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Construction management business plan for starting your own company
As long as humans continue to live in houses, the construction industry cannot go out of business. This business plan for construction company sample is being made to make it possible to start a construction management business that can be beneficial. Continue to read this document if you want to know how to open a construction company that can make you serious money.
Strategic management is one of the key factors that are needed to make any construction business a success. If you lack this, the company will not survive for long, let alone being profitable. This construction company business plan will focus on all areas that are important in making a construction company a success.
Executive Summary
2.1 The Business
Tyler Constructors will be a registered and bonded company based in and operating from Atlanta, Georgia. The funds needed for starting up a construction company will be provided by Tyler Corleone, an Italian Engineer who has been in the construction business for some 25 years now.
2.2 Management of Construction Management Company
If you want to know how to start a construction management business, the most important thing for you to learn is the management of the company. Construction is a complicated field and if the management is not handled the right way, it can never be profitable.
Tyler Constructors will be headed by Tyler Corleone. He will hire 3 managers for operations, liaison, and contracts. 2 Engineers will also be hired to run the actual construction work. All the managers and the engineers will be answerable to Tyler and will be required to bring any important matter to his notice as soon as possible. Now, let’s see how to write a business plan for investors to get funds for a construction management business,
2.3 Customers of Construction Management Company
The customers of this business will also pretty much the same as those of an interior design business plan. The main customers will include:
- Private clients.
- Corporate clients.
- Government agencies.
- Non-profit bodies.
2.4 Business Target
The answer to the question: how to set up construction company cannot be complete without setting the business targets. The targets of Tyler Constructors are:
- Starting to make a profit of $36,000 a month after three years.
- Becoming the leading construction management company in Georgia in 5 years.
- Expanding to at least two more states by the end of year 10.
Company Summary
3.1 Company Owner
The owner is one of the most important aspects of any construction project management plan example. The owner of this company will be Tyler Corleone. He is an engineer with extensive knowledge and experience in the field of construction project management. He is also the one arranging funds for this venture.
3.2 Why the Construction Management Business is being started?
Tyler is starting a commercial construction company because he has seen a lot of potential in the field. He has been associated with the field for a long time and knows is inside out. The current boom in the economy and the shift of people towards this sector has made this business a lucrative one.
Another reason for starting this business is the passion Tyler has for this field. He wants to live through his work for ages to come and to do this he is planning to write his name quite literally in stone all over the US.
3.3 How the Construction Management Business will be started?
Step1: Planning Phase
The next thing we need to talk about in this construction management business plan sample is the planning of the business. In this stage, Tyler will run the competitive analysis and will make a feasibility of the business. The target market segments will also be selected at this stage.
Setting up a construction company is not an easy thing and planning needs to be done on an extensive scale for the business to be successful.
Step2: Establishing a Brand Name
Making a brand that people can trust is the next step in any business plan for architecture firm. Tyler plans to make a brand that people can depend on and that has a worth in the market.
Step3: Establishing An Office
Once the planning and branding bits are out of the way, the next step will be to establish an office. This will be the point of contact with the world for the business.
Step4: Going Online
Having an online presence is very important for any business to succeed these days. Tyler Constructors will make a website where people can come to know about them or place any order for any construction contract.
Step5: Promotion and Marketing
The last step is to make the brand known to the people so much that people start linking the name Tyler with construction.
| Start-up Expenses | |
| Legal | $257,000 |
| Consultants | $0 |
| Insurance | $35,000 |
| Rent | $23,000 |
| Research and Development | $32,000 |
| Expensed Equipment | $60,000 |
| Signs | $4,000 |
| TOTAL START-UP EXPENSES | $411,000 |
| Start-up Assets | $340,000 |
| Cash Required | $390,000 |
| Start-up Inventory | $60,000 |
| Other Current Assets | $290,000 |
| Long-term Assets | $310,000 |
| TOTAL ASSETS | $1,390,000 |
| Total Requirements | $1,801,000 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $411,000 |
| Start-up Assets to Fund | $1,390,000 |
| TOTAL FUNDING REQUIRED | $1,801,000 |
| Assets | |
| Non-cash Assets from Start-up | $1,790,000 |
| Cash Requirements from Start-up | $370,000 |
| Additional Cash Raised | $71,000 |
| Cash Balance on Starting Date | $48,000 |
| TOTAL ASSETS | $2,279,000 |
| Liabilities and Capital | |
| Liabilities | $29,000 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $45,000 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $74,000 |
| Capital | |
| Planned Investment | $1,801,000 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,801,000 |
| Loss at Start-up (Start-up Expenses) | $404,000 |
| TOTAL CAPITAL | $2,205,000 |
| TOTAL CAPITAL AND LIABILITIES | $2,279,000 |
| Total Funding | $1,801,000 |
Services
The services Tyler Construction will be providing are the next thing that need to be discussed. Unlike a real estate flipping business plan, owning a construction company means you have to provide a number of different services. The main services we will be focusing on in this construction project management template will be the following.
