How to Write a Tiny House Business Plan

The tiny house building industry is a relatively new concept.  Just five years ago, a tiny house would have been considered an RV or truck camper.  Now, the demand for tiny houses is seemingly endless. 

There are numerous reasons for this phenomenon.  One reason for the unexpected boom in the tiny house market would be affordability.  Our tiny house business plan writer has found that tiny homes may be acquired for less than $8000.  This is a fraction of a fraction of the price for a new home.  Also, tiny homes may be built in factories or other locations and cost-effectively delivered to almost any homesite in America.  Regardless of why the tiny home market is growing substantially, the fact of the matter is that the market is ripe for entrepreneurs seeking to exploit these opportunities.  Because of this, our tiny home business plan writer has come up with some tips and tricks to help tiny home entrepreneurs write a professional tiny home business plan.

Executive Summary for a Tiny House Business Plan.

The executive summary section for a tiny home should be a little bit different as compared to traditional home construction business plans.  For example, our tiny home business plan writer recommends that the executive summary starts with a problem statement.  In the problem statement, discuss two or three specific reasons why tiny homes have become popular, cite the sources, and briefly explain how your business will meet the demand for tiny home growth in the future.  Once this foundation is set, then the executive summary section should follow typical homebuilder business plan executive summary structures.

Company Information and Location.

In the company information and location section for a tiny home business plan, the writer should fully explain your organization's services or products in relation to tiny homes.  For example, some organizations may build or install prefabricated tiny homes.  Other firms may specialize in transporting tiny homes.  Still, more organizations could offer services related to decorating and optimizing tiny home space.  No matter what your part in the play is, make sure to specifically state it in this section.

Service Description and Competitive Advantages

In the competitive advantage section for your tiny home business plan, first, make sure to identify your competition.  In some locales, your competition may be local homebuilders.  In other areas, competition could come from RV sellers or module home dealers.  Once your competition is identified, then do a bit of research and find facts and statistics comparing the benefits with tiny homes and your direct competition.  For example, if your competition would be local homebuilders, then competitive advantages for your tiny home business might be that your product is a fraction of the price of a regular home.  Also, transportability may be appealing to potential buyers.  Regardless of your competitive advantage selected, make sure to not only state the competitive advantage but also discuss why the competitive advantage is important for your company.

Target Market for a Tiny House Business Plan

The target market for tiny homes is actually expanding seemingly on a weekly basis.  In previous years, the target market for a tiny home would have been environmentally conscious individuals or couples wanting to lessen their carbon footprint.  Now, your target market for a tiny home could be college students, cost-conscious buyers, and or buyers wishing to periodically relocate their tiny home due to work needs or even travel desires.  Because of the growing demographics of individuals and couples buying tiny homes, not only may you have multiple target markets, but you may also differentiate your organization to best align with niche market opportunities.

Industry research for a Tiny House Business Plan

Industry and market statistics for tiny homes are relatively scarce.  However, there are some quality sites providing tiny home statistics that may be reliable.  For example, iproperty management has done some seemingly good research related to the benefits of owning tiny homes.  On their site, the organization noted that New York City leads the country in the tiny home-share market.  A close second would be San Francisco and San Diego.  Also, Los Angeles ranks in the top five for tiny home sales.  Just from the statistics, an argument may be made that the West Coast, specifically California, could be ready to lead the country in tiny home sales.  This is just one source available to establish a foundation for the need for tiny home builders and a supporting cast.

Owner and Management Section

The owner and management section for a tiny home business plan should start with insights as to why the owner wishes to enter the tiny home industry.  Our tiny home business plan writer has found that some entrepreneurs wish to enter the market because of their personal experiences with tiny home living.  Other entrepreneurs have significant construction experience and wish to exploit niche opportunities in the construction marketplace.  Regardless as to what your personal passion or drive for entering the industry, start the section with a brief explanation of it. 

Funding Request for a Tiny House Business Plan

The funding request section for a tiny house business plan should start with specifically stating the dollar amount needed to start your business.  Once a dollar amount needed to start your tiny house organization is identified, then follow up this specific dollar amount with categories showing how the funds will be divvied up.  For example, if your organization will build tiny houses, then common categories may include working capital, construction equipment, advertising, budget for purchasing land, building materials, and other relevant costs.  Once these categories are identified in dollar amounts allocated, then show the grand total for startup costs at the bottom of the bulleted list.  Also, make sure to have the grand total dollar amount needed to startup operations as the same dollar amount as the top-line dollar amount.  In doing this, tiny home entrepreneurs are able to show, explicitly, the dollar amount needed to start the organization upfront.  However, by breaking the funding into categories, the business owner is able to have some wiggle room and startup cost allocation.

Financials and Financial Projections for a Tiny House Business Plan

The financial projection section four a tiny house business plan should start with identifying when the first home sale will take place.  Once this is done, then use the variable cost section of your financial model to include land purchases, impact fees, and subcontractor costs.  Next, your financial model for your financial projections should list your various fixed costs that will be paid monthly like executive wages, advertising, utilities, office expenses, smartphone bills, and other popular monthly wages.  Once your fixed costs are identified, deduct this from your gross profit margins, which is simply your variable cost subtracted from your revenues.  This number will give you your estimated monthly profits for your tiny house business.  It’s a pretty simple process but an excellent starting point for your financial projections.

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. 

Phone: 321-948-9588

Email: Paulb@Qualitybusinessplan.com

 

Author: Paul Borosky, Doctoral Candidate, MBA., Author

Owner of: Quality Business Plan, and Quality Business Consultant.

Date: 4/20/2021

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