The construction industry is growing steadily from year to year. In 2018, construction comprised 8% of the country’s GDP, and we can expect that positive trend to continue.
Starting a construction company is an excellent way of enjoying long-term returns on investment. Similar to any other startup, you need a solid business plan when establishing a construction company. A business plan allows you to lay down the blueprint for your company from start to finish. It includes information on the business itself, the services to be provided, how contracts will be obtained and an analysis of your position within the market.
While your own document might be quite extensive depending on the operations of your company, here are eight fundamental elements of a construction company business plan.
Your company description is one of the most important parts of your business plan. In this section, you should include the name of your company and the type of business you intend to operate, such as residential construction, commercial construction, and custom home builders.
The names and contact information of all business owners should be listed, as well as brief descriptions of each owner’s background and experience. In a nutshell, the business description should provide an overview of all the cornerstone information pertaining to your construction company.
Next, include detailed descriptions of all the services to be provided by your company. When listing your services, ensure you have enough speciality and variation within each service to maintain demand.
Along with service descriptions, include the prices you intend to charge for each service. A price list also makes it easier for you to project revenues and to plan for business expenditure.
Another important component of a construction company business plan is the market analysis section. In this section, include information regarding your potential customers and how construction services are performing in your target market. You should also include information about how you intend to attract customers.
Using information about your target market, list the advertising and marketing strategies you intend to use and how your company will stand out from the competition. You can also include the cost and projected effectiveness of each marketing strategy you plan to implement. Market analysis is important because it allows you to determine if your business model is sustainable.
As a construction company, you will need suppliers and vendors who deliver materials for your projects. In the business plan, include a section that covers how you will find suppliers. Will this be done by bidding or direct procurement? How will relationships with suppliers be maintained over time?
Also, list the items that you expect to purchase from your suppliers and how payment will be made for all materials delivered.
Competitor information is another fundamental section to include in a construction business plan. You should identify at least three of your primary competitors, the services they provide, and some of the challenges your business will face in light of this competition.
Competitor analysis provides useful insights into how your company can improve on its shortcomings over time. It also shows the growth potential that your company can achieve as you strive to outperform the competition.
Once customers express interest in your construction company, how will they begin the transaction process? Explain how you will prepare contracts with customers, how prices will be negotiated, and how payment will be made.
This section should walk customers and other stakeholders through the buying process and how services will be delivered to clients.
Your business plan should also include important financial information. Prepare a section that lists all the company’s assets, debts, cash flows and income projections.
You may choose to include a balance sheet, income statement, statement of cash flows, and other relevant financial documents that shed light on your construction company’s financial health.
Every successful business has clearly defined systems and processes, which allow it to operate efficiently and maintain positive cash flow. Technology is becoming increasingly central to the creation and maintenance of these systems.
For any construction company operating in the 21st century, using technology will be key to success. For example, construction estimating software makes it easier and more efficient to plan for material costs, service delivery methods and project timelines. Rather than making inaccurate guesses regarding customer projects, this software creates accurate models fuelled by real-time data.
To see how you can grow your construction business with accurate and efficient estimating and takeoff, get a free trial of Cubit today.By David Cartwright
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