- House Renovation
Home renovation is one of the most lucrative of all construction projects. Finishing touches in any building are the most expensive and always have a large profit margin. We will be providing these services all over the state of Georgia and will make a name in this market segment.
- Home Building
As there is a lack of reputable home builders in the area, we will provide this service. This will not be a very lucrative one, but the number of projects will be higher than other services and will earn us quite a bit of profit.
- Commercial Construction
We will also provide all sorts of commercial construction services from shopping malls to hotels. This will be one of the bulk income services that we will be providing.
- Government and Public Sector Construction
This will be the most important service provided by Tyler Constructors. As government projects are generally large, this will make up the bulk of steady revenue for the firm.
Marketing Analysis of Construction Management Business
Business plan for investors
A detailed marketing analysis of the target market is one of the most important things for starting a successful business. If you need to know how to write a business plan for a construction company, you need to know the industry. The US construction industry is worth just under $1 trillion and is expected to grow to $1.25 trillion by the next year. This expected boom in this industry means that now is the perfect time for starting a construction management business in the US.
If you want to learn how to open a construction company, the most important thing to consider is the market you are planning to penetrate. Even though the industry is huge, your construction company business plan needs to have something distinct that sets it apart from the rest.
5.1 Market Trends
The next thing a construction business proposal template needs to shed light on are the trends of the market. The construction industry in the US has always been growing, less the great depression and the recession of 2008.
All the construction business plans need to have a close look on the market before setting foot in the business. This is just like making business plan for engineering consulting.
5.2 Marketing Segmentation
The Market segments Tyler Constructors will be providing the services will include:
5.2.1 Government Agencies
These are unarguably the largest customers of any construction company. Tyler Constructors will focus on establishing as a reputable government contractor. This is a profitable segment of the market.
5.2.2 Corporate Clients
These are one some of the most profitable of all segments of the market. Tyler Constructors will provide all type of construction services to this segment of the market.
5.2.3 Home Building Market
This is a large segment of the market but the worth of individual projects is not very much. This market will be sort of a side business for Tyler and will be used to cover the overheads of other projects.
5.2.4 Non-Profit Bodies
The services provided to this segment of the market will be not for profit but as a civic duty of Tyler Constructors to play their role in improving the society.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Government Agencies | 35% | 34,000 | 36,000 | 38,000 | 40,000 | 42,000 | 10.00% |
| Corporate Clients | 28% | 26,000 | 28,000 | 29,000 | 31,000 | 33,000 | 10.00% |
| Home Building Market | 24% | 21,000 | 22,000 | 24,000 | 26,000 | 28,000 | 10.00% |
| Non-Profit Bodies | 13% | 11,000 | 12,000 | 13,000 | 14,000 | 15,000 | 11.00% |
| Total | 100% | 92,000 | 98,000 | 104,000 | 111,000 | 118,000 | 10% |
5.3 Business Target
- To provide impeccable construction management service in the state of Georgia.
- To become one of the leading government construction contractors.
- To expand to national market and make a name.
- To start making $500,000 in profits by the end of 5 years.
5.4 Product Pricing
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Our products and services will be priced slightly below the average price on the market. This will be used as a tactic to attract customers. After we make a credible name in the industry, we will increase the prices.
Marketing Strategy
You need to have a strong construction management marketing strategy if you want to be successful in this field. The most important aspect of any marketing strategy for construction company pdf is finding out what the competitors lack and building your strategy around it.
The construction firms in the area do not have established brands and do not offer flexibility in the services. This means that these are the aspects on which Tyler Constructors will be basing their marketing strategy.
6.1 Competitive Analysis
- We have a very experienced team, made up of managers and engineers who can complete the projects on a tighter budget.
- We will involve the client in all stages of the project, and use the materials and practices they want, something no other constructor in the area does.
- We will offer the flexibility of completing any stage of the project, if someone wants just a grey structure or just the finishing we will do that.
6.2 Sales Strategy
- We will use print, electronic, and social media to advertise the business.
- We will have a separate wing dedicated to finding advertisements for construction projects and biding on them.
