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					Business Plan



Arizona MLS

An Arizona Association of REALTORS® Project
Making the real estate transaction speedy, simple, secure & seamless

February 2010




Developed in collaboration with the following volunteers, staff and
Kevin McQueen, President of Focus Forward:

John Foltz, Chair                       Ed Pattermann
Bob Bemis                               Matt Widdows
Deems Dickinson                         Beth Adams
Duane Fouts                             Wes Wiggins
Lola Franklin                           Tom Farley
Evan Fuchs                              Ron LaMee
Laura Mance
                                                                         Table of Contents

Executive Summary .......................................................................................................................................................................................................................2
Background........................................................................................................................................................................................................................................4
The Vision ...........................................................................................................................................................................................................................................5
What Exactly Are We Proposing to Build? ...........................................................................................................................................................................8
Benefits, Products and Services of ARIZONA MLS ........................................................................................................................................................ 10
Organization and Management.............................................................................................................................................................................................. 11
Operational Financial Plan....................................................................................................................................................................................................... 16
Financial Projections .................................................................................................................................................................................................................. 17
Rollout Plan .................................................................................................................................................................................................................................... 18
Projected Start-up Costs ........................................................................................................................................................................................................... 22
Appendix A – Frequently Asked Questions (FAQs) ...................................................................................................................................................... 23
                                        Executive Summary

The topic of statewide MLS has been widely debated in Arizona and across the country for years. In 2009,
AAR’s Strategic Planning group initiated a formal request to investigate the pros and cons of a potential
statewide MLS. The AAR Directors approved a full investigation in March 2010 and a workgroup was created
to study the merits of a statewide MLS including a contrast to NAR’s REALTORS Property Resource
(RPR™). A complete written report of the findings and comparisons was released in July 2010. Additional
research included two membership-wide surveys and feedback from local association/MLS executives to
understand their services and costs.

This business plan was requested by the AAR Directors in October 2010 to develop a plan to include
governance and financial projections. The plan would describe in some detail a lower-cost ARIZONA MLS,
where the members pay a single fee for access to all listings. Today, we know that statewide listing data is
already available via the Internet, accessible to members and consumers alike. This plan describes a
comprehensive solution where AAR’s current business applications would interact more seamlessly with the
MLS data and offer a path to innovative companies to bring new software applications (“apps”) to Arizona.
The vision is bold:


            To embrace the latest open standards, use current and proven technology,
              and create the next generation solution for REALTORS® through the
           Arizona REALTOR® Business Interface “ARBI” and ARIZONA MLS.

Imagine if all of the property information were available statewide, without borders, for one fee. What if you
could login one time and connect to the MLS, electronic forms, public records, document management,
digital signatures, REALTORS Property Resource (RPR™), transaction management and brokerage back-
office system? ARBI seeks to create a partnership between AAR and its local associations working together to
best serve our mutual members.

Our objective is to create an integrated business system (ARBI) that incorporates one MLS to serve all of the
members in Arizona. This would deliver a uniform listing input form with the best available tools, one source
for all property listings in the state, property centric database including the best public records property
available statewide without restrictions and for a single MLS fee.

First AAR will invite all local associations and regional MLSs to develop the new ARIZONA MLS and
ARBI. Three qualified associations will be selected at first to manage the scope for the initial steps of the
project. These three will significantly influence the design of the new ARIZONA MLS system including data-
fields, reports and business rules to accommodate the needs of the rural associations and their members.


Business Plan – ARIZONA MLS                                                  February 2011                   2
AAR will also invite ARMLS, TARMLS and Santa Cruz MLS to share their experiences working with the
flexmls® system. The Workgroup recommends this system since it has already been proven to serve 35,000
AAR members and it makes good business sense to build on this proven foundation rather than starting over
from scratch. ARMLS, TARMLS, Santa Cruz MLS will also be invited to participate and their current
systems can connect to the ARIZONA MLS system to provide access to the combined listings and more,
through one login. The resulting solution would serve at least 90% of the AAR members and ARMLS,
TARMLS and Santa Cruz MLS would continue to use their current systems while receiving the benefits of
ARBI until such time that it makes good business sense to make changes.

Open standards will be used throughout to ensure that the best available tools will “plug and play” with
ARBI and the ARIZONA MLS. By adhering to open standards, the members will benefit through more
options, increased innovation and competitive products at lower costs. Vendors will be motivated to promote
and deliver their best solutions in Arizona as a result of the increased number of members they can reach
through ARBI and ARIZONA MLS.

Benefits include one property-centric database without geographical limitations across Arizona, available to
every member with seamless integration of the best productivity tools to monitor and manage contracts,
listings and transactions. Members will search all information in a single system, have one source for IDX
data feeds and enter a listing one time based on uniform MLS rules and enforcement. This results in the
most cost-effective way to deliver the best tools, save time and money based on the mass purchasing power
of 42,000 REALTORS® across Arizona through a common system where the member pays one MLS fee.

The rest of this business plan describes in more detail the organization, operations, governance, delivery of
service options for each local association and member, including Baseline (wholesale) service or Full-service
(retail). The financial model described in the plan suggests a monthly Baseline (wholesale) MLS fee of $10
per member, billed by ARIZONA MLS to the local association, or a full-service (retail) fee of $22 per
member. There is a six-step plan for rollout by 2012. The initial participating local associations will be able to
recover lost net income should this occur as a result of partnering with AAR through this initiative.

