Another carpenter and I have decided to try and go into business for ourselves. Wrote up a business plan using a computer program. I didnt like the way the plan turned out ( just to generic, feel it didnt really fit for a construction company). So we are back to square one.
For those of you that have written up a business plan, what did you do? Looking for some guidance or examples. Found a couple of web pages (SCORE, Small Bus. Bureau, etc,) that have some stuff on business plans, but have looked at them real close yet.
Thanks for any and all info.
-m2akita
Replies
Congrats you are probably ahead of ten million contractors at this point!
Keep up the good planning. You'll get a good education here at TU.
blue
"...if you just do what you think is best testing those limits... it's pretty easy to find exactly where the line is...."
From the best of TauntonU.
blue_eyed_devil - "Congrats you are probably ahead of ten million contractors at this point!
Keep up the good planning. You'll get a good education here at TU.
blue"
Blue, I'm thinking unfortunately you hit the nail on the head. Anecdotally I would say maybe 1% of all contractors have really researched and developed a written business plan.
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Blue, I'm thinking unfortunately you hit the nail on the head. Anecdotally I would say maybe 1% of all contractors have really researched and developed a written business plan.
I'm thinking 1% is high...way high!
I've read one. I've also stayed at a Holiday Inn!
blue"...if you just do what you think is best testing those limits... it's pretty easy to find exactly where the line is...."
From the best of TauntonU.
I want to thank everyone who has posted here. I hadn't been able to follow this thread since starting it due to computer problems ( enhanced by me trying to fix them on my own!!). Once again, thank you!!!Live by the sword, die by the sword....choose your sword wisely.
Why do you want a business plan?
IOW, what is the plan going to do for you?
IMHO, a good business plan should do for the businessman what a good set of prints, drawings, Gantt charts, estimates, cashflow projections do for the builder.
SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo
Sam T,
"Why do you want a business plan?
IOW, what is the plan going to do for you?"
Those are good questions. I originally bought some business plan software becuase I had read ( here at breaktime and other places), that one should have a business plan. What exactly a business plan was/ is, I didnt really know. Thats why I bought the computer program.
So what is a business plan?? What should a business plan do?? Im still not really sure, trying to figure that out, but here is my thinking. A business plan should tell who/ what the company is, what the company's goals and plans are, and how the company is going to get there. I guess kind of a road map.
So what is the plan going to do for me/us. First off, to organize all the thoughts that are flying around in my head :). I think it is really good to have something down hard on paper (how the company is going to be run, what the goals are, etc.). That way it is there, gives less room for misinterpretation. I think this is especially important in a partnership. Having something down hard on paper will make it easier to spot potential flaws or problems in the way the company is run.
Hope I was able to make this clear.Live by the sword, die by the sword....choose your sword wisely.
What should a business plan do??
I think the best analogy to a business plan is a commercial set of Architects prints.
If I were to give Blueyedevil a set of prints, I would already know what I should be looking at when he eventually hands me the C of O.
There will be a construction schedule so we could check at any point in time and see if he was going as fast as should be and make corrections in all projections..
Taking the schedule and expenses list, he will create an Expenses schedule, plan a nice Cash Flow and create an income schedule he'll call a Draw Schedule. Now, he can check to see if the budget is being followed and make more corrections.
At the start of Blues' Project, he can predict everything of con$equence And will be able to tell when and why to make corrections.
The only difference between a Construction Plan and a Business Plan is the order in which the projections are created. With a Business Plan, you start with prints and guess your income in order to create an Income Schedule.
Use the Income Schedule to create an Expense Schedule that results in a good Projected Cash Flow.
The time and effort it takes to design the thing and create the Blueprints, Projections and Schedules total about the same in both cases.
I'm on a roll, so I'm gonna finish this for my own reference.
Arch Term: DesignShelterNerd's <!----><!----> Business Plan is A truely excelent Vision Statement and one would do well to study it and incorporate something similar into a Business Concept. Another part of the concept is "What field?" McMansion? Neo Grecian? Construction? Retail?
Arch term: Equipment Spec sheets and Shop Drawings, etc.Each Capital Expense must include a Projected Benefits Specification. The Cash Flow and Contruction Schedules should reflect this.
Arch Term: Change Orders.A CO reflects on a planned or necessary change in the ultimate state of the business.A CO must reflect into all Schedules and Projections.
Arch Term: Mechanical Systems.Estimating Systems, Accounting, Payroll, Taxes, Expense Tracking, Bid Tracking, Marketing, Sales, Warrenty work, Contruction Procedures, etc, etc, etc.