- We will keep the prices low for the first year to attract more customers.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| House Renovation | 40,000 | 42,400 | 44,944 |
| Home Building | 45,000 | 47,700 | 50,562 |
| Commercial Construction | 46,000 | 48,760 | 51,686 |
| Government & Public Sector Construction | 48,000 | 50,880 | 53,933 |
| TOTAL UNIT SALES | 179,000 | 189,740 | 201,124 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| House Renovation | $50.00 | $58.00 | $67.28 |
| Home Building | $75.00 | $87.00 | $100.92 |
| Commercial Construction | $80.00 | $92.80 | $107.65 |
| Government & Public Sector Construction | $70.00 | $81.20 | $94.19 |
| Sales | |||
| House Renovation | $2,000,000.00 | $2,459,200.00 | $3,023,832.32 |
| Home Building | $3,375,000.00 | $4,149,900.00 | $5,102,717.04 |
| Commercial Construction | $3,680,000.00 | $4,524,928.00 | $5,563,851.47 |
| Government & Public Sector Construction | $3,360,000.00 | $4,131,456.00 | $5,080,038.30 |
| TOTAL SALES | $12,415,000.00 | $15,265,484.00 | $18,770,439.13 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| House Renovation | $48.00 | $55.00 | $63.00 |
| Home Building | $73.00 | $84.00 | $96.00 |
| Commercial Construction | $78.00 | $89.00 | $103.00 |
| Government & Public Sector Construction | $68.00 | $78.00 | $90.00 |
| Direct Cost of Sales | |||
| House Renovation | $1,920,000.00 | $2,332,000.00 | $2,831,472.00 |
| Home Building | $3,285,000.00 | $4,006,800.00 | $4,853,952.00 |
| Commercial Construction | $3,588,000.00 | $4,339,640.00 | $5,323,616.80 |
| Government & Public Sector Construction | $3,264,000.00 | $3,968,640.00 | $4,853,952.00 |
| Subtotal Direct Cost of Sales | $12,057,000.00 | $14,647,080.00 | $17,862,992.80 |
Personnel plan
Construction is a labor-intensive business. The need for skilled and unskilled labor in this field is more than any other one. We will hire some people on a permanent basis and others on project-to-project basis. This is because if you hire all the staff on a permanent basis, the overheads will be too much to make the business profitable in the days when there is no ongoing project. Let us see what the minimum staff is needed to make this construction management business plan possible.
7.1 Company Staff
- The CEO of the company will be Tyler Corleone.
- 3 Managers for Liaison, Operations, and Contracts.
- 1 Accountant to manage the finances of the company
- 2 Engineers to manage the construction sites.
- 4 Overseers to run the construction activity.
- 3 Drivers for the office and staff.
- 2 Office boys.
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Liaison Manager | $13,500 | $14,850 | $16,335 |
| Operations Manager | $14,000 | $15,400 | $16,940 |
| Contracts Manager | $13,500 | $14,850 | $16,335 |
| Accountant | $10,000 | $11,000 | $12,100 |
| Engineers | $25,000 | $27,500 | $30,250 |
| Overseers | $44,000 | $48,400 | $53,240 |
| Drivers | $27,000 | $29,700 | $32,670 |
| Office Boys | $16,000 | $17,600 | $19,360 |
| Total Salaries | $163,000 | $179,300 | $197,230 |
Financial Plan
The cost to start a construction company is obviously more than a remodeling business plan. The actual costs can only be determined with reasonable accuracy when the business is started. However, here are some of the costs that you need to have arranged before the company is started:
- The cost for setting up the business.
- The cost of basic construction machinery.
- The money needed for staff salaries.
- The cost of setting up the website.
- The online and media marketing cost.
