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Construction Programs & Results Inc

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Writing a Business Plan for a Construction Business

by Michael Stone

At a recent class we were asked about business plans. We used to recommend a software program that would help write a plan, but it's no longer on the market and we haven't found an acceptable substitute.How to Write a Business Plan for a Construction-Related Business #MarkupandProfit #ConstructionBusiness #Construction

A business plan is different than year-end planning. A few weeks ago we talked about year-end planning. As a business owner, you need to take the time once a year to look at where things stand and to plan for the next year.

A business plan, on the other hand, looks at a bigger picture. It's a roadmap for the whole journey. Year-end planning is from destination to destination.

Business plans for most construction-related firms should be written by the owner. The incentive is to create direction for the business, and clarity on how you'll make your plan reality.

You can put together a business plan yourself by defining a few details about your company. Get started using these questions. After going through the whole exercise, let it sit for week then read it again. Is it clear to you? Is anything missing? Could it be said better?

Organizational Structure

  • What is your company's organizational structure?
  • Who are the owners and what are their responsibilities? What is their background in construction or business?
  • Will there be other employees, and what are their responsibilities?

Mission Statement

  • Why is your company needed? What's unique about it?
  • What kind of work does your company do, and how is it done?
  • What values does your company embrace?

Market

  • What type of clients do you want?
  • Where are your clients located?
  • Who is your competition?

Operations

  • What will be your process from taking a lead to completing a project?
  • How will jobs get built? Will this change over time?

Marketing

  • How will you market your business?
  • Why should someone call you?

Financial History and Projections

  • Print out the last few years income statements. If you use QuickBooks, you can print two years side-by-side. If you're skilled with Excel, create a spreadsheet that shows your income statement with multiple years side-by-side.
  • Use that data to project what you'd like to see in three and five years.
  • If you are new in business, project your financial goals using your best guess. Information on what is reasonable for a new business is in Markup and Profit Revisited, Chapter 2, under the topic "Projecting Volume."

Long-Term Plan

  • How long do you plan to be in business? What are your retirement or exit plans? Do you hope to sell the business, or pass it to a family member? How will you make that happen?

That's the basic outline of a business plan. Once it's done, review it every year or two and make changes as needed.

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