This business plan not a huge document to “sell” the bank or bonding company on you. This is a practical document construction company owners can use to stay focused and grow your business.
Construction contractors such as electrical contractors and general contractors and more live in a topsy-turvey world of competitive bids with jobs often starting with little notice. This causes many construction contractors to question business planning at all. You should prepare a business plan for the following reasons:
- It gives you an opportunity to look at all key people and productivity including profitability by job, by supervisor, by general contractor etc.
- It allows you to determine strategy in advance for if things are working well or not working at all.
- It gives you a guide to lead from. It also allows you to include your team increasing buy-in.
KISS is the key. Keep it simple, stupid. Here is how most construction business owners can plan for the future:
- Create an introduction page that specifies in writing your Mission (what you do now) and your Vision (what you want to be in the future). Put your past three years key metrics – Revenues, Gross Margins, Overhead, Profits. Perhaps your fully marked up labor rates etc. Your shorthand for running your business.
- On a second page list specific tasks that will be completed in the next 90 days. List who will be responsible and the due date. IMPORTANT – you must review this list at least monthly with your team. Weekly is usually better. Keep updating and adding new 90 day items as ones are complete.
- Add a Work-In-Process schedule for current and future expected jobs. Add an overhead expense schedule and equipment purchase schedule. Have your financial person create a cash flow schedule. Project your most likely outcome. If you get really motivated project a low and a high.
- If possible and helpful review your WIP schedule by profitability by supervisor, tasks, etc. See where you make the best money. Can you do more of that work?
- Review the entire plan monthly. Review the tasks weekly. Update the projections quarterly or sooner if major changes occur. USE this document. You will be amazed by what you see in front of you that used to only be seen once it occurred.
This is not a huge document to “selling” the bank or bonding company on you. This is a practical document you can use to stay focused on grow your business.
For more tips click here to download the e-book, “A Contractor’s Guide to Succession Planning”. A salable business is a well run business. See if you are running your business well.
Harvest Business Advisors sells and prepares business valuations for construction contractors nationally including Maryland, Delaware, Pennsylvania, New Jersey, Virginia and more.