There are many more ways to lose money than to make it in the construction industry and controlling risk is one of the key ways to minimize loss. Unfortunately, most construction managers just don’t know how to control risk. The answer is simple – establish a well thought-out business plan that makes financial sense in the marketplace and stick to it.
Whether a contractor is starting a new business or a new division, planning on handling new types of work, penetrating new markets, or expanding within the present market, a solid plan of attack is not only good to have, but essential to success.
“Everybody’s got plans…until they get hit.”
– Mike Tyson, Heavyweight Champ
The construction industry has one of the highest failure rates in our economy today. One reason for this failure is that management often cannot adapt to change. Successful managers know that change is inevitable and that a business plan is a great tool to help them prepare for and deal with it, but many construction managers don’t actually know what a business plan is for. If they are well-seasoned professionals, lenders or guarantors might not even request a business plan from them and contractors that are not required to produce a business plan tend to disregard the idea altogether, failing to recognize the inherent value.
Many contractors have been asked to produce a business plan but see it merely as a way to satisfy the bank or bonding company. In either case, they are making a serious mistake.
No company should fail to realize that people function better with defined goals than without, especially in business. Not realizing that they can benefit from it, many mature, well-established and profitable contractors believe that they have no need for a business plan. At the very least, a business plan acts as an eye-opener and identifies areas within your company that require attention or change. The simple exercise of creating one is often enough to spark long-term thinking, which can significantly impact present-day decisions and, in turn, determine the future direction of a company.
There are two elements to a business plan: the written part that covers future goals and objectives and the financial model that predicts corresponding income and expenses. A business plan not only defines goals, but also, most importantly, acts as a financial road map that directs a company to long-term profitability. Staying on course with goals will get a contractor where it wants to go in the shortest time possible, while the financial framework allows it to monitor progress along the way.
Never underestimate the many uses of a business plan – they make real financial sense and will help earn money! When contractors partner with Druml Group to create a business plan, we create a financial model that includes a detailed variables analysis including projected property acquisitions, fixed asset purchases, accompanying debt and the potential overhead required to perform to planned volume. We work closely with our clients to determine a margin that’s representative of the marketplace and help them shape their future – making sure they earn money as planned!
Druml Group has developed successful business plans for many construction companies and we’d be glad to help you too. Call us today. We’ll help you master the art of planning to earn money!
“First comes thought; then organization of that thought into ideas and plans; then transformation of those plans into reality.”
– Napoleon Hill