Start-up costs are projected to be $10 - $24 per member (one-time fee) that could be appropriated from
existing reserves if funding is approved or through dues. No votes will be taken at the AAR Board of
Directors’ Prescott meeting in March 2011 to allow for adequate time for members and interested local
association leadership to meet with AAR leaders in March – June to discuss the various options and answer
all of the questions. The business plan will be updated during this timeframe and a special AAR Board of
Directors’ meeting will be called in July 2011 to determine if AAR will proceed or not based on the updated
business plan.

See the FAQs on page 23 for answers to the most frequently asked questions.




Business Plan – ARIZONA MLS                                                     February 2011                    3
                                              Background

The concept of a statewide MLS is not new to Arizona REALTORS®. In Arizona, conversations between
REALTORS® and Association leadership have been frequent during state meetings and AAR officer visits. In
2009, AAR’s Strategic Planning group initiated a formal request to investigate the pros and cons of a potential
statewide MLS. A preliminary study was begun in February 2010 and AAR Directors approved a full
investigation in March 2010. Two well-known industry experts, Ann Bailey of Pranix and Kevin McQueen of
Focus Forward, aided AAR.

A workgroup was created to continue to research the merits of a statewide MLS including a contrast to
NAR’s REALTORS Property Resource (RPR™), which was being considered by the local MLSs at that time.
A complete written report of the findings and comparisons was released in July 2010. Additional research
included two membership-wide surveys to better understand the members’ viewpoint; feedback from local
association/MLS executives to understand their services and costs; and numerous individual interviews and
surveys. During this process, various methods of statewide data sharing were discussed, including a new
statewide MLS and the REALTORS Property Resource (RPR™).

Across Arizona, members and brokers voiced support for sharing statewide listing data. Most local
association leadership supported the sharing of listing data, but voiced concerns about loss of board control
and income if there were to be a lower-cost ARIZONA MLS where the members could access all listings.
Others were concerned about the effect of greater data availability on members practicing outside their areas
of expertise. Today, we know that statewide listing data is already available via the Internet for access to
members and consumers alike.

In October of 2010, AAR Directors were presented with the results of nine months of intensive work and
subsequently voted to proceed with development of a proposed business plan and governance model for a
statewide MLS. Throughout this time, the two consecutive workgroups concentrating on this project were
chaired by John Foltz of Phoenix and staffed by agents, brokers, and association/MLS staff.

Indicative of the innovation and range of issues explored by these groups, the results include a comprehensive
solution, which would enable AAR’s current business applications to interact more seamlessly with the MLS
data and offer a path for new and innovative companies to bring their software applications (“apps”) to
Arizona. The proposed solution has come to be called the Arizona REALTOR® Business Interface or
“ARBI”, which will integrate all of the elements including the proposed ARIZONA MLS. This business
plan represents the culmination of considerable time and effort by volunteers, staff and professional industry
consultants. The association and its leadership are grateful for the expertise, effort and passion shown by all
who have participated in the development of this business plan.




Business Plan – ARIZONA MLS                                                   February 2011                     4
                                                  The Vision

Making the process speedy, simple, secure and seamless
Imagine if all of the property information were available statewide, without borders, for one fee. What if you
could login one time and connect to the MLS, electronic forms, public records, document management,
digital signatures, REALTORS Property Resource (RPR™), transaction management and brokerage back-
office system? Imagine having your choice of computer, mobile or tablet device for access? What if you could
shop for the very best and latest tools and technology “apps” in this same place? And what if the data flowed
seamlessly between all of these services, saving you time, money and lowering your risks? The Arizona
REALTOR® Business Interface (ARBI) and ARIZONA MLS aim to make that vision a reality.

AAR’s Partnership with Local Associations and MLSs Will Produce a Better Transaction Solution
There is no doubt that the local or regional Multiple Listing Service (MLS) is a highly valued association
member benefit. AAR currently provides several valued transaction business tools that benefit members,
including electronic forms, transaction management, and, very soon, electronic signatures. ARBI seeks to
create a partnership between AAR and local associations working together to best serve our mutual members.

ARIZONA MLS and the Arizona REALTOR® Business Interface (ARBI)
Our objective is to create an integrated business system (ARBI) that incorporates one MLS to serve all of the
members in Arizona. A uniform listing input form for each property type will enable tight integration with
electronic forms, digital signatures, transaction management, broker back-office systems and one source of
data for all property listings in the state. It will include the best electronic public records available as part of
this property centric database. Members can enter a listing one time, share their listings with all of the
professionals in the system at the same time and search all of the listings, public records /tax and other
content—without restrictions.

The current MLS infrastructure does not support these conveniences. However, we know that the capability
and technology exist, and through the business plan, we are recommending the best way to make this a reality
in Arizona. We will invite all local associations to migrate to the new ARBI and ARIZONA MLS in place of
their current MLS vendor system and related operating costs. The goal is a statewide MLS that would be an
important part of a bigger vision, the Arizona REALTOR® Business Interface.

