Home Real Estate Inspection Business Plan
Inspection Connection is in the process of being formed as a Limited Liability Company owned and operated by Jacques Clouseau. This plan is written as a guide for starting and managing this new business. The following is a summary of the main points of this plan:
- The objective of Inspection Connection is to provide high-quality, ethical Home Inspection services which provide education and peace of mind for the clients while providing sufficient profit for Inspection Connection to continue operations.
- The mission of Inspection Connection is to provide friendly, professional, ethical and quality conscious Home Inspection Services to the community.
- The Keys to success for Inspection Connection will be maintaining visibility and offering high-quality services in a particular marketing niche.
- The local market for this type of business is not new, but offers plenty of opportunity for new Home Inspection businesses.
- An initial financial analysis indicates that the venture is viable and could generate sufficient profits to sustain operations.
As a service-oriented business, Inspection Connection will start with very low overhead, operating out of Mr. Clouseau’s home. Inspection Connection will advertise its high-quality inspection services for buyers, sellers, and home owners concerned about maintenance with bulk mailings to the targeted ZIP Codes, an informative website, and by becoming known locally as a real estate “expert” through writing columns for the local paper and attending real estate association meetings.
The largest single expense in the first year, aside from the owner’s payroll, is a CT licensure internship to be undertaken in summer, which will qualify Mr. Clouseau to do inspections in Connecticut, as well as New York. This expense will be paid with a low-interest-rate credit card, and repaid within 2 years from the cash flows of the business.
Inspection Connection expects to reach the break-even point in July, but will not show an annual profit in the first year, largely because of the internship expense. If sales can be maintained at year-end levels, the business will be very profitable in years 2 and 3, and will pay Mr. Clouseau a reasonable wage.
In conclusion, as shown in the highlights chart below, this plan projects promising net profits over the next three years. Proper marketing and relation management by Inspection Connection will ensure success.
The objectives of this business plan are:
- To provide a guide for starting and managing this Home Inspection business; a framework for developing a comprehensive marketing plan.
- The intended audience is the owner of the business only; this plan is not intended to obtain financing from outside sources.
- The scope of this plan is to provide detailed monthly projections for the current plan year, and yearly summaries for the following two years.
The objectives of Inspection Connection are:
- Education: To educate Home Buyers, Sellers and Owners about the systems and components of a home and about the importance of maintenance. Additionally, to provide the community with continuing education courses and seminars
- Quality: To provide quality services to the community in the form of professional Home Inspections.
- Profit: To generate sufficient profit to finance future growth and to provide the resources needed to achieve the other objective of the company and its owner.
My Home Inspection, LLC’s mission is to provide friendly, professional, ethical and quality-conscious Home Inspection services to the community. Inspection Connection will maintain membership with ASHI (American Society of Home Inspectors). Inspection Connection will continue to obtain education through accredited organizations and will provide education to the community through Home Inspections and by sponsoring seminars and educational events.
1.3 Keys to Success
The Keys to Success for Inspection Connection will be:
- Visibility – In order to succeed Inspection Connection will need to attend Real-Estate functions and provide educational opportunities to Real-Estate professionals and the community. Effective marketing will be a key factor to success.
- Quality services – It will be very important that Inspection Connection provide high quality Inspection services. In doing so, clients will be more likely to recommend our services to friends and family. With many Home Inspection companies to choose from, a positive reference from a satisfied client will direct future customers to Inspection Connection.
- Niche services – Based on data collected from MelissaData.com, if Inspection Connection were just offering Buyer Inspection Services, we would need to capture 5% of the existing Buyer Home Inspection Market in order to schedule 31 Inspections per month. By marketing inspection services that other Home Inspection businesses are not currently offering, such as Maintenance Inspections, Inspection Connection will only need to capture 2.5% of the existing Buyer Market and will focus marketing efforts on the Owner Market by advertising Maintenance Inspection services.
