Expert: Penny MacKenzie - 7/29/2011

Question
Hi. I am putting together a business plan on SBA.gov, using the SBA business plan template (http://web.sba.gov/busplantemplate/BizPlanStart.cfm). I am taking a business class, and currently I am writing up a business plan about owning my own real estate firm. So, I am currently on the part where it says, "Describe what share of the market you currently have and/or anticipate." What exactly does that mean?

My original answer was, "We, at Wilson Real Estate currently serve 30% of the market in San Antonio, and look forward to serving more than 44% of the market in the years to come."

My Instructor told me this: "Your share of the market is the actual share of the market that you think you have captured. In other words, if you think you have 5% of the people who you think might buy in your place of business there is 95% of customers who don’t but at your place."

I'm not asking you to give me the answer, but rather, kind of simplify what "Describe what share of the market you currently have and/or anticipate" means, because apparently he didn't like my answer. Thank you!

Answer
Hi,
I think what your instructor might be pointing towards is identifying the other companies in your market and what % share of the market they each have. By the way, in Real Estate it's difficult for any company to capture more than 25% of the market - so the 44% market share is unrealistic. Typically in most Cities there are numerous Real Estate companies with 5 or 6 that capture the lions share of the market. Be sure to identify each of your competitors, the number of agents that they have working for them (the number of agents affects market share), the number of homes sold and then reflect that as a percentage of the total for each. If you have any more questions please don't hesitate to ask!
Regards,
Penny