AAR will partner with up to three outlying associations or MLSs to assist in the creation of the ARIZONA
MLS. These initial business partners will significantly influence the design of the new ARIZONA MLS system
including data-fields, reports and business rules to accommodate the needs of the more rural associations and
their members. AAR will also invite ARMLS, TARMLS and Santa Cruz MLS to share their experiences
working with the flexmls® system. The Workgroup recommends this system since it has already been proven
to serve 35,000 AAR members and it makes good business sense to build on this foundation rather than


Business Plan – ARIZONA MLS                                                       February 2011                        5
starting over from scratch. If ARMLS, TARMLS, Santa Cruz MLS choose to participate, their current systems
can connect to the ARIZONA MLS system to provide access to the combined listings and more, through
one login. The resulting solution would serve at least 90% of the AAR members and users of ARMLS,
TARMLS and Santa Cruz MLS would continue to use their current stable systems while receiving the benefits
of ARBI, until such time that it makes good business sense to utilize Arizona MLS.




                      A conceptual view above of the ARBI Desktop, by Ed Pattermann




Open Standards to Produce Products that Work Together
Through the use of open standards, ARBI will expand its offerings to our members by working with new and
innovative vendors to create “apps” for the real estate practitioner via ARBI. To provide seamless and tight
integration between products, software developers will design their products based on standard and published
Application Program Interface (API) guidelines. The products will then “plug and play” with the ARIZONA
MLS and other business solutions, which are part of ARBI. The use of open standards and interfaces will
ultimately benefit our members with additional innovation and competitive products at lower costs. Vendors



Business Plan – ARIZONA MLS                                                 February 2011                  6
will be motivated to promote and deliver their best solutions in Arizona based on the number of members
they can reach through ARBI, the lower cost of sales and our ongoing commitment to open standards.

Change Is Here to Stay
Change is never easy, but we acknowledge that it is a part of our reality. While focusing on our vision for
ARBI and the ARIZONA MLS, we know that the progress we are proposing will take commitment,
compromise and funding. There will be challenges and anticipated improvements to the business plan on how
we roll out the new solutions. Today’s economic climate lends itself to countless opportunities, but it also
demands great prudence on the part of leadership. This business plan outlines a step-by-step approach in
order to manage risks and minimize start-up costs. Should the project be approved and funded later this year,
we will closely track and report on progress, member benefits and our success in order to keep everyone well
informed along the way.

Conclusion
An integrated business interface with greater efficiencies for members in conducting business transactions is
long overdue. An environment that delivers what the members want, rewards innovation, tightly integrates
our best products and embraces the newest technology is within our grasp. We must take sensible steps first
in order to achieve a successful outcome. Each of you has the opportunity to be on the forefront of these
exciting changes.

The vision is bold: To embrace the latest open standards, use current and proven technology, and create the
next generation solution for Arizona REALTORS® through the Arizona REALTOR® Business Interface and
ARIZONA MLS.




Business Plan – ARIZONA MLS                                                   February 2011                     7
                         What Exactly Are We Proposing to Build?

As introduced in the Vision, the Arizona Association of REALTORS® (AAR) intends to build an integrated
business solution that incorporates the ARIZONA MLS system and the very best information and tools
including MLS and public records, digital maps, electronic forms, digital signatures, REALTORS Property
Resource (RPR™) transaction management, broker back-office support, the app store and more. The
solution will provide members with more choices and efficiency in the transaction process than ever before.




     This is bigger than just a statewide database of listings or a statewide MLS.



The two main components of this solution are the ARIZONA MLS and the Arizona REALTOR® Business
Interface (ARBI) that ties all of the current business tools together with additional apps, chosen by individual
members. For example, today if a member wants to purchase CMA software or a mobile or iPad app, there is
no guarantee that the software will work with their local MLS or even worse, multiple MLSs. The vendor then
has to get permission from one or more associations and they may have to pay an additional fee. This
approach is outdated and is difficult for vendors and members. Today, it costs the vendors a lot more to
connect their software to 15 separate and unique MLS systems compared to the proposed solution, which will
use open-standards, one plug-in for the MLS, common data definitions and faster decision-making about
technology and software apps. We expect lower prices, less hassle and inconvenience and many more choices,
by opening the market up to AAR’s 42,000 members.

We will build ARBI, the new integrated business system and ARIZONA MLS by leveraging current and
proven tools and infrastructure. To substantially reduce time to market, risks and costs, it makes good
business sense to follow this path rather to start over from scratch. We recommend using the flexmls®
platform. This proven platform now powers the MLS for ARMLS, TARMLS and Santa Cruz MLS and other
Arizona associations have used it in the past. This is quite different than the approach taken by the California
Association of REALTORS® to create their MLS. More than 35,000 AAR members already use this system
every day for their MLS needs and we recommend using it to build-out the ARIZONA MLS. Further, the
vendor is a champion for industry and data standards, making them the right choice for Arizona.




