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Construction Business Plan
Executive Summary
Introduction
Fosse Commercial Contractors LLC is a small construction company formed from the merger of Fosse Painting & General Construction and West General Contractors.
The company has successfully operated in the Houston area for the past ten years working on both small and large scale construction, repair, and alteration projects focusing on residential contracting.
With the business boom that is occuring in our local area and the desire to improve overall profit margins, the company is planning to shift its target market from residential clients to the larger commercial customers.
This business plan will lay out our goals and tasks to make this transition successful and create enough market share to succeed in this highly competitive market.
The Company
Houston based Fosse Commercial Contractors, LLC began in 1985 when Mr. Robert Fosse began his own company, Fosse Painting and General Construction.
In 1993 the original company was merged with another small scale local company, West General Contractors and the company began to bid successfully for larger scale projects.
As part of its growth and altered focus, FCC is planning on changing its charter from a limited liability company to a class C corporation registered in Texas. This will allow FCC greater access to investment funds to fuel its growth.
Services
Fosse offers comprehensive services designed allow the company to do whatever it takes to finish a project.
Some of these services include; design work, remodeling and alterations, permitting, site preparation, carpentry, cement foundations, painting, and plumbing and utilities installation.
In addition, skills Fosse lacks can be subcontracted.
The Market
The Houston area is booming at this moment, overall business growth during the past seven years has averaged approximately 9.5% and is expected to continue for at least the next four years.
This makes for a very attractive market for Fosse Commercial Contractors.
We will be concentrating on the customers that will provide us with the greatest margin, in other words those clients desiring office building construction.
This is the fastest growing segment of commercial clients requiring our services. The other categories that we will serve include the restaurant segment, the special facilities segment, and all other potential commercial clients.
1.1 Objectives
Fosse Commercial Contractors plans to:
- Significantly expand into the commercial and office building contracting market to improve profit margins and increase local market share.
- Expand services and decrease costs by creating a permanent painting crew, as well as adding a bookkeeper and an accountant to our staff.
- Begin to market and offer services in the San Antonio area in preparation for opening an office there in Year 4.
1.2 Mission
Fosse Commercial Contractors (FCC) strives to offer the finest quality design, site preparation, cost estimates, construction, repair, and alteration to clients needing large scale construction services, whether it be office buildings, warehouses, large apartment complexes, public works, etc. Fosse maintains the highest standards of service in the commercial construction industry.
1.3 Keys to Success
The local commercial construction market is booming at the moment. In order to achieve a defendable position in this environment, Fosse must concentrate on the following tasks.
- Secure at least five large scale commercial contracts over the next three years.
- Expand our customer base through expansion into other geographic areas to retain a sufficient level of profitability.
- Increase marketing expenditures by 15%.
Company Summary
Fosse Commercial Contractors, LLC began in 1985 when Mr. Robert Fosse began his own company, Fosse Painting and General Construction in the Houston area. In 1993 the original company was merged with another small-scale local company, West General Contractors, and the company began to bid successfully for larger scale projects.
In 2002 the company’s management came to the conclusion that the firm had grown sufficiently to alter its primary target market segment from the residential construction segment to the higher margin office and commercial construction segment.
The company plans to implement this change by the middle of Year 1. As part of its growth and altered focus, FCC is planning on changing its charter from a limited liability company to a class C corporation registered in Texas, allowing greater access to investment funds to fuel its growth.
2.1 Company History
Fosse Commercial Contractors, LLC began in the Houston area in 1985 when Mr. Robert Fosse, who had worked in the residental construction business for ten years began his own company, Fosse Painting and General Construction in the Houston area.
For the next eight years the company grew slowly, working mostly on small scale residential projects while gaining a reputation for quality services and reliability.
In 1993 the original company was merged with another small-scale local company, West General Contractors and the company began to bid successfully for larger projects. The company maintains a General Contractor’s license in the state of Texas.