- The cost of overheads before the company starts making money.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.17% | 8.22% | 8.26% |
| Long-term Interest Rate | 8.35% | 8.39% | 8.42% |
| Tax Rate | 23.22% | 24.36% | 25.00% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
| Break-Even Analysis | |
| Monthly Units Break-even | 5342 |
| Monthly Revenue Break-even | $132,500 |
| Assumptions: | |
| Average Per-Unit Revenue | $235.00 |
| Average Per-Unit Variable Cost | $0.66 |
| Estimated Monthly Fixed Cost | $162,530 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $12,415,000 | $15,265,484 | $18,770,439 |
| Direct Cost of Sales | $12,057,000 | $14,647,080 | $17,862,993 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $12,057,000 | $14,647,080 | $17,862,993 |
| Gross Margin | $358,000 | $618,404 | $907,446 |
| Gross Margin % | 2.88% | 4.05% | 4.83% |
| Expenses | |||
| Payroll | $163,000 | $179,300 | $197,230 |
| Sales and Marketing and Other Expenses | $140,000 | $126,000 | $127,000 |
| Depreciation | $2,230 | $2,340 | $2,450 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $2,800 | $2,900 | $3,190 |
| Insurance | $2,500 | $2,600 | $2,700 |
| Rent | $2,800 | $2,900 | $3,000 |
| Payroll Taxes | $30,000 | $31,000 | $32,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $343,330 | $347,040 | $367,570 |
| Profit Before Interest and Taxes | $14,670 | $271,364 | $539,876 |
| EBITDA | $14,670 | $271,364 | $539,876 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $2,934 | $54,273 | $107,975 |
| Net Profit | $11,736 | $217,091 | $431,901 |
| Net Profit/Sales | 0.09% | 1.42% | 2.30% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $68,000 | $73,440 | $79,315 |
| Cash from Receivables | $18,000 | $19,440 | $20,995 |
| SUBTOTAL CASH FROM OPERATIONS | $86,000 | $93,740 | $101,239 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $87,000 | $94,000 | $102,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $40,000 | $42,000 | $44,000 |
| Bill Payments | $30,000 | $32,000 | $34,000 |
| SUBTOTAL SPENT ON OPERATIONS | $70,000 | $74,000 | $78,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $70,000 | $75,600 | $81,648 |
| Net Cash Flow | $18,000 | $19,000 | $21,000 |
| Cash Balance | $23,000 | $25,000 | $27,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $280,000 | $313,600 | $344,960 |
| Accounts Receivable | $26,000 | $29,120 | $32,731 |
| Inventory | $4,200 | $4,704 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $301,000 | $337,120 | $378,923 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $19,000 | $21,280 | $23,940 |
| TOTAL LONG-TERM ASSETS | $60,000 | $67,200 | $75,600 |
| TOTAL ASSETS | $295,000 | $330,400 | $371,700 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $18,500 | $20,720 | $23,289 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $14,900 | $16,688 | $18,757 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $16,000 | $17,920 | $20,142 |
| Paid-in Capital | $29,000 | $30,000 | $30,950 |
| Retained Earnings | $60,000 | $65,400 | $71,940 |
| Earnings | $195,000 | $212,550 | $233,805 |
| TOTAL CAPITAL | $277,000 | $301,930 | $332,123 |
| TOTAL LIABILITIES AND CAPITAL | $293,000 | $330,400 | $371,700 |
| Net Worth | $310,000 | $337,900 | $371,690 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.23% | 8.01% | 8.88% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.18% | 10.17% | 11.27% | 9.80% |
| Inventory | 5.41% | 5.99% | 6.64% | 9.90% |
| Other Current Assets | 2.12% | 2.35% | 2.60% | 2.40% |
| Total Current Assets | 150.01% | 150.50% | 152.00% | 158.00% |
| Long-term Assets | 11.41% | 11.44% | 11.52% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.95% | 4.99% | 5.04% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.60% | 7.66% | 7.73% | 7.38% |
| NET WORTH | 100.85% | 101.66% | 102.59% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.22% | 96.76% | 99.47% | 99.00% |
| Selling, General & Administrative Expenses | 94.36% | 96.91% | 99.62% | 97.80% |
| Advertising Expenses | 1.55% | 1.59% | 1.64% | 1.40% |
| Profit Before Interest and Taxes | 42.00% | 43.13% | 44.34% | 33.90% |
| Main Ratios | ||||
| Current | 34 | 35 | 36 | 32 |
| Quick | 33 | 33.8 | 34.645 | 33 |
| Total Debt to Total Assets | 0.18% | 0.17% | 0.17% | 0.40% |
| Pre-tax Return on Net Worth | 72.80% | 73.00% | 75.59% | 75.00% |
| Pre-tax Return on Assets | 94.66% | 99.39% | 104.36% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 33.05% | 34.07% | 35.13% | N.A. |
| Return on Equity | 55.33% | 57.05% | 58.81% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.7 | 7.8 | 7.8 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 31.22 | 32.781 | 33 | N.A. |
| Accounts Payable Turnover | 15.4 | 15.9 | 16.23 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.4 | 2.5 | 2.6 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.04 | -0.03 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $233,400 | $246,470 | $260,273 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.86 | 0.87 | 0.87 | N.A. |
| Current Debt/Total Assets | 1% | 0% | 0% | N.A. |
| Acid Test | 29 | 29.04 | 29.09 | N.A. |
| Sales/Net Worth | 2.2 | 2.3 | 2.3 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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