Business Plan – ARIZONA MLS                                                    February 2011                   8
       Arizona MLS
                                       Integrated Business Tools

                                            AAR zipForm®
                              ARMLS
      Step 1



                                           AAR Digital Ink
                           INITIAL
      Step 2-3          ASSOCIATION
                         PARTNERS

                                               AAR TM
                       LAUNCH ARBI
      Step 4


                                           Brokerage Back
                                               Office
                        ADDITIONAL
      Step 5            ASSOCIATION
                         PARTNERS
                                            Single Sign-on
                                              Dashboard
                       AVAILABLE TO
      Step 6           ALL REALTORS®

                                          Other Applications




Business Plan – ARIZONA MLS                 February 2011      9
                Benefits, Products and Services of ARIZONA MLS

The ARIZONA MLS and Arizona REALTOR® Business Interface (ARBI) will offer a comprehensive MLS
system which will be available to all 42,000+ REALTORS® in Arizona. It offers the following benefits,
products and services:



    One database and MLS system without geographical limitations - available to every AAR member

    Seamless integration of AAR productivity tools including ZipForm®, Digital Ink and AAR TM

    Dashboard to allow members to monitor and manage all contracts, listings and transactions

    Search all listings and available public records in one MLS system

    Includes offers of compensation or cooperation to cooperating brokers across Arizona

    Best available public records integrated with MLS data; auto-populate new listings

    Tighter integration between MLS, public records, RPR™ , forms and transaction management

    One source of IDX feeds for all listings, in a standard data format with uniform IDX rules

    Uniform MLS rules and data standards - the best new technology, software “apps” and innovation

    Unified email communications between members and between members and their clients

    Associations can choose to provide MLS customer service or have ARIZONA MLS provide it

    Most cost-effective way to save time and money based on mass purchasing power of 42,000 members

    Members have more choices, innovative tools and solutions thru ARBI and ARIZONA MLS

    Members can enter a listing one time in one system and pay one MLS fee




Business Plan – ARIZONA MLS                                                February 2011              10
                               Organization and Management

The Organization

The Board of Directors will lead the ARIZONA MLS. There will also be an MLS Advisory Board that will
function much like an existing MLS Committee, making recommendations to the Board of Directors. The
MLS Advisory Board will consist of representation from participating associations and MLSs that choose to
utilize the ARIZONA MLS. They will represent metro and rural market areas and will have a voice in the
organization. Each participating association or MLS will enter into a service agreement with the ARIZONA
MLS in place of their MLS vendor contract of today. A service agreement between ARIZONA MLS and
participating local associations will define the specific terms.

The new organization will be created if AAR Board of Directors votes to proceed in July 2011, by funding the
start-up of the ARIZONA MLS, based on the then current business plan. Next, the AAR Executive
Committee will appoint the Interim Board of Directors for the ARIZONA MLS. The Interim Board will
guide the start-up and will be responsible for oversight and making decisions that shape the new corporation
including governing documents (bylaws, articles of incorporation, financial and other key policies, etc.),
contracts with suppliers including flexmls®, and other business relationships. The Interim Board of Directors
may engage professional advisors including financial, legal, technology and MLS experts. The initial service
agreements as proposed to local associations or MLSs will likely be another responsibility of the Interim
Board of Directors.

Operations

The ARIZONA MLS will be operated as a for-profit subsidiary of AAR, as is required by the IRS. The day-
to-day management will be the responsibility of the staff and contractors engaged by the ARIZONA MLS.

The Workgroup carefully considered three different approaches to start-up operations.

   -   AAR to partner with ARMLS and its shareholders in order to jump-start the ARIZONA MLS and
       provide MLS operations support.
   -   Proceed with the start-up without ARMLS or its Shareholders by contracting directly with other
       vendors and suppliers of products and services.
   -   AAR to purchase all or a majority ownership interest in ARMLS.

The final approach and recommendation will be determined following substantive talks between ARMLS
Shareholders and AAR, which will be held in March - April 2011. Based on the results of those discussions,
the business plan will be updated to reflect the outcome. A special meeting of the AAR Board of Directors
will be called to vote on the then current business plan.



Business Plan – ARIZONA MLS                                                 February 2011                    11
The majority of the Workgroup members felt that the best approach is to form some type of partnership with
ARMLS and/or its shareholders. This approach was determined to be the quickest, lowest cost and lowest
risk path for starting up and growing the ARIZONA MLS. In addition to the existing infrastructure,
contracts, staffing, products and services, the ARMLS members already use the flexmls® system and represent
a substantial user base of approximately 83% of the AAR members. ARMLS has the experience to manage
the operations of MLS, deliver training and support and other related and necessary services.

Delivery of Services to Associations and Members

As previously mentioned, all local associations will be invited to partner with the ARIZONA MLS. They will
have two service options for working together with the ARIZONA MLS to benefit its local members. The
ARIZONA MLS will offer a written business proposal to each local association or MLS including a service
agreement, customized to meet their needs. For example, some local associations may want to continue to
provide local services including MLS training, training facilities, quality and compliance enforcement and/or
invoicing and collections of fees. Other associations may prefer a more “full-service approach”, eliminating
most or all of the MLS related expenses by contracting with the ARIZONA MLS for a turn-key solution
including the MLS system, helpdesk, and MLS training and more so the association can focus its resources on
other services to improve their bottom line.

Between now and June, AAR leadership will meet with local Boards of Directors who are interested in
learning more. We will provide a worksheet, which incorporates all of the proposed services to make it easier
to compare the proposed services and related costs and benefits side-by-side with the association’s current
costs.