Every successful contractor is using all those systems, whether they're as vague as sending the current foreman out with a set of plans and an address, or as concrete as ShelterNerd is developing. The more refined and defined those systems the better your company will work. The more concrete, that is written, printed and disseminated, the more your Business is worth. Think of it as like the trim, paint and landscaping on a new house.SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo <!----><!---->
m2akita I actually research develop and write business plans for other businesses professionally as part of my business consulting gig and have written them for an areo-space job shop contractor, a ski & bike shop (3), a sports training facility, a dentist office, a pet store, and a garden nursery. As I sort of alluded to in my comments to Blue the only ones for contractors I written are the ones I written for my own operations.
If I might make a few recommendations for some resources you might find helpful. Rhonda Abrams of RhondaOnline.com has a written a couple of books I think you will find really helpful:
And I think when you buy her books you might get some special access privileges to the content on her site too.
Ellen Rohr whose books How Much Should I Charge?: Pricing Basics for Making Money Doing What You LoveView Image & Where Did The Money Go?- Easy Accounting Basics for the Business Owner Who Hates Numbers View Image I keep on recommending and promoting here also has a business plan tool that I've found that really helpful too called The Bare Bone Fitness Plan that is available from her website BareBoneBiz.com.
I planned on working this winter on cleaning up an Excel workbook I've been using for years that I called Planning_Production_Volume and linking it so it works with the freeware workbook I already have (my Capacity Based Markup Worksheet aka the PILAO worksheet) so it can be used by contractors as a business plan development guide but I haven't quite gotten to it yet since I have some other things I'm working on right now. But if you want you can email me what you've got and let me look it over and then I can talk to you on the phone and maybe tell you what I think you need to do to make what you have already work for you.
I don't know what SCORE (and this Small Bus. Bureau you mentioned) are like today but I went to SCORE twenty years ago and found them to be of little to no help especially standing where I am today.
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Thanks Jerrald for all the book recommendations/ links. Will take a look at them. Would love to have you take a look at our business plan. Once we get a workable draft made I will e-mail it to you.
Not sure what to expect from SCORE. My dad didnt seem to be too impressed with them, but I figure it is worth a shot. We might get lucky.
Once again, thanks for the offer of help.Live by the sword, die by the sword....choose your sword wisely.
I publish my business plan (minus financial data) on my website, primarily because I want my employees to be able to hold me accountable for the things I say in it and also because I think they get pride from showing it to friends and relations. I re-write it every spring so you'll notice that it is due for an up-date. (Goals say we expect 2006 to be a good year) It also gives prospective clients a clear idea of what we are about and helps differentiate us from the 99% of builders who lack business plans.
http://www.chandlerdesignbuild.com/beta/index.php?id=businessPlan&t=Business%20Plan%20/%20Vision%20Statement
One thing else is that it looks like you are setting up a partnership. Not my favorite form of business entity. Think long and hard about your exit stratagy in the event that you may decide to go separate ways at sometime in the future. Having it clearly spelled out while you are friends will be a good investment.
Michael, I read your business plan online last week, very impressive! I printed out your mission statement (hope you don't mind) and brought it in to show my crew. I'm a foreman for a company much like yours, but we don't have an explicit mission statement. If we did it would be similar to yours.
Thanks, we just got a Custom Home Pacesetter award at the NAHB Custom Builder Symposium and a nice write up in Custom Home Magazine for it http://www.customhomeonline.com/industry-news.asp?sectionID=226&articleID=401508
Borrow all you want, it's working well for us. My 23 year old daughter helped me shrink it down to the single sentence "Dedicated craftsmen having a great time building beautiful, high performance homes for enthusiastically satisfied clients."
As a Vision and Strategy Statement that is beautiful.
JMHO, but as a Business Plan, I think it's as about good as a 3d sketch of a house is to a builder.
You've set some directions, but no concrete goals, so how will you know if you're on schedule or not?
Just some examples that stuck (sorta) in my head.
You're going to educate your men. How many by when? Convert to MS Project. By when? Who is to be trained on it by when? Will your cash flow support outside training? Adding some manuals and systems. Which are hi priority and when are the deadlines? Will the workflow support it?
You know? Concrete measurable goals. Like dimensions on a Floor plan. You can tell when a wall is 6" short. Can you tell when you're 3 weeks behind on sending that third man to school? Is that gonna leave enough manpower when you gotta . . . . ? Is the cash flow gonna be right to do it?
