Contractor Business Plan
A contractor is any person engaged in the business of construction, repair, alteration, dismantling, or demolition of bridges, highways, roads, streets, buildings, airports, dams, pipelines, and every other type of structure, project, development, or improvement coming within the definition of real or personal property, including the construction, alteration, or repair of property to be held either for sale or rental, and shall include subcontractor, public contractor, and nonresident contractor.
No person may engage in the business nor act in the capacity of a contractor without first having a license. Whether you are new to the building trades or a seasoned general contractor with your own construction company, a handyman or an international developer, you must create a business plan for your business.
The general contractor is employed by the client, on the advice of the architect or the architectural technologist. A general contractor must first assess the project-specific documents (referred to as tender documents). In the case of renovations, a site visit is required to get a better understanding of the project. The contractor will then calculate a price, also called an estimate. The general contractor considers the cost of materials and equipment as well as the cost of labor to provide the owner with an approximate price for the project.
Your construction contracting business is your livelihood, so let us help you work smarter, not harder! You need specialized construction knowledge, specialized contractor tools, and a whole lot of smart elbow grease to build your construction business right and keep it growing strong. You want to stay on the cutting edge, and ahead of your competition.
In the most general terms, a contractor is a person or company who enters into a contract to provide services. In relation to home building and remodeling, it usually refers to a general contractor or a builder. Contractors are typically hired to oversee a project. They may do all of the work themselves or they may hire subcontractors. A subcontractor is usually someone who specializes in one particular field such as plumbing, electrical or masonry.
If you are thinking of setting up business in the contracting industry you should aim to provide top-quality interior and exterior residential and commercial repair and building services. We believe that most companies in this industry suffer two major problems:-
- Poor scheduling of job projects
- Poor retention of quality employees
Both lead to lower customer satisfaction, lack of repeat business and a low word-of-mouth referral rate. You should aim to improve upon and exploit these weaknesses to gain local market share.
If you can provide high quality craftsmanship in the commercial construction industry at a very competitive cost. It should be your goal of your company to achieve a greater reputation for quality and on-time delivery than the current competitors in your region.
Be committed to delivering on-time completion. You should maintain high integrity on all promised timelines and quality assurances.
You should seek to provide your building services in the timeliest manner and with an ongoing comprehensive quality-control program to provide 100% customer satisfaction. Your companies management should see each contract as an agreement not between a business and its customers, but between partners that wish to create a close and mutually beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.
You should implement the following key procedures to reach your goals:-
- Impeccable and unique workmanship.
- Retaining high-quality, on-site management.
- Ensuring estimates on price and completion dates are as accurate as possible.
- Track the progress of each construction project to insure the scope cost and schedule of each is maintained.
- Have a dedicated project manager for each project who can handle quality-control issues.
- Institute a program of profit sharing among all employees.
Initially your company should focus on residential and commercial customers in the local area. However, by the end of the third year in business, your company should expect to be serving further afield.
Your mission of your contracting company should be to provide top-quality interior and exterior residential and commercial building services. Your company will seek to provide these services in a timely manner and with an ongoing comprehensive quality control program to provide 100% customer satisfaction. You as the owner should see each contract as an agreement not between a business and its customers, but between partners that wish to create a close and mutually beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.
Your keys to success will be your experience you have in the building trade. You should then exploit the two major weaknesses that most building companies in this industry suffer from.
The first problem comes from scheduling of jobs. Many contractors find it difficult to maintain established schedules with their customers that lead to a decrease in customer satisfaction and retention. This is caused by poor management, less than reliable employees, and delays in inventory procurement and distribution. The second problem is in retaining reliable and motivated personnel. Many building companies rely on temporary or transient employees that lead to high turnover rates and decreased service quality.
By implementing the above key procedures will make for a profitable building business.
If you are looking for contractors, there are a variety of sources from which to start your search. By now you probably know just what kind of contracting work needs to be done, so have a rough idea in mind of how much you would like to spend. Asking friends or relatives is a good referral source, and will give you a reasonable idea as to the overall cost of your renovation project.
Most Contractors are reputable, but some are not. Trust your instincts as a good judge of character, because the more you know about your contractor, the safer you will feel when it comes to construction time. Ask to examine a prospective contractor's portfolio to get a good idea of his or her design sense. This is a very important point, because once a contractor has gotten used to building a certain way, it is difficult to "teach that old dog new tricks."