   Baseline (wholesale): Under this option, the ARIZONA MLS provides the MLS system, available
   public records, centralized helpdesk, MLS rules, data feeds plus all of the benefits of the integrated
   platform (ARBI). The association would set its own MLS fee and continue to manage all aspects of local
   MLS training including training facilities, quality and compliance enforcement (based on uniform rules),
   handle billing and collections of MLS fees. The ARIZONA MLS would invoice the local association a flat
   monthly fee for services. For this business plan, we use a flat fee equal to approximately $10 per member
   per month ($120 per year). This amount could vary based on the unique needs of each local association.
   We include it here to support the ongoing discussions about the ARIZONA MLS and financial forecasts
   by local associations interested in estimating the potential savings or net loss.

   Full-service (retail): This option offers all of the same services as the Baseline (wholesale) approach,
   including the MLS system, public records, centralized helpdesk, MLS rules, data feeds plus all of the
   benefits of the integrated platform (ARBI). In addition, under the full-service (retail) option, the
   ARIZONA MLS is responsible for providing local MLS training / training facilities, quality and
   compliance enforcement (based on uniform rules), billing and collections of MLS fees directly to the


Business Plan – ARIZONA MLS                                                  February 2011                 12
   members. Under this option, the ARIZONA MLS could leverage its massive purchasing power to
   provide the lowest available costs for other products and services including, for example, electronic
   lockboxes and keys. Each local association can pick from an “ala carte” menu of services as described in
   the proposed service agreement. The MLS fee for full-service is projected to be approximately $22 per
   member per month ($264 per year).

Summary

   Baseline (wholesale) - $10 /            Full-Service (retail) - $22 / month     Current MLS fee: _____
   month billed to local association       billed to member

   Core MLS system                         Core MLS system                         Fill in the services your
   Integrated (available) public records   Integrated (available) public records   association and vendors
   Data Compliance software                Data Compliance software                provide to local members
   Centralized helpdesk                    Centralized helpdesk                    now for comparision
   Uniform MLS rules                       Uniform MLS rules
   Data feeds (IDX, back-office)           Data feeds (IDX, back-office)
   Integrated platform (ARBI)              Integrated platform (ARBI)
                                           Local MLS training
                                           Training facilities
                                           Quality and compliance enforcement
                                           Billing and collections of MLS fees
                                           billed to members.




Business Plan – ARIZONA MLS                                                 February 2011                 13
Governance

Once the Interim Board of Directors has completed its duties, the permanent Board of Directors will be
seated as described below. The Board of Directors is the governing body for the ARIZONA MLS. This
separate board will consist of the best people from across the state to define the strategic direction, employ a
CEO (the CEO will hire the staff and contractors for ARIZONA MLS) and make the best and most timely
business decisions on behalf of all of the members. The Board of Directors of the ARIZONA MLS will
report directly to the AAR Board of Directors and will also be accountable to the membership. Specific duties
and requirements will be clearly defined in the Bylaws, with guidance from competent legal counsel.



Organizational Chart



                                       AAR Board of
                                        Directors



                                        Arizona MLS
                                          Board of
                                       Directors (15)



                                       MLS Advisory
                                          Board




Business Plan – ARIZONA MLS                                                   February 2011                  14
The Board of Directors for the ARIZONA MLS will consist of fifteen Directors as described:

   -   (9) Broker-owners or a designated officer of their firm. Qualifications will include geographic
       representation and the following, which will be finalized by the Interim Board of Directors and legal
       counsel as defined in Bylaws:

           o 3 large broker representatives from the top 10 firms
           o 3 medium broker representatives
           o 3 small broker representatives

   -
   -
       (2) Non-managing, top-producing members

   -
       (1) Independent Directors e.g. technology expert, commercial broker or appraiser

   -
       (1) Local association or MLS executive with significant MLS experience, selected by peers

   -
       (1) CEO of AAR or designee
       (1) CEO of the ARIZONA MLS


There will be fifteen voting directors with 3-year terms, which will be staggered to ensure that each year
approximately 1/3 of the Directors retire and are replaced.

The specific qualifications for each group will be defined in the bylaws as developed by the Interim Board of
Directors and legal counsel.

MLS Advisory Board

The Board of Directors will appoint representatives from participating local associations that choose to
partner with the ARIZONA MLS, to represent their local market area needs about MLS. Qualified MLS
Advisory Board representatives ideally would have experience as association or MLS staff running an MLS or
volunteer MLS Committee experience. They will be responsible for making recommendations to the Board of
Directors, much like a local or regional MLS Committee works today. The Board of Directors will likely
delegate certain responsibilities to the MLS Advisory Board including, for example:

   -
   -
       MLS system improvements and design changes within the scope of the current contracts


   -
       Recommendations for increasing or improving the scope and/or quality of add-on services


   -
       Recommendations for additional “apps” to be available to members through ARBI
       Review of proposed changes from NAR about MLS rules and policies, recommendations for


   -
       adoption by the Board of Directors
       Represent the voice of subscribers, listening to member feedback i.e. suggestions for improving,
       concerns, etc.




Business Plan – ARIZONA MLS                                                    February 2011                 15
                                    Operational Financial Plan

The following assumptions were used to develop the financial plan.