In 2002 the company’s management came to the conclusion that the firm had grown sufficiently to alter its primary target market from the residential construction segment to the higher margin office and commercial construction segment. The company plans to implement this change by the middle of 2004.
2.2 Company Ownership
Fosse is a Limited Liability Company registered in the state of Texas. Fosse Commercial Contractors, LLC is exclusively owned by Mr. Robert Fosse (50%) and his partner, Michael West (50%).
The company is expecting to alter to a Class C corporation chartered in Texas in 2004. This will create greater investment opportunities through the acquisition of investment capital from a limited number of shareholders.
Services
Fosse offers a comprehensive package of services designed to allow the client to work with one of our managers and create a project the company can carry forward to completion. Some of the myriad services Fosse offers are:
- Design work
- Remodeling and alterations
- Permitting
- Site preparation
- Carpentry
- Cement foundations
- Painting
- Plumbing and utilities installation
- Exterior renovations
- Subcontractor assessment and evaluation.
Market Analysis Summary
The Houston area is booming at this moment, overall business growth over the past seven years has averaged approximately 9.5% and is expected to continue for at least the next four years. This constitutes an attractive market for Fosse Commercial Contractors.
We will be concentrating on the customers that will provide us with the greatest margin, in other words those clients desiring office building construction.
This is the fastest growing segment of all the commercial clients requiring our services. The other categories we will serve include the restaurant and special facilities segments, along with a segment we will call the general category, to serve all other potential commercial clients.
4.1 Market Segmentation
At the moment our potential list of clients includes all the various businesses in the Houston area and its suburbs. According to the Texas Small Business Association there are 6,512 firms of all types and sizes in the surrounding area.
We will concentrate on the customers that can provide us with the greatest margin, in other words those clients desiring office building construction. This is the fastest growing segment of all the commercial clients requiring our services.
The other categories that we will serve include the restaurant segment, the special facilities segment, such as gas stations, and theaters, and a category which we will call “general”, encompassing all other potential commercial clients.
4.2 Target Market Segment Strategy
Since office building construction has the highest average profit margin, we will focus most of our marketing and servicing toward these customers. Usually these clients require the largest projects in scope, land use, and cost. In addition, they tend to be the most sensitive to completion times.
Therefore, we plan to accommodate these clients through a well established and expeditious permitting program, strict cost accounting and supply management, and intensive and comprehensive project management capitalizing on Fosse’s experience in the field.
4.3 Service Business Analysis
The Houston area is booming at this moment, with overall business growth for the past seven years averaging approximately 9.5%. This growth level is expected to continue for at least the next four years. One of the prime reasons for this growth is the creation of the North American Free Trade Agreement (NAFTA), that removed trade boundaries throughout our continent.
Texas is ideally situated to take advantage of these new conditions and is experiencing a boom to prove it. This makes for a very attractive market for Fosse Commercial Contractors.
The commercial construction industry is highly fragmented across the nation. More than 86% of all construction companies in the U.S. consist of small “mom and pop” style companies employing less than ten individuals.
Contrasted to this are the large companies that engage in “heavy” construction such as roads, shopping malls, etc. who often have a nationwide scope and employ several thousands of workers.
This creates a highly competitive market with low profit margins. Companies wanting to create a defensible position in this market need some form of competitive edge, such as brand name, low cost advantages, or size.
4.3.1 Competition and Buying Patterns
Currently we have three major competitors within the Houston area. These are TNT General Contractors, Texas Specialty Construction, and Polanski Construction.
Each of these companies targets the same clients as Fosse and each has a fine reputation for customer satisfaction. However, the market in Houston is growing so fast that the demand is currently greater than supply.
This is an excellent opportunity to gain market share and a defensible position in the industry.
One of the greatest limiting factors in this industry is its strong seasonality. During the winter months, contracts and production drop off sharply, increasing the company’s short-term risk of cash flow shortfall.