But that is still a wonderful Vision statement.SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo <!----><!---->
I set three specific goals every six months. Getting myself trained in MS project has been on the list for over 2 years and I have failed at it every time. I'll just keep banging my head against that scheduling thing until I get it or decide it's not worth it. Creating a CDB cookbook of systems has been coming along I review and assess the top three list every six months. Do a big financial analysis and review every winter. track my time by the hour and keep trying to improve with out going over 40 hrs per week average (been at 38 for three years) I know what you mean about needing measurable goals but I like to just push myself to take whatever opportunity for improvement I can grab in a given year. Keeping it loose and using the review process for analysis has allowed me to just keep a steady pressure on without beating myself up for not acheiving specific milestones. I know I'm on schedule if I can prove I did better this year than last and don't backslide too badly on any specific goal. ThanksMichael
SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo <!----><!---->
It seems a lot of people are wary of partnerships? With all the warnings that I've read here, we are going to have a detailed write-up of what the partnership entails (work load, money & profit, etc.). I would like to write something up as if we were breaking the company up.
What do you see as draw backs to a partnership (maybe this should be another thread)? What I see as advantages is having someone else there to share the when things are rough, another person to bounce ideas off of. and another view point.
Live by the sword, die by the sword....choose your sword wisely.
The worst part of a general partnership, which is created when two or more people are in business together and don't create any other entity, is that each partner is 100% personally liable for all debts and other obligations of the partnership. That means all of your assets, not just partnership assets, are available to creditors, even if your partner incurred the debt. ("But we needed that new Porche so I could deliver stuff in a hurry!")
Talk to your lawyer about how to set up your new business.
m2akita,
I would suggest you pay caeful attention to ShelterNerd's and any others commenting about the perils a partnership.
I have been in two partnerships. They were compaines we set up aside from our custom home design / build business. The ventures were in swimming pools, landscaping and backyard improvements. Without going into detail, neither were good in the long run.
We resolved the compaines. The swimming pool expert now has his own pool company. He sells and builds swimming pools, and refrers our building business for pool houses, decks and other improvements associated with the pool build. We use his company as a sub-contractor when one of our custom home clients wants a pool. He gives us a trade price and we sell at retail. He gets a trade price from us on non-pool improvements. The landscaper is much the same. He refers our company when build out of backyard improvements are needed, and does our landscaping.
Everybody is happily making money, not worried about how to divide the money, where to spend company profit, who is doing what and why they aren't working as hard as the other, etc. Each of the three companies have multiple opportunities during a given year to help the others....and we do.
If you do form a partnership, I suggest the best mover shaker dreamer own the largest percentage of the company and have the responsibility of the final decisions. But, even with this I think it is ultimately better if there is one owner and employees, commisioned sales people or sub-contractors.
If you could give reasons why you think you need a partnership, some of us may be able to help you figure out alternatives to meet the need.
I will speak only of my personal experience.
We each had strengths, they combined well at first.
His attention to money and mine to building.
Over time his strength at watching the bottom line and desire to be wealthy conflicted with my desire to simply produce the best building product I could and the bottom line be dam**.
We split, he is wealthy , I am not.
He still spends endless effort trying to get wealthier and I stil spend endless effort trying to produce a better building.
At the end he gained financially from my bailing to escape his desire for a better bottom line.
I started in this game back in 77. I've been in coops, a couple LLCs, Sole Props, and now I'm a Sub S corp. Along the way I watched the Coop split over and again as different people had different visions for what the business should be and I've had a seven year lead guy (almost partner) decide to chuck it all and become a massage therapist, and two other long time (8 and 10 year) lead guys fall into self defeating behavior involving drinking, stealing from the company credit card, cocaine and marital infidelity. At the end of the day I am so glad I was able to just say "I can't work with you any more, load up your tools and good luck at your next job." People change, most for the better but not all. Some people are happy to make 45,000 a year doing what they love some can't be happy no matter what they are doing or how much they are paid. Be the skipper of your own boat. Since your already in it together this far I think it's right to do a pre-nup as you are. There are a lot of great and successful partnerships out there. Look at those guys from Gimme Shelter construction. I think they're 25 years into it as a partnership and look to be doing a great job of it. And read The Company We Keep, that guy shares ownership with his whole crew and is thriving. But both of these guys OWN their markets and look like pretty profitable operations. Easy to love work when the cash is not a problem. I remember some years when cash was the biggest problem. (60 hrs per week for 12 months for $4,000 net one year, divorce the next.) A partnership under stress can really double things up.
What do you see as draw backs to a partnership (maybe this should be another thread)? What I see as advantages is having someone else there to share the when things are rough, another person to bounce ideas off of. and another view point.
What happens when one partner is sick of being in construction and stays home goofing off? He doesn't pull his own weight and charges lunch every day on the company credit card. After a month of this you're sick of it and decide enough is enough so you tell him it's over. Little did you know, this past month he hasn't been paying your subs and ran up your lumber yard account getting material for his bathroom remodel.
