Guides to write a business plan for a construction or real estate business

A business plan is a written document that sets out the commercial, operational and financial objectives of a business and explains how it's going to achieve them.

To put it simply, it consists of two distinct parts:

• A written part that presents, in detail, your project, the team, your business strategy, and your medium-term objectives.
• A financial forecast that highlights the expected profitability of the project and the funding requirements.

A business plan is a document that sets out your goals for the next three to five years and explains the strategies and actions you plan to take to achieve them.

There are three main reasons to write a business plan for a construction or real estate business:

• To draw up a roadmap: helps you make informed decisions about how best to allocate resources and ensure long-term success.
• To track financial performance: enables you to regularly compare your financial performance against what was planned in your business plan and adjust accordingly.
• To raise funding: helps you articulate your growth potential and funding requirements, making it easier to secure financing from lenders.

The absence of a business plan is one of the main reasons why more than 50% of new businesses fail within five years. If you are setting up a construction or real estate business, drawing up a business plan is essential to reduce the risk of your project failing.

The main components of a construction or real estate business plan follow that of a standard business plan outline:

• Executive summary: provides a concise overview of the business plan, highlighting the key points, financials and objectives of your construction or real estate business.
• Company description: delivers a comprehensive overview of your construction or real estate business, covering its vision, legal structure, history, location, and the management team.
• Products and services: describes the products or services offered by your construction or real estate company, emphasizing its unique features and benefits.
• Market analysis: evaluates the construction or real estate industry landscape, target demographics, and competitive dynamics to pinpoint strategic opportunities and threats.
• Strategy: maps out your construction or real estate business's marketing, sales, and pricing strategies aimed at achieving objectives and outmaneuvering competitors.
• Operations: provides insights into your construction or real estate supply chain, key assets, and staffing needs essential for smooth day-to-day functioning.
• Financial projections: presents a detailed financial forecast, including cash flow, income statement, and balance sheet, guiding your construction or real estate business's financial trajectory.
• Appendix: includes supplementary information such as resumes, legal documents, detailed research, and additional data that support the business plan.

Nowadays, the most efficient way to write an professional business plan is to use a business planning software.

The Business Plan Shop’s online business plan software lets you confidently create your plan without worrying that you've left out a crucial part:

• Our detailed outline includes all the key sections expected in a business plan so you won't have to worry about missing out on crucial aspects.
• Instructions and examples in every section help you power through your plan with confidence.
• Avoid lengthy text by adding images, tables or charts throughout your business plan.

Once you're done, download your business plan as a PDF or Word Document and send it to lenders.

Your business plan serves as a powerful tool to secure funding for your construction or real estate business by showcasing your vision, market opportunity, operational strategy, and financial projections to potential lenders.

By demonstrating a clear understanding of your industry, a solid plan for growth, and a realistic assessment of funding requirements, you can instill confidence and attract the necessary capital to fuel your construction or real estate venture.

The Business Plan Shop has a range of business plan templates to help you write a business plan to present to investors or lenders.

Most of our business plan templates are examples of companies and entrepreneurs seeking bank loans and so can be used in the same way to structure your business plan!

• Download your chosen template in Word or PDF format (or load it directly into our online business plan software to use as a starting point for your own plan).
• Replace the template’s text and numbers with your business’ details to make it your own.

Here are some of the mostly commonly made mistakes made by entrepreneurs when writing a business plan for a construction or real estate business:

• Underestimating project costs: failing to accurately estimate construction costs, including materials, labor, permits, and unforeseen expenses, can lead to budget overruns and project delays.
• Neglecting market analysis: not conducting thorough market research on local real estate trends, demand, and competition can result in investing in properties or projects with limited potential for return on investment.
• Ignoring seasonality: overlooking the impact of seasonal fluctuations on construction timelines, sales cycles, and rental demand can lead to delays in project completion and revenue generation.
• Lack of regulatory compliance: ignoring zoning regulations, building codes, environmental requirements, and permit processes can lead to costly fines, delays, and legal issues.
• Poor project management: inadequate project management practices, including scheduling, communication, and subcontractor coordination, can lead to delays, cost overruns, and dissatisfaction among clients.

You should be reviewing and updating your business plan at least quarterly to track your actual performance against what was forecasted at the beginning of the year.

By tracking key performance indicators (KPIs) on a quarterly basis, you can identify any areas of your business which may require a greater budget allocated to them and obtain funding as soon as possible.

You'll also be able to view what's working for your business and what isn't to ensure that your short-term goals and actions are aligned with your long-term objectives outlined in your annual business plan.

The Business Plan Shop's financial forecasting software makes it easy to track your actuals against your forecast to ensure you’re reaching your goals.