For major improvements, a remodel, or a similar job that involves several trades, you’ll want a general contractor–a construction professional who knows several trades and hires trades people, called subcontractors or “subs,” to handle various aspects of the work, such as plumbing, electrical, concrete, and drywall.
There are many duties which a building contractor must complete on a daily basis in order to ensure that the construction project is completed in a timely and correct manner. The first duty of the building contractor is to implement a plan in which to carry out the construction project. This extends anywhere from hiring workers to developing a step-by-step timeline that the project will follow from start to finish.
In addition to implementing the construction plan, the building contractor is responsible for hiring, supervising and, at times, firing employees who work on the specific project with the contractor. Along those same lines of supervising the employees, the building contractor must also take care of payroll with regard to the workers and engage in payroll functions or hire someone to do so for the contractor.
The building contractor is also responsible for obtaining materials for the project. Since construction projects cannot be completed without the necessary building materials, it is up to the contractor to acquire goods to build the structures. This involves various forms of correspondence with necessary material suppliers.
Another specific duty of the building contractor is to acquire all necessary licenses and permits from relevant entities so that the building project can begin. These range anywhere from building licenses to zoning permits and there are many regulations that relate to these documents which each building contractor must follow in order to engage in construction.
The building contractor must also do their research regarding relevant regulations and laws akin to the construction process. There are many laws which state when, where and how a building contractor and their crew should build in certain areas. These must be recognized and followed by building contractors in order to complete the project in a law-abiding manner.
Budget issues are another item which relate to the duties of a building contractor. The building contractor must establish a budget for the construction project and follow that budget as closely as possible. This will allow the building contractor to obtain supplies, hire workers and finish the construction in a cost-efficient manner. Instituting and following budgets is a serious matter which building contractors should be concerned with as they ensure that the project will be completed as was envisioned in the beginning.
Throughout the construction process, the building contractor is also responsible for reviewing the progress and implementing any changes along the way. The building contractor needs to follow the specific building project closely and make changes when they deem it necessary to do so.
Lastly, the building contractor is the individual who deals with all emergencies and surprises which relate to the project and occur on-site and sometimes off-site as well. This individual is the one which many parties go to should they need assistance with an emergency issue that has just arisen.
Finding Quality Contractors
Remember that contractors' reputations rely upon their integrity. If, in the past, they have built something that looks great, but has by now fallen apart, that does not bode well for what they will do to your house. It is not uncommon to ask for referrals from a contractor. If there is anyone who will tell you the truth about potential contractors, it will probably be a past client.
Once you feel that you can trust the contractor, and like his or her work, it is time to ask for estimates. Make sure that you get more than one estimate, because you might be able save a lot of money. Contractors will gladly supply that information, and together you can come to a figure on which you can both agree.
Choosing general contractors is an important decision for any home renovation project. There are many decisions that need to be made, because choosing the wrong contractor can be a financial and emotional disaster. Let's take a look at some of the guidelines that you should follow when deciding upon a specific contractor.
Depending on the scale of your renovation project, you will want General Contractors that have the capabilities and skills to complete your project on time. This does not always mean the largest contractor company in your area, as sometimes smaller general contractors can better serve your needs. It is natural to be overwhelmed at this point, because of the sheer number of contractors at your disposal.
Hiring Responsible General Contractors
How do you start your search for general contractors? You want to make sure that you enlist the services of contracting companies that have completed similar projects to yours. Look at contractors' past histories to see if they have done this kind of work. For example, if you are looking for pool contractors, ask to see a portfolio of past pools that they have renovated, to see if their aesthetic sense matches yours.
General contractors can sometimes be found on a referral basis. If your friends, relatives or neighbors had used general contractors in the past, and you like what has been done, ask for their contact information. But referrals are by no means the only way to find a good contractor. The Internet is a surprisingly great place to find contractors, because you can search by local area or zip code. That should give you a base from which to amass a preliminary list of contractors.
General Contractors and Estimates
As is the case with any large-scale project, examine more than one contracting company. It is a good idea to request estimates from at least two or three general contractors. Sometimes it will take contractors weeks to produce a good estimate. Keep in mind that that figure is only an estimate, as actual costs will certainly differ.