Who's screwed now?
How many partnerships last over the long-term? Can you list one construction partnership locally, regionally? Probably not. They are rare for a reason.
If you want someone to bounce ideas off of, hire an employee or have lunch with another contractor.
Beer was created so carpenters wouldn't rule the world.
I'll second Jerrald's rcommendation of the Rhonda Abrams book.
It is what my current plan was written from.
Funny though, I got the book when I decided to get out of remodeling and construction, and my wife and I were going to buy a different business. (Retail and orthopedic shoes)
It was sent as part of a "Start up Kit" from the National Shoe Retailers Association.
Bowz
m2akita:
May I recommend C.L. Ray's "How to Start an Operate an Electrical Contracting Business" (available from Amazon in paperback). I took a class a number of years ago taught by Mr. Ray & using his book as a text. Much of the information is applicable to any construction business.
CarbonBased
Congratulations on your insight! The vast majority of "contractors" do not/ did not have a plan with any depth, thus they fall into that very large group that go bust within 5 years. Too many of us started out with some talent, drive, tools, and the desire to be able to make payments on a new truck. That is not enough!
We may not need the usual slick presentation, market studies, projections, etc., but you darn well better have a plan that designates goals and how you will get there. I recommend the book "Builder's Guide To Running a Successful Construction Company" as well as "Journal Of Light Construction". Both treat contractors as business people too, rather than just artisans who do their work and then ride into the sunset (often not even covering their labor costs, much less showing a profit and covering overhead). My best to you.
Randy
Edited 1/10/2007 12:36 pm ET by Reg
Here's a one-pager we put together to help clients think about the early stages of business planning. Might be of some help.
Most biz plans are written (a) by business units of large companies because their upper mgmt requires them to; or (b) because a business needs money, and all the money sources look for a business plan.
Too few are actually used to guide a business!
At its simplest, your plan should include: (1) Goals & Objectives; (2) Actions required to achieve the objectives; (3) Resources (people, outside expertise, tools, money) required to make the actions happen; and (4) Some mechanism to track progress against 1-3.
I would add to the booklist HOW TO MAKE BIG MONEY IN YOUR OWN SMALL BUSINESS by my colleague Jeffrey Fox (avail on Amazon, etc). It's an easy, fun read that covers planning and many other aspects of running your own biz.
Good luck!
Hey Rick long time no see you here online. Seeing your post jogged my brain again and as I mentioned in another post in another top here I've been rebuilding my Essentials Booklist these past few weeks and I really do have to put a couple of Jeffrey Fox's books on the list too.
Yeah How to Make Big Money in Your Own Small Business is a real good one but How to Become a Rainmaker: The Rules for Getting and Keeping Customers and ClientsView Image and Secrets of Great Rainmakers: The Keys to Success and WealthView Image are great for understanding sales. As I think I told you way back whenever I have them on CD so I often listen to them in my car as I travel up to your neck of the woods to visit my brother and his family.
And perhaps my personal favorite was The Dollarization Discipline: How Smart Companies Create Customer Value...and Profit from ItView Image (which is not in available n audiobook form although I wish it was so I could "re-read" it again) because of what it taught me about the dollarization concept. What a great sales tool. Especially in selling business to business (i.e subcontractor to contractor) but we use it all the time in selling straight to homeowners too.
Along the thinking lines of dollarization are you at all familiar with this exchange attributed to Dr. Edward Deming (the man who taught the Japanese about Quality). The particular quote starts with the question:
The true cost of a product or service depends on its long-term performance - that is, the value provided over time.
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Hey Jerrald. Now that I finished my big renovation project, I've had to get back to my day job and just be an occasional BT lurker. Love the Deming quote. Wish I had seen that before finishing DOLLARIZATION as it would have been a great chapter lead-in quote.I concur on the RAINMAKER series, though they're not as directly relevant for the business planning topic. Both great books that any business person should be exposed to. You might be interested in an enewsletter we just started called THE JEFFREY FOX REPORT. It will contain some previously published book content, plus assorted papers and essays by Jeff and occasionally me.Sign up at http://www.foxandcompany.com.But don't set your watch on the publication schedule. It is a bit irregular.I would also have to agree that THE DOLLARIZATION DISCIPLINE is my personal favorite, especially having spent three months of my life writing it! It has proven to be a good 300 page brochure for my consulting biz. AS for the audio version, our insurance company thought the liability of someone falling asleep while driving was too big a risk to underwrite ;-)Best. -Rick