   -
   -
       The financials are based on “real world” figures from an existing large, successful MLS.
       Participating associations can pick one of two options for service delivery as described above. The
       fees of $10 and $22 /month are realistic, based on the assumptions. Depending on which associations
       elect to participate in the initial development, these fees may be adjusted slightly in the updated
       business plan, prior to being voted upon in July 2011.

           o Baseline (wholesale) at $10/month ($120/year) billed to participating associations. The fee
             could vary based on what services the association would like to offer (or not offer).
           o Full-service (retail) at $22/month billed directly to the members ($264/year)

There is a one-time reserve of $750,000 to help offset verifiable actual net lost income for the initial partner
associations. This reserve fund will be used for the purpose as defined in writing by the Interim Board of
Directors to ease actual lost net income from secondary MLS subscribers, due to the association’s decision to
participate in the ARIZONA MLS. For example, if an association reduces its operating expenses by $25,000
per year through participation with ARIZONA MLS, under the Baseline (wholesale) option, but they realize
an actual loss of $45,000 in secondary MLS subscriptions, they may be eligible for the difference ($20,000)
from the reserve for the first year or until the fund is depleted.

The costs for the current AAR business services such as AAR TM, Digital Ink, zipForm® are not included in
this P&L as they are already accounted for in the AAR budget. They will remain part of the AAR financials,
until it is clear how the new business will be rolled-out.

Based on these assumptions, the following P&L reflects a conservative $172,000 profit for the first year on
gross revenues of $11 million serving all AAR members.

Conservative budgeting here is based on a population of 90% of the current number of REALTOR®
members as of January 2011 = 41,468. 31,227 are members of the 4 ARMLS Shareholders plus West Pinal.
There are 10,241 from 16 other local associations.




Business Plan – ARIZONA MLS                                                    February 2011                  16
                              Financial Projections




Business Plan – ARIZONA MLS                           February 2011   17
                                                Rollout Plan

This business plan was available prior to the AAR Board of Directors’ meetings in Prescott March 9-11, to
produce more meaningful discussions at the state meetings. There are no votes planned for this meeting to
allow sufficient time to hear from everyone and to improve and refine the business plan in March - June.
Transparency has been the guiding light of this initiative throughout.

This business plan will be presented and discussed at the meetings in Prescott March 9-11. The
business model was widely available prior to the meeting to share as much information as possible in advance
and maximize the potential for productive discussions. In Prescott, members and association leadership will
explore all facets of the plan including pros and cons, opportunities to identify additional questions and
concerns, as well as measure the level of support for the project. Between March - June 2011, AAR leadership
will meet with interested local associations to discuss the plan and answer all of their questions in more detail.
One of the goals will be to identify those local association / MLS candidates with interest in being considered
for one of three initial partner associations to help develop the ARIZONA MLS and ARBI. Another is to
determine the best possible business relationship between AAR, ARMLS and the ARMLS shareholders. The
business plan will be updated as a result of the feedback from local associations and MLS leadership interest
in leading forward. Frequent and ongoing communications with local association leadership and the AAR
membership will continue throughout this period from March – June 2011.

A special Board of Directors meeting will be held in July 2011 to vote up or down the adoption of the
then current business plan and fund the start-up of the ARIZONA MLS and ARBI in partnership with
interested local associations / MLSs. It should be clear who the initial partner associations / MLSs will be
prior to the vote in July. In fact, this will be necessary to refine the financial projections in advance of the
vote. If the AAR Board of Directors votes to proceed, the AAR Executive Committee will appoint the
Interim Board of Directors. The future of the ARIZONA MLS and ARBI will be determined based on the
vote of the AAR Board of Directors in July 2011, not in March.

Should the project move forward, the following six-step rollout plan is recommended to minimize the risks
and costs and to produce measurable results. Each milestone will be tracked and reported on throughout the
rollout phases.




Business Plan – ARIZONA MLS                                                      February 2011                     18
Rollout Phase I

Phase I Step 1. AAR, ARMLS and the ARMLS Shareholders determine the business relationship that
enables ARMLS to continue to manage the day-to-day operations of the current MLS without interruption to
its current member users and to prepare to play a key role in the service and operations of the new
ARIZONA MLS.

Phase I Step 2 - ARIZONA MLS creates a new version of flexmls® for three initial partner
associations or MLSs. This is limited to three qualified associations since this is hard work and the success
is dependent on selecting right associations that are committed to working together to build something better
for their members. This phased approach is limited to just three to manage the scope, cost and timeline. By
learning from the ARMLS’ experience (and TARMLS and Santa Cruz MLS if they are interested in sharing
their experience), the ARIZONA MLS and flexmls® will work closely together to build the ARIZONA MLS
system to meet the needs of the rural and metro associations. This does not have to impact the current
ARMLS, TARMLS or Santa Cruz MLS users or systems. The goal is to build the new version in the most
practical phases with the end in mind – a single MLS system. The initial partners will have a significant
influence on the new ARIZONA MLS system including listing input forms, property types, data, reports,
MLS rules and some local customs that can be supported uniformly going forward. This is much more than a
proof-of-concept as it will result in a fully functional MLS system, including data from the three
association/MLSs and more. To be clear, it will result in a single system to serve the needs of the first three
partner associations and hopefully, once proven, will be of great interest to others based on the business value
proposition.

In exchange for their efforts, the initial three partner associations and their members will be the first to
benefit from the new ARIZONA MLS and ARBI including cost-savings, service improvements, and access to
additional information. Thru the ARIZONA MLS the current databases from ARMLS, TARMLS, Santa Cruz
MLS and the others using flexmls® will be integrated if they choose to participate.