An advantage to hiring general contractors is that they have more than one area of expertise. For instance, they might be skilled in the areas of plumbing, roofing, masonry, and window construction. The more diverse a contractor's areas of expertise, better. If the contractor has experienced in many different areas of construction, this is a good sign because he can easily adapt to your specific needs.
Specifications from General Contractors
Regardless of the size of your project, you must request a list of specifications from the contractor. This is a standard procedure, and should be free of charge. If the contractors are wary about disclosing a list of specifications, this might be an indication of their integrity (or lack thereof). The specification list is a standard procedure regardless of whether the construction job is to simply patch up a part of the roof or to add an entire room.
In the world of general contractors, legitimacy is key. There might be a temptation to skirt legal zoning laws in order to save money. However, very hefty fines can be imposed if improper building codes are discovered. Play by the rules and you will find inexpensive general contractors whose work you can be proud of.
There are many different types of building contractors, and depending on the size and scale of your home renovation, you should consider more than one of them. What kinds of questions should you have for independent contractors? The more prepared you are for your building project, the more informed you will be during the construction process.
When interviewing possible Building Contractors, you should inquire about past work and references. Reputable building contractors will gladly supply references. Ask about the size of the contractor's crew, and if that would affect completion time. Inquire about their work schedule, because you might prefer building contractors that start later in the day.
Making It Last with Quality Building Contractors
Many building contractors will offer warranty programs to ensure that you are satisfied with their work. If this is the case, and if they are fully licensed and insured, ask for a written contract. Any trustworthy building contractor will be able to provide a reasonable estimate and a plus or minus range within that amount.
Sometimes the most valuable information you can find is from past clients. If they are at all dissatisfied with a certain contractor, they will most certainly inform you. This is one of the most important decisions that you will make, so take your time in choosing the right contractor.
Throughout the years, building contractors have turned their ideas into contractor businesses. They have met the needs and wants of consumers and, at the same time, they have built rewarding contracting businesses for themselves.
Many people start a contractor business in order to enjoy the perceived rewards of freedom and independence. This is understandable as owning your own contractor business can offer you the opportunity to experience freedom:
- the freedom to use your own ideas;
- the freedom be the boss;
- the freedom to not be fired; and
- the freedom to earn as much as you want.
In fact, you don't have to work unless you want to; or do you?
The reality of small-business ownership can be quite different. Many small contractor business owners will tell you that they work more hours than when they worked for someone else.
A lot of those hours are the result of demands of others.
Some of the more demanding others can be the regulations imposed by provincial and federal governments. Some of the other regulations that must be adhered to are: federal and provincial licensing; local safety and health regulations; environmental protection rules; employee deductions and labour standards.
Then there are the significant others, who impact the bottom line -- the customer. You must satisfy your customers. For these are the people who will ultimately decide whether or not your business will succeed. You will be successful only if you can provide them with the goods and/or services that they want or need badly enough to pay for.
Then there are your financial others -- the people who provided you with funds to get your business started. They might be relatives, friends, bankers. No matter who they are, they will have a vested interest in how well you run your business.
Even your competitive others will become more significant as their policies and competition will affect the way you run your business, the hours you work, prices, profits and more.
As the most important other, you alone will take full credit when errors in business decisions are made. A decision that can result in losses not only to yourself, but to your employees, creditors and customers as well.
It is money, after all, that is the bottom line. Your success depends upon your ability as a boss to make sure your business is making more money than it spends.
At this point, the idea of running a contracting business may not seem very attractive. Don't let the negatives get you down. Running your own business provides you with a tremendous source of self-satisfaction and pride.
Most small-business experts urge prospective business owners to carefully construct a Contractor Business Plan and completely analyze their potential to succeed.
Typically, you will begin by analysing yourself as a future contractor business owner. What kind of person are you? What technical or special knowledge do you have?
Self-confidence and drive, innovative thinking, goal-orientation, and business and technical knowledge are necessary to succeed. These traits must also be tempered with realism. Knowing the limits of your own abilities and not being afraid to ask for help is imperative.
Successful people as well as contractor business owners know what they want to achieve in life. They determine where they are going by setting goals, paying attention to details and motivating others around them. It is wise to understand and follow the lead of those successful people around you.
