Key Points:
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You typically need a professional construction business plan to get business bank loans and investors.
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Do market research and market analysis to find your target market and industry trends.
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Include financial projections and cash flow forecast analysis to show the project is financially viable.
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Outline your management team and project management strategy to deliver the project.
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Show how you will market to new clients and win against other projects in the construction industry.
Introduction
Having a professional building and construction business plan is very important if you want to get a bank loan, or attract private investors. A well thought through business plan shows you understand the construction industry, outlines your growth strategy and demonstrates your financials.
In this article will explore the key components of a construction business plan, and how you can best present your construction company to potential lenders and investors.
The Construction Industry
Before we get into details of your construction business plan, we need to understand the construction industry itself. As you may know, the industry is very competitive, and includes a number of different sectors such as commercial construction, residential construction, and even industrial projects. Having a good grasp on industry trends will help inform your market research, and how to best position your business within it.
Australian Industry Data:
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Growth: IBISWorld predicts 2.4% growth over the next 5 years.
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Market Size: As of 2023 the construction industry is worth around AUD 423 billion.
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Employment: The sector employs over 1.1 million people, making it one of the largest industries in Australia.
Construction Business Plan Components
1. Executive Summary
The first section of your business plan is the executive summary. This section should provide a short, concise a powerful overview of the business proposition of your construction company. While the section is first in the business plan, it’s often a good idea to tackle it last, once you’ve fleshed out the rest of your business plan. This section should summarise your company objectives, services and unique selling points. The aim is to grab the attention of potential lenders and investors and encourage them to read on.
2. Company
The company description should provide a detailed overview of your business concept, which can include your business structure (for example is it a limited liability company, a partnership, or sole proprietorship?), the location of the business location, and it’s history. You can take the opportunity here to also highlight any competitive advantages you may have over other businesses in the construction industry.
3. Market Analysis
Thorough market analysis gives you a great way to demonstrate your understanding of the construction market, the competitive landscape, and where your target market fits within it.
This section should include:
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Competitor research: What are the strengths and weaknesses of the other construction companies in your market?
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Industry trends: How has the industry moved or changed over the past 5 years? And what’s forecast to happen over the next 5 years, and why?
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Target market: Who are your target customers and what are their needs?
4. Services
Here is where you provide details on the construction services your company offers, whether it’s commercial or residential construction, or other specialities. Clearly define the scope of your services, and the types of projects you do, and how you see revenue weighted.
5. Marketing Strategy
Your marketing strategy provides details on how you will find, attract and retain customers. Ideally it should also outline your cost of customer acquisition against total customer lifetime value which informs your marketing budget.
This can include:
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Digital marketing: Social media, SEO and online advertising.
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Word of mouth referrals: Encouraging happy clients to refer your business.
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Sales strategy: How you will sell and acquire clients.
6. Management
Showcase the strength, experience and qualifications of your management team. This should include all key roles such as project managers, site managers, office managers, and any other leadership roles in your business. Demonstrate how each will contribute to the success of your construction business.
7. Project Management and Operations Plan
Delivering projects efficiently requires strong project management strategies. In this section, describe your processes for planning, scheduling and managing your construction projects. Include an operations plan that outlines how the day-to-day business will operate, including material costs, labour and overheads.
8. Financials
One of the most important parts of your business plan are the financials. This is generally how a bank or investor will make their final decision on the viability of your business. This section should include a detailed financial cash flow projection, including profit and loss statements, and a balance sheet.
Show how you plan to manage cash flow, and your strategies for profit. Comprehensive financials will show the potential of your business opportunity, while reassuring lenders and investors that you understand your business.
Commercial Construction Loan Calculator
For illustration purposes only. Contact us for an accurate cash flow forecast projection and personalized loan estimate.
9. Health and Safety
Risk to health and safety is very important to manage in the construction industry. Show how you will develop and implement health and safety protocols to protect your workers and clients on site to avoid potentially issues. This helps build trust and credibility with your stakeholders.
10. Growth and Expansion
Growth and expansion is great but take a strategic and measured approach. Do your market research and feasibility studies before pursuing growth opportunities and develop a plan for your growth.
How to Write A Construction Business Plan
Every part of an professional business plan should be concise, clear and well structured. Avoid the temptation to ‘pad’ or ‘fill’ your business plan with irrelevant information. Often less is more.