Inspection Connection will be a start-up venture with the following characteristics:
- Inspection Connection will be a Limited Liability Corporation.
- The goal will be to start the venture as inexpensively as possible.
- Inspection Connection will be a home office start-up, utilizing one room in the owner’s home.
2.1 Company Ownership
Inspection Connection will be created as a Limited Liability Corporation, owned and operated by Jacques Clouseau.
2.2 Start-up Summary
The goal is to start-up as inexpensively as possible. Inspection Connection will incur most of the normal start-up costs related to Legal and Accounting filing fees and paperwork. The largest costs is the fee for the internship process that is required in order for the owner to obtain a License in the State of CT.
Initially, Inspection Connection intends to offer the following services:
- Buyer Home Inspection
- Seller (Pre-Listing) Home Inspection
- Maintenance Inspection
Optional “Add-In” services, offered in addition to the three main services listed above and at an additional fee, will be:
- Radon Testing (air and water)
- Termite Inspection
- Water Testing
- Well Inspection
- Septic Inspection
- Pool and Spa Inspection
Some of the services listed above, such as Septic and Well Inspection, may be sub-contracted out to reliable and qualified professionals with expertise in the specific field. All other services will be provided by the owner in a friendly, professional and ethical manner.
In the future, Inspection Connection may decide to offer the following services:
- Mold Survey / Sampling
- Home Energy Audit
- New Construction (In-Progress) Inspection
Market Analysis Summary
Inspection Connection will initially begin marketing services in Westchester County, NY while the owner completes the Internship Requirements for Licensure in CT. This will accomplish two objectives:
Inspection Connection will have some income while completing the CT Licensure Internship requirement
If Inspection Connection can complete 100 or more inspections in NY before January 2006, when the NY Licensure laws come into effect, it may be easier for Inspection Connection to obtain a NY License.
Once a Connecticut license has been obtained, Inspection Connection will be marketing services primarily in the county of New Haven, CT. More specifically, Inspection Connection has identified 23 towns, by ZIP code, which appear to have sufficient monthly home sales to support My Home Inspection, LLC’s entry into the market. This is explained in more detail in the next section.
4.1 Market Segmentation
Inspection Connection has divided the Home Inspection Market into three segments:
Most of the established Home Inspection Businesses are currently marketing to the Buyer and Seller segments, offering Buyer Home Inspection and Pre-Listing Inspection services. Inspection Connection intends to capture 2.5% of the Buyer and Seller segments which are small in comparison to the Owner segment. Inspection Connection has identified twenty three ZIP codes in New Haven County that, combined, averaged seven hundred home sales per month from January 2004 through February 2005.
Information gathered from the 2000 Census indicates that the there are 340,732 Housing Units in New Haven County, 66% of which are owner occupied, translating into 224,883 Owner Occupied Homes. By offering Maintenance Inspection services, Inspection Connection intends to market mainly to the larger and more stable Owner segment.
4.2 Target Market Segment Strategy
As mentioned in the previous section, Inspection Connection intends to market in all three segments, but will focus marketing efforts on the Owners segment, which is not being widely marketed to by the existing Home Inspection Businesses. The size of the Owner Segment and the fact that few existing Home Inspection businesses are marketing maintenance inspections to that segment, make it a very attractive niche.
4.3 Service Business Analysis
The Home Inspection Industry is selling time and knowledge. An Inspector spends a designated amount of time reviewing a property and educating the client about the property. The resulting Inspection Report, which is presented to the client, represents a transfer of knowledge.
4.3.1 Competition and Buying Patterns
Most of the competition in the Home Inspection Industry occurs in the Buyer and Seller segments. Inspection Companies need to maintain relationships with Real Estate professionals and rely on word of mouth in order to obtain business in those two segments.
The advantage of selling to the Owner segment is that direct marketing becomes possible in the following ways:
- Postcards directed to specific ZIP codes
- Informative column and Advertisement in local news papers
- Organizing informational and educational events within target communities