How to Write a Construction Company Business Plan
The construction company industry, in general, over the last several months has performed exceptionally well.
Demand for homes and affordable living has never been higher, local governments, as well as the federal government, are investing more and more money in infrastructure repair, and businesses are using stimulus money to renovate their facilities in hopes of future growth. Because of the elevated demand in the construction industry, more competitors are entering the marketplace. As more construction companies enter the marketplace, the need for a professionally written business plan becomes evident regardless of your new entrant or establish competitor. Because of this need, our business plan writer and financial projection consultant has come up with some tips and tricks on how to write a professional construction company business plan with financial projections.
Executive Summary for a Construction Company Business Plan.
The executive summary section of a construction company business plan should summarize the totality of the business plan already written. However, an important aspect of the construction company's business plan is to highlight the business owner's professional history. Some construction companies focus on HVAC; other construction companies may specialize in plumbing or electrical; no matter what your specialty, make sure to support your business's objectives with the business owner's specialty expertise. Further, always have a financial projection highlight segment in your executive summary. The highlight should include the construction company's estimated revenues and profits for the first year, as well as the profit margin.
The company information section of a construction company business plan should include significant discussions about the organization's specialty. As noted above, some construction companies primarily do roofing, other construction companies 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.
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.
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. 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.
Industry research for a Construction Company Business Plan
The industry research section for a construction company business plan 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, the 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.
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 as 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.
The financial projection section of a construction company business plan to start with revenues on a daily basis. For example, if your construction company specializing 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