Your executive summary is the first part of your business plan, but you usually write it last because it is a summary of all the most important parts of your plan.
The reader should be interested in your Executive Summary right away. Tell them about your business as a contractor and how things are going. For instance, are you a new business, a contractor who wants to grow, or a business that works in more than one market?
Next, describe each part of your plan that follows this one. For example, you could say a few words about the contractor business. Talk about what kind of business you run as a contractor. Detail your direct competitors. Give a summary of who you want to buy from you. Talk about your marketing plan in a few words. Find the people on your team who are the most important. And explain how you plan to take care of your money.
In your business analysis, you’ll say what kind of contractor business you run.
You could, for example, run one of the following types of contractors:
- Residential contractors are businesses that build new homes or fix up old ones.
- Specialty Contractor: This type of contractor is an expert in one kind of construction work, like preparing the site, wiring, finishing carpentry, laying flooring, etc.
- Heavy construction contractors build things like roads, bridges, and other infrastructure that aren’t buildings.
In the section of your business plan called “Company Analysis,” you need to explain what kind of contractor business you will run and give some history about it.
Be sure to answer questions like:
- When and why did you start the business?
- What big steps have you taken so far? Milestones could be things like how many customers you’ve helped, how many good reviews you’ve gotten, how many customers you’ve helped, etc.
- Your legal structure. Does your business have an S-Corp structure? An LLC? A business run by one person? Tell us about how the law works in your country.
In your industry analysis, you need to describe the contractor industry as a whole.
This might seem useless, but there are more than one way to use it.
First, learning about the business of being a contractor gives you information. It helps you understand the market better.
Second, market research can help you come up with a better plan, especially if it shows you market trends.
Doing market research is also a good way to show your readers that you know what you are talking about. This is what you do by doing your research and putting it in your plan.
As a contractor, you should answer the following questions in the industry analysis part of your business plan:
- How much money does the business of contractors make?
- Is the market getting smaller or bigger?
- Who are your biggest market competitors?
- Who are the most important suppliers in the market?
- What kinds of changes are happening in business?
- How do you think the business will grow over the next 5–10 years?
In the “Customer Analysis” section of your business plan for being a contractor, you should talk about the customers you serve or hope to serve.
There are many different kinds of customers, like homeowners, real estate developers, government agencies, and so on.
As you might expect, your choice of customer segment(s) will have a big impact on the type of contractor business you run. Different marketing campaigns, like ones that help homeowners, would get different responses from the government.
Try to figure out who your ideal customers are by looking at their demographics and how they think and feel. In terms of demographics, you should talk about your customers’ ages, genders, locations, and levels of income.
Psychographic profiles can tell you what your customers want and need. If you can understand and describe these needs well, it will be easier to find new customers and keep the ones you already have.
In your competitive analysis, you should find out who your direct competitors are and then focus on them.
The main ones are other contractors.
Customers can also buy from indirect competitors instead of direct competitors. One example is a homeowner who likes to put in their own floors or paint their own walls. You should also talk about competitions like this.
You should list the other contractors with whom you are in direct competition. Most likely, the contractors who work in the same area as you will be your closest rivals.
Give an overview of each of their businesses and a list of their strengths and weaknesses. You won’t know everything about your competitors unless you have worked for one of them. But you should be able to learn important facts about them, like:
- What kind of clients do they work with?
- What business do they run?
- What is the price range (high, low, etc.)?
- What are their strengths?
- What do they not do well?
Try to answer the last two questions from the point of view of your customers. Don’t be afraid to ask customers of your competitors what they like and dislike about them.
The last part of your competitive analysis is to list the ways you are better than your competitors. For example:
- Will you do the best work possible?
- Will you provide services that your competitors don’t?
- Will you give your customers better service?
- Your prices will be better, right?
In this part of your plan, you should think of ways you can do better than your competitors and write them down.
Usually, a marketing plan has four parts: the product, its price, where it will be sold, and how it will be promoted. You should do the following in your marketing plan for a business plan for a contractor:
Product: In the part about the product, you should repeat the type of contractor company you wrote about in your Company Analysis. Then, explain in detail what you will be selling. For example, do you build both homes and office buildings?
Price: List your prices and how they compare to those of your competitors. In your marketing plan, the “product” and “price” sections are mostly about the services you offer and how much they cost.
Place: This is where your company as a contractor is located. Write down where you are and how your position will affect your success. For example, is your contractor business in a city where a lot of people are moving into new homes or in a city that is trying to improve its infrastructure? Talk about why your place might be the best one for your customers.
Promotions: This is the last part of your marketing plan for your business as a contractor. Here, you’ll list how you’ll bring customers to your business (s). Here are some ideas for how to promote your business:
- Putting ads in local newspapers and magazines
- How to get in touch with sites
- Marketing with social media
- Local radio advertising
You wrote about your goals in other parts of your business plan. In the operations plan, you talk about how you’ll reach those goals. There should be two different parts to your operations plan.
Everyday short-term processes include all the things you need to do to run your contractor business, such as preparing and submitting bids, coordinating crews, finding solutions to supply problems, scheduling inspections, billing, and other administrative tasks.
Long-term goals are the steps you plan to take to get there. These dates could be when you want to build your Xth house or when you want to make $X. It could also be when you move to a new city and want to start working as a contractor.
You need a strong management team for your contractor business to show that it can be successful. Show the backgrounds of your key players, with a focus on the skills and experiences that prove they can help a company grow.
You or other members of your team should have managed contractors before. If so, talk about what you’ve learned and what you’ve done. But you should also talk about any business experience you have that you think will help your business do well.
If you don’t have a strong enough team, you might want to put together an advisory board. A board of advisors could have anywhere from 2 to 8 members. These people would help you with your business as mentors. They would answer questions and give planning tips. If you need to, look for advisory board members who have worked in construction or who have done a good job managing projects in the past.
Your 5-year financial plan should include your 5-year financial statement. For the first year, it should be broken down monthly or quarterlyly, and after that, it should be done annually. Your financial statements include your income statement, your balance sheet, and your cash flow statement.
Most people call an income statement a P&L, which stands for a profit and loss statement. It shows how much money you made and how much it cost you, so you can see if you made a profit.
Income statement: you have to make some assumptions. For instance, will you work on one house at a time, or will you have crews working on more than one project at once? How much will sales increase each year? 2% or 10%? As you might expect, the assumptions you make will have a big impact on your business’s financial projections. Do as much research as you can to try to find facts that support what you think.
Balance sheets show you what you own and what you owe. Balance sheets may have a lot of information on them, but try to focus on the most important parts. For instance, if you spend $50,000 building up your contracting business, you won’t start making money right away. Instead, it’s an asset that you hope will bring in money for years to come. Also, a check from a bank for $50,000 doesn’t have to be paid back right away. You’ll have to pay that back over time instead.
Cash Flow Statement: Your cash flow statement will help you figure out how much money you need to start or grow your business and make sure you don’t run out of money. Most business owners and entrepreneurs don’t know that you can make money and still go bankrupt if you run out of cash.
Make sure to include some of the most important costs of starting or growing a contractor business on your Income Statement and Balance Sheet.
- What does software cost?
- The price of tools and materials
- Staff pay or salaries Insurance for businesses
- Fees and permits
- Legal expenses