November 19, 2019

4 reasons to review your business plan at year end

Nearly all construction companies began with a business plan — or should have. It’s the road map that outlines the company’s goals and provides details on how it will achieve them. But, once a business is up and running, the document tends to get buried either in a file cabinet or on a hard drive.

As the year winds down, you can benefit from digging out your business plan and using it to take stock of all you’ve accomplished in the preceding 10 to 11 months. Here are four more specific reasons to do so, along with advice on how to make it happen:

1. To fine-tune your financials

Now is a good time to take an honest look at the past year’s sales, expenses, profits and losses — and make adjustments to the way you run the business. Compare your plan’s projections with the company’s actual results to identify pain points, as well as the most profitable components of the operations.

Are profit margins lower or higher than expected, and why? Examining the answers may lead to strategic decisions such as focusing on certain types of jobs or expanding into a new market. You may also realize that costs are too high and you need to find ways to cut back.

2. To identify industry/market changes

Your business plan should state the purpose of your construction business and help you discern whether you’re fulfilling it. While reading it over, ask yourself questions such as:

  • Has our target market changed?
  • Has the economy changed?
  • Are new regulatory rules impacting operations?
  • Do we have more or different competitors now?

The answers can help redirect your construction business into more profitable jobs, markets or geographic regions. They can also help you prepare for disruptions in the industry or address new competitive threats.

3. To attract the right partners

By “partners,” we don’t necessarily mean an individual to join ownership of your company (assuming your business is structured that way). But perhaps your business plan calls for success on a certain type of project and you just haven’t been able to get there. Maybe trying a joint venture in the coming year would enable you to fulfill this objective.

There are other partner implications, as well. Many business plans identify the vendors and suppliers the company intends to use. Is it time to move on to new ones? You also might want to attract outside investors or take a business loan. They will want to see a current business plan.

4. To assess staffing needs

Your business plan should help you understand the optimal size of your construction company. Are you still a small business, as when you launched? This may call for adding staff or perhaps laying off some workers.

On a related note, if you’re hiring, an updated business plan is a great thing to share with selective employees. Both productivity and retention tend to improve when workers know the company’s strategic objectives and understand why managerial decisions are made.

Not just for start-ups

Business plans aren’t just for start-ups. This document can serve as a baseline for monitoring progress and keeping your construction company’s operations aligned with its true objectives.

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