The initial partner associations are not required to enter into a service agreement or impact their current local
or regional MLS services to participate as an initial partner. If fact, until and unless they are satisfied with the
results of the new ARIZONA MLS system (which they helped to create) and the business proposition
described in the next step, they are not obligated to the ARIZONA MLS for the long-run. This is a very
unique approach where an association is given the opportunity to build its new system before being asked to
enter into a service agreement.

Phase I Step 3 - ARIZONA MLS and three initial partner associations consider the business
proposition, as defined in the written service agreement. At same time the new ARIZONA MLS system
is being created, the three initial partner associations will consider the business, financial and service options
anticipating that the new system which they help to design will meet their needs. The ARIZONA MLS will


Business Plan – ARIZONA MLS                                                       February 2011                   19
likely extend an offer to work with TARMLS and Santa Cruz MLS if they are interested. Two options will be
offered to each association – Baseline (wholesale) or Full-service (retail). Similar to the influence that the
initial partner associations have on the design of the new system, they will also play a key role in shaping the
list of services and terms of the service agreement. The goal is a single service agreement with flexible terms
to meet the unique needs of local associations and MLSs.

At the conclusion of this phase, the Interim Board of Directors will likely sunset and a new permanent Board
of Directors will be seated. Two or three representatives from each participating association will be invited to
participate from the very beginning of the new MLS Advisory Board. The ARIZONA MLS is officially open
for business.

Phase I Step 4 - ARBI integration with ARIZONA MLS including ARMLS. One key to success is to
limit the number of variables (different vendors) in order to get started by demonstrating the highest possible
integration and to confirm what is possible with ARBI. ARMLS and the new ARIZONA MLS are integrated
so users can enter a listing one time, search all listings in the ARIZONA MLS at same time, receive a single
IDX data feed and pay one fee. The current business tools including zipForm®, Digital Ink, AAR TM and
others will be integrated to provide additional value and easy-of-use benefits to the members of the new
ARIZONA MLS.


Rollout Phase II

Phase II Step 5 - ARIZONA MLS begins to offer services to all other association / MLSs across the
state. Partner associations / MLSs will have the same options of Baseline (wholesale) or Full-service (retail).
By this point, the system will be fully functional and its capabilities well defined. ARIZONA MLS will build
on its base, which may include ARMLS, TARMLS, Santa Cruz MLS and three initial partner associations at
this phase.

Phase II Step 6 - ARIZONA MLS is available to all REALTORS® in ARIZONA. Brokers of non-
participating associations can subscribe to the ARIZONA MLS in two ways: (1) by choosing to become a
subscriber through a participating association or (2) as a direct full-service customer for a projected fee of $22
/ month.




Business Plan – ARIZONA MLS                                                     February 2011                  20
Estimated Timeline




Business Plan – ARIZONA MLS   February 2011   21
                                      Projected Start-up Costs

Costs related to defining the working relationship with ARMLS and its Shareholders

Costs associated with staging the new customized system for three initial association partners, contract for
flexmls®, project management and facilitation, technical resources, staff time, travel expenses, time from local
association staff / MLS volunteers to participate in design of ARIZONA MLS.

Travel costs to meet with local associations and MLSs to discuss the business proposition

Professional service fees for financial, tax planning, legal for governing documents, consultants and filing fees

ARBI development and Project Integration Team (project manager, software architect, designer and software
developers)

Meeting expenses – Interim Board of Directors

The projected start-up cost per member is between $10 - $24, a one-time fee.




Business Plan – ARIZONA MLS                                                     February 2011                  22
                 Appendix A – Frequently Asked Questions (FAQs)

   1. What is the ARIZONA MLS? The ARIZONA MLS is proposed as a tightly integrated business
      solution for members in Arizona, which combines the MLS system with the best information and
      tools including public records, digital maps, electronic forms, digital signatures, REALTORS Property
      Resource (RPR™), transaction management and Brokerage back-office system support.

   2. Why is AAR doing this? Many of the local associations asked AAR to investigate whether a
      statewide MLS would give them an economic advantage through volume purchasing of MLS and
      related services. At the present time, there are 16 separate MLS systems, each with different data, rules
      and software. By consolidating statewide listing data, AAR will offer members more choices,
      increased innovation and ease of use by adopting industry standards and leveraging the maximum
      possible buying power of 42,000 members across the state.

   3. What will the proposed program cost me? Will I have to pay more? We estimate the one-time
      start-up costs to be $10 - $24 per member basis that could be appropriated from existing AAR
      reserves if funding is approved or through dues income. The projected ongoing monthly MLS fee is
      $22-$25 per member. If you are currently paying more than that now or if you pay for more than one
      MLS, your costs will go down. You will have more choices, more information and more services from
      which to choose, including the best tools available.

   4. How will the MLS accommodate our Association’s specific needs? We are different from the
      metro areas. Three initial partner associations from outlying areas, each with its own local needs, will
      come together to create the new ARIZONA MLS. Through cooperative efforts, the three
      associations will design uniform listing input forms (data) and reports that meet the combined needs
      of the rural and the metropolitan markets. This will include a comparison of ARMLS and TARMLS
      under the guidance of a competent data analyst and professional facilitator resulting in a system,
      which accommodates the needs of the rural markets.

