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.
Original Essays: Twin brothers construction business plan FREE Plagiarism check!
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?
General Contracting Company
Is anything missing? Could it be said better? Throughout this business plan we have taken a very conservative approach to developing our financial projections. The following assumptions were used in preparing the projections in this business plan:. This page left intentionally blank to accommodate tabular matter following.
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Break-Even Analysis is a mathematical technique for analyzing the relationship between profits and fixed and variable costs. It is also a profit planning tool for calculating the point at which sales will equal costs. The above analysis indicates break-even number customers at. Anything over these amounts will be profit.
Ratio analysis can be one of the most useful financial management tools. It becomes important when you look at the trend of each ratio over time. It also becomes important when compared to averages of a particular industry. It has spent the first three years building, staffing, and equipping the business.
As the sales and income go up, these percentages will go down and become more in line with industry averages. The hiring of a new comptroller should help reduce the amount of taxes paid and allow the company to more closely monitor expenses. This would indicate that the amount of current assets is increasing steadily as is the "cushion" between current liabilities and the ability to pay them.
It could suggest that Smith Contractors has a relatively more stable position than the industry and seems to suggest that there is an opportunity for expanded operations. The Revenue to Receivables ratio measures the number of times trade receivables turn over in a year. This indicates that collection methods need to be improved. This has been done. The Cost of Goods to Payables ratio measures the number of times trade payables turn over in a year.
This indicates that the company may be experiencing cash shortages due to the amount of time between the payment of supplies or subcontractors and receipt of payment for its billings. It might want to consider extending the time it takes to pay for supplies or subcontractors.
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The Revenue to Working Capital ratio is a measure of the margin of protection for current creditors. This has been corrected with the change in payment policy to subcontractors. This indicates efficient use of working capital. This indicates that the company should not have a problem servicing its debt. The figures for is above industry median figures. This could indicate that the company is better able to make interest payments and could possibly handle more debt.
The Current Maturities Coverage ratio is a measure of ability to pay current maturities of short-term debt with cash flow from operations. This indicates that the cash flow available to service debt are increasing relative to the level of debt. This indicates that the company is better able to service debt and could possibly indicate additional debt capacity.
The Fixed Assets to Tangible Net Worth ratio measures the extent to which owners' equity has been invested in property, plant, and equipment. This indicates that the investment in fixed assets relative to net worth is decreasing and results in a larger "cushion" for creditors in the event of liquidation.
Fosse Commercial Contractors
The Debt to Equity ratio expresses the relationship between capital contributed by creditors and capital contributed by owners. This indicates the company is achieving greater short-term financial safety. For the period to this ratio is above industry median earnings. This indicates that the company is out-performing the industry but can also indicate that the business is undercapitalized. The Earning Before Tax to Total Assets ratio expresses the pre-tax return on total assets and measures the effectiveness of management in employing available resources.
This indicates an increasingly effective use of available resources. The Officers', Directors', Owners' compensation to Sales ratio is a general measure of ability to compensate top employees. This can indicate an increasing effectiveness of management or that the business is becoming more service oriented and less capital intensive. If the Z Score is Greater than or Equal to 2. If the Z Score is Less than or Equal to 1. If the Z Score is between 1.
Z Score analysis is a statistical method developed to forecast bankruptcy.
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In this instance we used the and actual figures, Estimated , Projected , and figures to determine the above scores. The Z Scores indicated above are all well over 2. A review of the first eight years of Smith Contractors' existence show that it has been immensely successful. Even in its first full year of operation, it reached industry standards of performance. This is unheard of for a start-up company.source link
Writing a Business Plan for a Construction Business
Each subsequent year has shown significant improvement in profitability and operational performance. During the first eight years the company concentrated upon being profitable, building its staff and equipping its office. Smith Contractors is now ready to step up to the next level and utilize economies of scale to make the projected numbers even more striking.
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Smith Contractors has also undertaken major changes in philosophy in billing and payment of subcontractors and suppliers which will dramatically increase cash flow. The company has also hired a full-time marketing manager and is in the process of hiring a full-time controller.
It also utilizes the services of a professional business consultant to help analyze the financial information and make suggestions for the future. Smith Contractors will conduct a complete review of the actual figures and compare them to budgets and peers periodically throughout the year. Toggle navigation. Other articles you might like:.