Planning is critical to a construction contractor. No surprise to all. Planning’s importance has been stated by so many people in some many ways as the one of the key activities to assure business success. We cannot state it differently than it has been said before. We agree. Additionally, we believe that you are not planning when you make up your plan as you go. It is called fire fighting and it is never profitable.

The right kind of planning is essential. The economics, the environment and the business of construction contracting are unique. Therefore, a generalist approach is ineffective. It may be even dangerous given the risk and nature of our industry. Add to that, industry veterans state it is harder to make the same profits than 5 years ago.

Based on Facts and Numbers:

Our business planning process is half quantitative meaning it is based on facts and numbers, not ideas and intentions. We have assisted dozens of firms with their business. Contractors have seen the power that in-depth industry knowledge can have on an actionable and thoughtful business plan.

• Business Plan– this is the long term vision and action plan of keeping your business strong. Once created, it must be updated to reflect changes in the market, industry, client base etc. This should be a yearly exercise. To keep the plan the same or to have no plan at all invites the fate of the dinosaurs.

Contractors are smart to review and understand that there are two ready sources of wealth building from construction contracting:

• Income from a construction firm
• Selling a well organized and profitable construction firm.

A business plan is a contractor's road map of his or her firm's journey. The business plan is similar to a pre-job plan. Both documents are essential in keeping wasted time and adverse events to a minimum. The reason for planning is simple; it is foolish to make up your process as you go. The business is highly risky. The business is changing. In other words, if you don't have a plan, you don’t have a business, you have a job.

Your plan should include:

1. Executive Summary
2. Mission
3. Keys of Success
4. Company Summary
5. Ownership / Ownership Plans
6. On Going (or Start Up)  Operational Summary
7. Services Offered by Your Firm

• Billable
• Value Added
• Contemplated

8. Market Analysis Summary

• Existing Clients
• Potential Clients

9. Business Services Analysis

• Niches
• Commodities
• Changes in Client Demand

10. Strategy and Implementation Summary

• Differentiators / Competitive Edge
• Cash Cows / Fading Light / Emerging Clients
• Sales Forecast

11. Management Summary

• Management SWOT
• Personnel Plan

12. Financial Plan

• Breakeven Analysis
• Pro Forma Profit and Loss
• Pro Forma Cash Flow
• Pro Forma Balance Sheet
• Construction Business Ratios

Investors are starting to recognize the value of a well run firm. That is, as your company matures there is a value of the firm. Others are looking to invest or outright buy your contracting business. A premium will be paid by an outsider to acquire a strong business. Construction contracting firms are being sold to those who are looking for a high return on their investment. There is a substantial amount of “unhappy” money in the world. Wealthy investors are not satisfied with the rate of return on CD’s or blue chip stocks. One symptom we observe is the growth of hedge funds and the reemergence of venture capitalists..
Planning has a high return on investment. Creating and executing a thoughtful plan allows the owner to have a life outside of construction. A business plan is a leverage point. It answers the twin questions of:

• How to increase the dividends paid to the owners year in and year out?
• How increase the value of the firm so that the sale price will be maximized?

If you are a construction contractor, you should take advantage of a free 1 hour consultation with us. We can certainly be a help in getting in your planning process started. We only work with construction contractors, we know the business and are ready to work when you are.