The type of contractor business that you enter should complement your experience, interest and / or technical knowledge. It is fine for you to dream about becoming your own boss some day, however, before you put too much work into your business, make sure that the area you choose is the right one for you.
When deciding what kind of contracting business to start, you may want to consider what hobbies and/or interests you have as well as your experience and background. If you are interested in an area in which you have little experience, you may want to seek some training before you begin. Arranging a job in the area of interest or acquiring a mentor are two ways that may help you gain the knowledge and experience that you need.
Writing A Contractor Business Plan
Writing A Contractor Business Plan
Two other factors that are equally as important as the above mentioned are:
- Is there a need for the contracting services you are going to offer?
- Will there be a market for your product in the future?
Fads, technology, and innovations all affect the opportunity for any business to be and remain successful.
Of all business that are started, just about a third fail within one year, and half fail within two years. By five years, approximately two-thirds are gone, but after five years the rate of discontinuation drops rapidly.
Lack of management experience accounts for nearly 90 percent of all small business failures. This does not mean that all small business managers have poor management skills. More accurately it refers to the person's ability to deal with the "unknown" that is so likely to occur.
A recent example is the poor national and world economic situation. In tough times, Some small businesses are surviving it. Others are not.
Desire and persistence along with innovative thinking improve the odds. In tough times, a small contractor business can quickly change direction by introducing new ideas and creating better methods to help move its product and sustain an adequate income.
After you have decided that you want to be in business, you face the problem of money. How much money will it take to start your new business? How much operating capital will you need?
There are forms available that will help you put together a very good estimate of your start-up and continuing capital requirements.
It is recommended that you become well acquainted with your local bank, as it will probably be the main outside source of capital.
All the above information should be helpful to you as you think about establishing your new business. Remember, it never hurts to gain more knowledge. Few businesses have gone broke because the owner knew too much.
Contractor Business Plan
Contractor Business Plan
It is vital that you use your Contractor Business Plan to set out which feature of your service will give you the all important edge over your competitors?
Is your product or service:
- an entirely new idea?
- an improved version of something that already exists?
- cheaper than the others?
- more reliable in delivery or after-sales service?
- more readily available to local customers?
In writing your Contractor Business Plan, both for your own guidance and to reassure your financial backers, you must show that your personal objectives and your resources (both mental and material) are in accord with the strategy you will adopt to exploit the particular feature of your product. This harmony is a major key to success, and careful planning will help you to achieve it.
The person reading your Contractor Business Plan is busy, often has other problems to deal with, and is consciously or unconsciously judging you by the way in which you express yourself. Therefore:
- keep your language simple;
- avoid trying to get too many ideas into one sentence;
- let one sentence follow on logically from the last;
- go easy on the adjectives;
- tabulate wherever appropriate.
If the banker or manager gets bored while reading your stuff, you are unlikely to get the sympathetic hearing you deserve. So prune and prune again, leaving only the essentials of what your reader ought to be told. In-depth descriptions are out.
The facts and ideas you present in your Contractor Business Plan will be easier to take in and make more impact if they follow one another in a logical sequence. Avoid a series of inconsequential paragraphs, however well phrased. Also, make sure that what you say under one heading chimes in with all you have said elsewhere.
Key Elements Of A Contractor Business Plan.
- The Contractor Business Plan must be a priority effort and represent the best that can be written and presented.
- It should be easy to read, it should look professional, and it should focus on the key issues.
A winning business plan consists of the following:
- Proper organization and appropriate format.
- Not too long and not too short.
- Not too fancy and not too plain.
- It must present a clear picture of what the business owners and management expect to accomplish at different points in the future.
- It must explain clearly, in quantitative and qualitative terms, what the benefits are, or will be, to the user of the company's products or
- It must present hard evidence of the marketability of the products or services being offered.
- It must clearly justify the method or strategies chosen to sell the products or services.
- It must clearly identify the skills and experience of the management team to show their ability to guide the company in the right direction.
- It must contain believable financial projections based on available supporting documentation.
- It must clearly show how the lenders can be repaid on their loan and / or how the investors can recover their investment and realize a good profit.
Great Contractor businesses do not happen by accident.
They are planned that way!
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