How to Write a Construction Company Business Plan
The construction company industry, in general, over the last several years has performed exceptionally well, which is a driving reason for the increased demand for construction company business plans, construction company business plan templates, and construction company proforma financial projections.
There are numerous reasons for the continued demand for construction company business plans. For example, demand for housing across the US is at an all-time high. This demand is spurring the need for new homes to be constructed as well as older homes to be remodeled. As a result, various trades in the construction industry, whether it be general contractors, framers, concrete companies, painters, drywallers, plumbers, and HVAC professionals, are all clamoring for updated and well-prepared business plans to ensure adequate funding when needed.
Regardless of the reason why the demand for construction company business plans is at an all-time high, having one prepared may assist in keeping your construction company business focused on operation objectives, ready to provide builders to show qualifications, or to take on investors for funding. From this, our construction company business plan writer has come up with some tips and tricks to use when writing your own construction company business plan, business plan template, or pro forma financial projections (2/22).
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Executive Summary for a Construction Company Business Plan or Template.
The executive summary section for a construction business plan should include general information about the organization, such as the company’s name, address, and geographic area service. Further, our construction company business plan writer feels that this type of plan’s executive summary should also include a brief discussion about the organization's specialty. For example, some construction companies run trim, specialize in framing houses, or install plumbing or electrical systems. Regardless of your trade, make sure to include a discussion about it within the first couple of paragraphs of your executive summary (3/22).
Company Information and Location for a Construction Company Business Plan.
The company information section of a construction company business plan or template should include significant discussions about the organization's specialty. As noted above, some construction companies primarily do roofing, other construction companies do punch work, and still more construction companies may do the land clearing. Whatever your specialty, make sure to discuss what your construction company does, the locations in which you offer your services, and possibly pictures of jobs completed. By setting this foundation, not only are you establishing credibility for your organization, but you are also informing the reader about your scope of operations.
Also, the location section for a construction business plan should discuss benefits related to the organization's home office/warehouse. For example, trim companies often utilize warehouses or storage units for extra materials. In doing this, construction owners are able to reduce job material costs or increase revenues due to excess supplies. Regardless of why an organization utilizes a warehouse or storage unit, make sure to fully explain the benefits as to how they outweigh the cost of the practice.
Product Description and Competitive Advantages
In the product description section of your construction company business plan, make sure to outline the specific services that your construction company offers. For example, if you are a plumbing company, then you may do residential repairs, commercial plumbing installs, as well as new construction plumbing installs. By documenting the services that your organization will perform, not only are you setting boundaries for what you will do in the construction arena, but you’re also documenting, indirectly, activities that you will not do.
Target Market for a Construction Company Business
The target market section for the construction company business plan should discuss or describe the type of customer that you typically will service. For example, a commercial electrician will usually work with business owners or corporate executives for repair work or remodeling activities. By identifying who your target market will be, business owners are able to design marketing activities and strategies to best exploit target market opportunities. An example of this would be if a roofing contractor works with residents, then an important marketing activity would be joining the Chamber of Commerce, which would allow the business owner to network with potential homeowners. Without knowing the target market, choosing the appropriate marketing channel proves difficult.
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Industry research for a Construction Company Business Plan or Template
The industry research section for a construction company business plan or template should start with examining industry happenings at a national level and then explore various trends within the industry. For example, in the last 12 months, construction in the US has generated approximately 2.1 trillion written dollars in revenue. In the last five years, this industry has grown annually by approximately 1.1%. In the next five years, construction industry experts predict an annual growth rate of approximately 3%. Further, profits for this industry have exceeded $110 billion. This information was obtained from IBIS world. By showing and discussing industry trends, business owners are able to show readers that they are well-versed in their industry. Also, by showing where the information was retrieved, the strategy adds credibility to the documentation.
Owner and Management Section
The owner and management section for the construction company business plan should highlight the historical experience of the business owner. For example, if the construction company business owner has significant experience in HVAC, then make sure to go into details as to the projects related to HVAC that have been completed and also work history and education as well. By showing a working background in the construction industry, this practice shows experience, adds expertise to thoughts and ideas, and lays the groundwork for why the business owner should start or expand the construction company operations.
Funding Request for a Construction Company Business Plan
The funding request section for a construction company business plan should start with describing explicitly how much money is needed to start or expand the construction company. Once a specific number is introduced, then in a bullet point fashion, categorize how the funds will be spent. Popular construction company categories would include construction equipment, construction tools, office location buildout, vehicles, and travel expenses. At the bottom of the document, provided a grand total of all the categories explored. This grand total for construction startup or expansion should be an identical number to the one introduced in the first sentence of the funding request document. By following the strategy, construction company business owners are able to show explicitly how much they need, but in the body of the funding request, they have broad categories that give them wiggle room for divesting funds invested.
Financials and Financial Projections for a Construction Company.
The financial projection section of a construction company's business plan starts with revenues on a daily basis. For example, if your construction company specializes in carpentry, then show your daily sales for trim-related activities and installations. Next, deduct the variable cost from your revenues on a daily basis. To extend the carpentry example, the variable cost would be nails and wood trim installed. Once your gross profits are determined, then multiply them by the number of working days in a month, usually in the construction industry, about 26 days. This will leave you with your gross profits on a monthly basis. The next step would be to deduct your monthly fixed expenses like travel expenses, gas, labor, and utilities like your phone bill. Once these bills are deducted, this will give you your first month's net profit, proximately. Using various gross estimates, you can then complete your projections for the next 12 months and even five years.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author
Owner of: Quality Business Plan, and Quality Business Consultant.