Marcus Richards
Working in a profession like a joinery, plumbing or engineering can be a rewarding and fulfilling way to make a living. Construction workers tend to be naturally resourceful and hardworking, which might be why it’s one of the top industries for startups. But when starting any new solo venture, the details of business loans, taxes and regulations can seem rather daunting.
A simple business plan can help to give you clarity and peace of mind. It helps to clarify what your business idea is, spot potential issues, set goals and measure your progress. Whether you’re considering going self-employed, starting your own construction business or wanting to find more business leads, this article lays down seven simple tips on what to consider when putting together a business plan.
What is the Purpose of the Plan?
There are two main reasons to write a business plan – to clearly set out your goals or use it to apply for a business loan or investment. In this article, we’ll be focusing on how to write a business plan to clearly outline your aims and targets so you can monitor your own performance once the business is up and running. However, this plan can be revisited and updated later down the line if you decide to apply for small business loans or investments. The lender or investor needs to see that your proposal has been carefully researched and includes how the business will operate and a forecast of your financial performance. Keep referring to your business plan and use it to inform decisions in the years ahead.
Understand Your Industry
The construction sector remains a fundamental part of the UK economy. It encompasses many different trades, from plumbers and electricians to welders and joiners. It’s vital to get clear on what your area of expertise is within your trade and then do your market research to see what sector of the market your business will operate in.
Things to consider:
Customer demographics
It’s essential to paint a picture of your potential customers and include details about why your customers would choose your services over others. Consider their needs, what kind of price they can pay and any barriers that may prevent them from choosing you. There are resources online where you can find information on demographics.
Competitors
Once you’ve identified your area of expertise and your potential customer demographic, identifying who your major competitors are will help you set your prices competitively and identify where you can stand out. Don’t limit your search to competition with other companies. Think outside the box – you may also be competing with other players such as DIY (do-it-yourself) homeowners.
Opportunities and threats
Even if you’re just starting out, you can get ahead of the game and assess how you will deal with any possible threat to your business. Doing your due diligence is a great way to get ahead, even in a crowded market. Identifying risks such as workers being absent, local competition and increases in material costs and having a contingency plan is the best method to minimise the damage. Most businesses will fall on hard times and be subject to market fluctuations, but being prepared and looking ahead can help to soften the blow.
Crunch the Numbers
Money is necessary to fuel your projects and keep your business alive. No matter the size of your company, cash flow will always be at the forefront of your mind. The financial part of your business plan is one of the most important as it will help you distinguish how much your business will generate. This is tricky if you’re just starting out, but you can forecast financial targets based on estimations from your market research.
Cash flow
Cashflow is the term used to describe the amount of money flowing in from completed work against the money flowing out for materials and other charges. If there’s more cash going out of the business than in, then the business may not succeed. It’s crucial that the cash is coming in at the right time so the report is accurate to the specific timeframe. This is particularly important in construction as jobs regularly require money to be spent on materials and labour before you receive full payment.
Business loans
This is why the financial part of your business plan is so important – it’s where you can highlight trouble areas and plan solutions. Working out how much money you need to have aside to complete the work you have scheduled while waiting on payment for previous jobs.
If you’d benefit from having a bit more cash, getting a business loan like a flex loan from a reputable company can be a great option. Even the most successful businesses can face financial hardships and getting a loan doesn’t always signal weakness. In fact, never needing a loan can indicate that you’re not pushing your business to its full potential.
Final Thoughts
With the pressures of running a business, taking the time to reflect and plan ahead can be challenging but is hugely beneficial. A business plan can check that things are moving in the right direction, targeting the right markets and keeping an eye on cash flow.
Using these tips to write a business plan can start you on a strong foundation and can help you get business funding. But remember, you don’t have to go it alone. You can get help from construction professionals, use construction accounting software and speak to small business lenders. Partnering with people that are in the know can help your hard work translate into real success.