   5. Why don’t we just use RPR™ - it’s free right? RPR™ is not an MLS system. There are no offers
      of cooperation and compensation, listing entry, business rules, integrated forms, transaction
      management or data exports (IDX, third-party software or Brokerage back-office), and there is no
      way to plug in other software “apps”. RPR™ may be a good thing, but it is not an MLS by design. As
      part of the ARBI and ARIZONA MLS development, we intend to meet with RPR™ management to
      determine areas we can work together to further enhanced each of our respective systems.




Business Plan – ARIZONA MLS                                                   February 2011                 23
   6. How can AAR run an MLS? They don't know anything about it. AAR will have a relationship
      with ARMLS to manage the operations on behalf of the ARIZONA MLS, which will be run by its
      own separate Board of Directors and MLS Advisory Board, consisting of representatives from
      participating associations in rural and metro market areas.

   7. How will it work? Every local association will have the option to participate in the ARIZONA MLS
      or continue operating their own separate MLS system. If they choose the ARIZONA MLS, there are
      two service options – “Baseline” (wholesale) or “Full-Service” (retail). Local associations can pick
      from a menu of options, which will be defined in the service agreement. Some associations may
      choose to be compensated for providing local services on behalf of the ARIZONA MLS. Some may
      receive short-term remuneration to help offset verifiable net operating losses, if they exist.

   8. What’s in it for me? What are the benefits? Numerous. The ARIZONA MLS and Arizona
      REALTOR® Business Interface (ARBI) will offer a comprehensive system available to all 42,000
      REALTORS® in Arizona by offering listings across the state, tighter integration with available
      electronic tax data, zipForm®, Digital Ink and AAR TM, a new single sign-on and dashboard (ARBI)
      to monitor and manage all contracts, listings and transactions, single sign-on to login once for access
      to all linked services, plus new and innovative software “apps”. Agents will be able to search all listing
      information in one MLS system for one fee. A complete summary of the benefits is included in the
      Business Plan.

   9. What will be different? Once it’s fully functional, you and your participating associations will have
      access to new services, tighter integration of business tools, plus additional data from the other
      markets that participate. For the associations not currently using flexmls®, listings will be automatically
      converted and members will migrate to the new ARIZONA MLS developed by the first three partner
      associations, representing the needs of the rural markets. For those currently using flexmls®, they will
      benefit from the new services and tighter integration, but they will not see many changes to their MLS
      system for a couple of years. All participating members will pay one MLS fee to access all of the
      combined information, ARBI and other services provided by the ARIZONA MLS.

   10. What is the ARBI (Arizona REALTOR® Business Interface)? ARBI is an integrated business
       system that will connect the ARIZONA MLS with business tools and software “apps”. Based on a
       uniform listing input form, ARBI will enable the tightest possible integration and flow of information
       between zipForm®, Digital Ink, AAR TM, Brokerage back-office systems and will distribute data to
       IDX and VOW sites from one source for all property listings in the system. ARBI will offer a new
       single sign-on and dashboard for access from your favorite computer, tablet or mobile device of your
       choice.




Business Plan – ARIZONA MLS                                                    February 2011                  24
   11. My association is concerned about lost MLS profits and the survival of our association. The
       ARIZONA MLS will provide the most cost-effective MLS system available in Arizona by leveraging
       the buying power of 42,000 members. It’s up to each local association board of directors whether the
       services and value proposition of the ARIZONA MLS is right for them. Many local associations may
       reduce their operating expenses by contracting with ARIZONA MLS in place of the current vendors.
       For those associations that realize a net loss as a result of partnering with ARIZONA MLS, a one-
       time reserve fund has been created to help offset losses that will be available until it is depleted.

   12. If there are profits, how will they be used? If there are any net profits from operations, they will be
       used first to invest in new subscriber benefits and second, for potential dividends to shareholders and
       reduce tax liabilities for ARIZONA MLS.

   13. What if my board doesn’t participate? If your board chooses not to participate, Designated
       Brokers may participate directly with the service and receive the benefits of ARBI and access all of the
       combined information in the ARIZONA MLS system. Local associations have the option to
       participate, but there are no mandates that they must.

   14. How does my board sign-up? Contact Duane Fouts at (602) 722-1983 or Tom Farley at (602) 248-
       7787 to request a consultation with your Board of Directors. During the consultation, we will discuss
       your needs, financial considerations (cost reduction opportunities, lost profits from MLS, etc.) and
       answer all of your questions. A written proposal and service agreement will be included.

   15. How much will it cost to start-up the ARIZONA MLS and ARBI? The projected cost on per
       member basis is between $10 - $24, a one-time cost that could be appropriated from existing AAR
       reserves if funding is approved or through dues.

   16. When will the ARIZONA MLS be operational? Based on the business plan timeline, the AAR
       Board of Directors will vote on whether or not to fund the initiative in July 2011. If there are three
       local associations that are ready to have a significant role in designing the new system at that time, we
       project the ARIZONA MLS could deliver services beginning in the second or third quarter of next
       year (2012).

   17. How can I learn more? Read the Business Plan and talk with your local association or MLS
       leadership or contact Duane Fouts or Tom Farley at AAR. Talk with one of the Workgroup members
       as listed on the cover of the business plan.




Business Plan – ARIZONA MLS                                                    February 2011                  25

				
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