Follow these steps to write a well-thought-out business plan, builders.
When builders approach banks, investors or partners with their business idea, they’ll be required to compile a business plan. It’s unlikely that banks or investors will finance their business based solely on their business plan, but it will convince them that the builder is well-researched, professional and that the debt will be repaid in a reasonable amount of time. A business plan also helps builders to ensure that their venture makes business sense.
Builders should arrange their business plans in the following way to make sure they are logical and well thought out:
1. The builder’s executive summary: Describe what your business will do, whether it’s contracting, maintenance or both, and why you believe it will be successful, in less than a page. The purpose of this summary is to give you and your reader an overall idea of your potential company’s operations as well as the reasons behind it.
2. The builder’s business and operations overview: Here, describe in detail your company’s operations, how you believe it’ll make money, as well as whether it’ll operate locally, provincially or nationally. Include daily operations, the advantages and disadvantage of your product or service, as well as the logistics of getting your product or service to the market place.
3. The builder’s marketing plan: Describe the findings of the market research you have conducted. Include reasons why your product is likely to succeed, your target market and who your competitors are. Also include an advertising plan, detailing whether you will be using direct advertising, traditional advertising, digital advertising, community advertising, or a combination.
4. The builder’s company management: Describe who is going to do what, the skills and experiences necessary for each position, as well as the chain of command you envision. Decide whether you want to be a project manager employing subcontractors, or whether you want to employ tradesmen for specific work and then outsource subcontractors.
5. The builder’s assets and infrastructure: Explain where you will be operating from; the facilities, equipment and tools you’ll need (and whether you’ll purchase or hire them), your vehicle requirements, as well as any other necessary assets that will be used by the company.
6. The builder’s financial analysis: Consider the days you will work per month and per year, billable days, fixed costs and variable costs. Work out your expected income statements, balance sheets and cash flow statements – these are explained in detail below.
6.1 The builder’s income statement: This will be a summary of your income and expenses for each month for the first few years of the business venture. Subtract your total expenses from your total income each month to work out your profit or loss. Remember to include set-up costs, repayment expenses and taxes.
6.2 The builder’s cash flow statement: If your customers have accounts with you, they will only pay you a few months after you invoice them. Therefore, you need to calculate the amount of money you expect to put into your bank account each month. Then, subtract the money you will be taking out of your account each month. You are predicting your bank account statements in order to work out whether you have enough money to last until the company becomes profitable.
6.3 The builder’s balance sheet: This is a list of your assets and liabilities at the end of each period (month, quarter or year).
Now builders, get your business started!