broken into three categories which represent the average commissions for homes in their category. Condominiums average $200,000 in Ridgefield for a $6,000 average commission. Standard homes from $300,000 to $1 million are expected to average $600,000 per sale for an $18,000 average commission. Luxury home sales range from $1 million to $2 million and average $1.25 million per sale for a $37,500 average commission.

Luxury home sales to first-time home buyers are relatively rare, compared to sales of less expensive homes. However, professional couples who have worked for a number of years in New York City or Stamford, CT can save a great deal of cash for a down payment while renting apartments. These individuals are often given substantial help by relatives or are beneficiaries of trusts which help them raise the $100,000 - $400,000 down payment. Ridgefield is an affluent community and a target location for these high-net-worth couples.

Unit sales will increase over the next year through the marketing efforts of Earl Estates alone. By the end of the year he will bring on an additional new agent and add more agents over the next two years. Direct costs include travel costs and gifts given to clients.

Sales Forecast

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Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Luxury Home Commissions 5 7 10
Standard Home Commissions 30 39 55
Condominum Commissions 52 57 63
Total Unit Sales 87 103 127
Unit Prices Year 1 Year 2 Year 3
Luxury Home Commissions $37,500.00 $37,500.00 $37,500.00
Standard Home Commissions $18,000.00 $18,000.00 $18,000.00
Condominum Commissions $6,000.00 $6,000.00 $6,000.00
Sales
Luxury Home Commissions $187,500 $262,500 $367,500
Standard Home Commissions $540,000 $702,000 $982,800
Condominum Commissions $312,000 $343,200 $377,520
Total Sales $1,039,500 $1,307,700 $1,727,820
Direct Unit Costs Year 1 Year 2 Year 3
Luxury Home Commissions $1,875.00 $1,875.00 $1,875.00
Standard Home Commissions $1,800.00 $1,800.00 $1,800.00
Condominum Commissions $1,200.00 $1,200.00 $1,200.00
Direct Cost of Sales
Luxury Home Commissions $9,375 $13,125 $18,375
Standard Home Commissions $54,000 $70,200 $98,280
Condominum Commissions $62,400 $68,640 $75,504
Subtotal Direct Cost of Sales $125,775 $151,965 $192,159

Marketing Expense Budget

The marketing expenses listed will generally rise with inflation over the next two years, except for referrals which are expected to account for an increasing number of the leads each year. Advertising will be increased in the spring and summer months to better publicize larger monthly information sessions. However, even during the off-peak home buying seasons these information sessions will continue to cultivate prospects. Other expenses remain regular in order to continue to cultivate suspects who may start thinking about moving months or years before they are ready to buy. The direct mailing, sent out every other month, will cost $1,500 each time it is mailed. The monthly information session has a budget of $1,500. Some months will be more extensive events and will exceed this budget and other months will be more intimate events with only Earl Estates speaking and will be under $1,500.

Gift certificates of $250 given out to customers for referrals and testimonials, and fees for the videographer and copywriter used for creating case studies, are also included.

Marketing Expense Budget

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Marketing Expense Budget
Year 1 Year 2 Year 3
Advertising $41,000 $42,640 $44,346
Information Sessions $18,000 $18,720 $19,469
Direct Mail $9,000 $9,360 $9,734
Website $6,000 $6,240 $6,490
Testimonials: Gift Certificates $3,750 $4,500 $5,000
Testimonials: Videographer/copywriter $7,500 $9,000 $10,000
Referral Program $5,250 $8,750 $10,000
------------ ------------ ------------
Total Sales and Marketing Expenses $90,500 $99,210 $105,038
Percent of Sales 8.71% 7.59% 6.08%

Key Marketing Metrics

Leads generated will often not convert into clients for months, and those clients will not yield revenue for additional months. Leads are somewhat seasonal, as fewer house hunters search in the winter and fewer closings occur in those months. Referrals will yield a growing portion of sales and will be generated by an increasing number of clients and other sources. Testimonials are now secured from roughly 50% of clients and the goal is to increase that number to 75%.

Key Marketing Metrics

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Key Marketing Metrics
Year 1 Year 2 Year 3
Revenue $1,039,500 $1,307,700 $1,727,820
Leads 692 830 996
Leads Converted 15.50% 23.00% 25.00%
Avg. Transactions/Customer 1 1 1
Avg. $/Customer $11,610 $12,696 $13,605
Referrals 144 152 160
PR Mentions 37 72 79
Testimonials 49 72 95
Other 0 0 0

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