How to Create a Construction Business Plan

Believe it or not, creating a business plan can actually be an uplifting experience. Read on to define your dream and ignite your team.

When you close your eyes and think about the future, what do you see?

Waves unfurling over the sand as you enjoy a lengthy vacation with your family, while your construction business functions like clockwork without you…

What’s that? Who has time to close their eyes? Let alone think about the future?

Ah. Well. We’ll tell you who: Builders with business plans.

Real business plans. Those scribbles you made on the back of an old invoice a few years ago don’t really count.

Most people think of business plans as something you create when you’re first forming a company, but you’re way past the starting line. So, what’s the big deal?

Unfortunately, no matter how far you’ve gotten, you haven’t outrun the need for a plan.

This article will walk you through a painless process for creating a business plan that’s so inspiring, you won’t even have to close your eyes to see it.

What is a construction business plan?

A construction business plan is a strategic document that outlines the intentions of a construction company. It includes financial, operational, sales and marketing goals, and is used as a guide when making decisions for the future, typically with a 5 -10 year timeframe.

Why does my construction company need a business plan?

It’s normal to wonder whether you should even bother investing the effort, especially when you consider that most construction companies operate without a business plan.

While that might be the reality, that doesn’t make it a valid excuse. Here are a few more reasons why creating a plan is TOTALLY worth your while:

• A business plan is a key component for managing a construction company.
• You’ll have guideposts for making decisions.
• It gives you a scorecard and keeps your team intentional.
• It’ll make you a more confident leader.

If everyone else is working without a plan, you’ll end up exactly where they are: average.

You know you’re better than that.

What should I include in my construction business plan?

1. Executive Summary - highlights of your business plan
2. Company Overview - key details about your company and culture
3. Market Analysis - industry, competitors and customers
4. Marketing & Sales Strategy - how you’ll land jobs
5. Operations Plan - how you’ll execute those jobs
6. Financials & Revenue Forecasting - how much you’ll make from those jobs

These are the main sections normally found in a standard business plan, but you don’t have to follow it exactly. If you’re searching for investors, they’ll likely expect a document similar to the above format, but otherwise… it’s your plan, you can structure it however you like.

You probably won’t want to write the sections in this order – nor will you really be able to. You’ll have to do a bit of research on the various aspects of your business first and what you learn about one area will impact the others. But don’t worry, here’s a framework for how to get it done.

How do I create a construction business plan?

1. Conduct market analysis: Who’s your competition?
2. Work out what matters: What’s your company’s purpose?
3. Study your numbers: Where are your profit margins?
4. Decide how you’ll close jobs: What do you need to bring in the door?
5. Set an operational path: How will you get the work done?
6. You’ve got your plan - now summarize it!

Let’s take it step by step, looking at questions to consider and where in your plan to slot your answers.

Step 1. Conduct market analysis

When you’re consumed by the daily demands of projects, staff and customers it’s easy to only see what’s directly in front of you. Which makes market analysis a great place to start working on your business plan as it forces you to pause and get a sense of the construction industry landscape, what your competitors are up to, and whether you’re chasing the right customers:

• Is there a strong outlook for construction growth in your region?
• What areas of business are in demand? Home builds? Remodels? Commercial buildings?
• Who are the dominant companies doing similar jobs?
• Who’s running a construction business you admire?
• Who are your ideal customers? Are they the ones you’re currently serving?

Your answers to these questions will make up the third section of your business plan: Market Analysis.

Step 2. Work out what matters

Once you’ve got a handle on what’s happening out there, turn your focus inwards to what sets you apart from your competition – and, more importantly, what you want your company brand to stand for. Ask yourself:

• Where does your business fit in the current landscape?
• What can your company do better than anyone else?
• What are your corporate values?
• Beyond just construction, what larger purpose does your company offer the world?
• In other words, what motivates you more than money?

Your answers to these questions will become the foundation of the second section of your plan: Company Overview.

Step 3. Study your numbers

Next up, finances. This is a biggie. It’s going to be next to impossible to forecast your revenue without a budget, but if you don’t already have a proper one in place, do the best you can with whatever historical accounting is available.

As you review your numbers, you want to figure out the following:

• What are your annual operating expenses, both fixed and variable?
• What are your net and gross profit margins?
• What do you want them to be?
• What’s your target annual revenue over the next 5 to 10 years?

Your answers will help you build out the last section of your plan: Financials & Revenue Forecasting.

Even though it appears last in the document, you’ll need this input to set your sales, marketing and operational strategies, which is why you’re attacking it now.

If the thought of creating a budget from scratch makes your head spin, never fear! Download this Budget Quick Tool to get on your way to financial clarity and decisive future planning.

Step 4. Decide how you’ll close jobs

You know how much you want to make, now you need to figure out the conversion levels necessary to meet your financial goals. Think about:

• What are good sales conversion ratios for your construction niche?
• What’s your average job size?
• How many jobs do you need to complete to meet your revenue and profit margin targets?
• How many estimates do you need to do to land that many jobs?
• How many leads?
• How are you going to attract prospective customers?

The answers to these questions will go in the fourth section of your plan: Sales & Marketing.

Step 5. Set an operational path

Alright, so you know roughly where you want to go. Don’t worry about getting into the minutiae of how you’ll round every corner. Keep it high level and ponder:

• What’s your BHAG (Big Hairy Audacious Goal)?
• Who will you need on your team?
• What systems do you need to implement?
• How will you keep track of progress?
• How will you instill a sense of accountability within your team?

These answers will help you round out the fifth section: Operations Plan.

It will also lay the groundwork for your annual strategic planning, where you’ll break your big vision down into executable actions. Curious what that looks like? Download our Strategic Plan template.

Step 6. Summarize it!

You’re in the home stretch! The good news is you can give your brain a break for this last step. Now that you’ve worked out the nuts and bolts of your business plan, it’s time to capture them in an overview that covers:

• Who is your construction company?
• What is it going to do?
• How?

Provide sense of everything, without getting bogged down in the specifics. It may be the last thing you write, but it will ultimately be the first section of your plan: Executive Summary.

Do’s & Don’ts of creating a construction business plan

Suffice to say… don’t over complicate it.

Ready to put your Construction Business Plan into action? You don’t need to go it alone.