There are many generic business plan templates you can find outline, or you can use our expert business plan writing services honed over 14 years to exactly what lenders are looking for. If you want to write your plan yourself, remember to be realistic with your projections and analysis, and back up your claims with data and research.
Market Research and Analysis
Market research and analysis is critical to understand the competitive landscape, and identifying your opportunities for growth. This research helps inform your marketing strategy and budgets, who your target market is, how big your potential audience is, and how you will engage them.
Financial Projections and Plan
Realistic financials are key to convincing a commercial construction lender or investor of your business potential. Your financial plan should show your expected income, expenses and profits over the next few years. This will show you can manage finances and achieve long term success.
Management Team
A good management team is crucial to your construction business. Highlight the qualifications and experience of your key people and how their skills will help your business grow.
Marketing and Sales
Developing your marketing strategy is critical to attracting and retaining clients in the construction industry. There are many ways to target and engage your audience, including digital marketing, social media and word of mouth. Consider your customer lifetime value and cost of acquisition.
Digital Marketing
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SEO: Get your website optimised for search.
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Social Media: Facebook, LinkedIn, Instagram and TikTok are popular digital marketing channels to reach different types of audiences.
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Online Advertising: Google Adwords is effective to capture intent based search.
Word of Mouth Referrals
One of the best ways to generate new business is to ask satisfied clients to refer your services to others. Consider offering a referral incentive to encourage recommendations.
Sales Strategy
Describe your sales approach and client acquisition. Include your sales team, sales process and how you will close deals, and at what velocity.
Growth and Expansion
Growth and expansion is great but take a strategic and measured approach. Do your market research and feasibility studies before pursuing growth opportunities and develop a plan for your growth.
Appendices
At the end of your business plan attach or link to any supporting documents, such as the CV’s of key team members, any market research data you have or additional financials.
In a nutshell
Writing a construction business plan is key to getting a bank loan or attracting investors. By doing your market research, developing your financials, management team and marketing strategy you can create a solid business plan that showcases your construction business.
Summary:
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A good construction business plan is key to getting bank loans and investors.
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Do your market research and market analysis to find your target market and industry trends.
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Include financial projections, financial plan and cash flow analysis to show profitability.
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Outline your management team and project management strategy to deliver projects efficiently.
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Highlight your marketing strategy and how you will attract clients in the construction industry.
Writing a professional construction business plan is important if you want to attract a significant injection of cash from a bank loan or investor. If you’d like help, book an appointment with our team.
Resources:
Use these resources and follow this guide to create a solid construction business plan to get bank loans and investors and long term success in the construction industry.
Construction Business Plans FAQs
What’s the most profitable construction business?
Some of the most profitable construction business operate in niche markets, or offer very specialised services like green building, high end residential or large commercial projects.
How do I succeed in construction business?
You need strong project management, good marketing, solid financials and a good management team. Building a reputation for quality and customer satisfaction is key.
How do I start a successful construction business?
To start building construction business in Australia we recommend first putting a business plan together along with financial projections to see if it makes sense to move forward. If so, you’ll then want to get the necessary permits and licenses, attract any needed funding, plan for hiring skilled workers, and establish relationships with suppliers and subcontractors.
Who earns the most money in construction?
Usually the top earners in the construction industry are in executive positions such as company owners. Typically project managers and senior engineers are the employees who earn the highest salaries. Specialised contractors and consultants can also command high fees and wages.
Who is Australia’s biggest construction business?
Currently the largest construction company in Australia is CPB Contractors (part of the CIMIC Group). They are often involved in major infrastructure and construction projects.
Where is construction booming in Australia?
Almost all major cities and regional centres across Australia have seen Construction boom, largely on the back of increase in immigration. There continues to be high demand in major cities like Sydney, Melbourne and Brisbane – both for residential and commercial development.
Who are tier 1 builders in Australia?
CPB Contractors, Lendlease and Multiplex are examples of tier 1 builders in Australia.
Who should I get to write my business plan?
Writing a business plan is a crucial step to getting a commercial construction loan or the support you need to grow your business. Follow this guide to create a solid business plan.
If you need help the team at Smart Business Plans are here!
We’ve helped more than 3,300 Australian business owners just like you! If you’d like to leverage our expertise and experience, book an appointment now and let’s talk about your construction business plan, and how we might be able to help you get a bank loan or investor.
