Construction Repair Business Plan

HodgePodge Sealcoating Company offers crack filling and sealcoating to residential customers. Sealcoating protects asphalt driveways by filling cracks and coating the surface, protecting it against the elements. HodgePodge will leverage their industry-benchmarked customer service to rapidly gain market share.

Although HodgePodge is a seasonal business, operating for eight months, they will maintain an office/garage year round in a low rent facility in an industrial district. Even operating seasonally, HodgePodge will reach profitability by month seven and achieve respectable profits by the end of year three.

Construction Repair Business Plan Example

1.1 Objectives

The first three years of operation objectives:

  • Create a service-based company that exceeds customer’s expectations.
  • Increase the number of clients by 20% per year through superior service.
  • Develop a sustainable start-up business, surviving off its own cash flow.

1.2 Keys to Success

To provide a reasonably priced sealcoating job that exceeds customer’s expectations. Sealcoating business does not have outstanding customer service.

1.3 Mission

HodgePodge Sealcoating Company’s mission is to provide customers with the finest level of service available in the industry. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed customer expectations.

Company Summary

HodgePodge Sealcoating Company, based in Washington, PA, is a sealcoating company that serves the residential market. HodgePodge will use a garage with an attached room for storage and office space. The truck and raw materials will also be stored here. The office is a small room.

HodgePodge is a seasonal business as sealcoat cannot be applied in cold or wet conditions. The garage/office is located in an industrial area to lower rental cost during the off-season.

2.1 Company Ownership

HodgePodge is owned and operated by Dan Slopster.

2.2 Start-up Summary

HodgePodge will incur the following start-up costs:

  • Computer system with CD-RW, printer, Microsoft Office, QuickBooks Pro, and Internet connection.
  • Desk, chair, file cabinet, and cellular phone.
  • Pickup truck and gasoline leaf blower.
  • Sealcoating mixer and hot crack filler mixer.
  • Squeegees for sealcoat and crack filler application.
  • Containers for raw ingredient storage and sand (for filling cracks larger than 1/8th inch in depth).
  • Work clothing and water container.

Some items are considered long-term assets and will be depreciated using G.A.A.P. approved straight-line depreciation method.

Construction Repair Business Plan Example

Start-up

Requirements

– Legal: $200

– Stationery etc.: $200

– Brochures: $0

– Consultants: $0

– Insurance: $0

– Rent: $0

– Research and Development: $0

– Expensed Equipment: $0

– Other: $0

– Total Start-up Expenses: $400

Start-up Assets

– Cash Required: $28,800

– Other Current Assets: $0

– Long-term Assets: $10,800

– Total Assets: $39,600

Total Requirements: $40,000

Start-up Funding

– Start-up Expenses to Fund: $400

– Start-up Assets to Fund: $39,600

– Total Funding Required: $40,000

Assets

– Non-cash Assets from Start-up: $10,800

– Cash Requirements from Start-up: $28,800

– Additional Cash Raised: $0

– Cash Balance on Starting Date: $28,800

– Total Assets: $39,600

Liabilities and Capital

– Liabilities

– Current Borrowing: $0

– Long-term Liabilities: $0

– Accounts Payable (Outstanding Bills): $0

– Other Current Liabilities (interest-free): $0

– Total Liabilities: $0

– Capital

– Planned Investment

– Dan: $40,000

– Investor 2: $0

– Other: $0

– Additional Investment Requirement: $0

– Total Planned Investment: $40,000

– Loss at Start-up (Start-up Expenses): ($400)

– Total Capital: $39,600

Total Capital and Liabilities: $39,600

Total Funding: $40,000

Services

HodgePodge provides residential sealcoating and crack filling. Sealcoating is the process of spreading an asphalt-based product that coats the surface of an asphalt driveway, filling in small cracks and sealing against the elements. Crack filler is applied first to fill in gaps in the driveway. If the crack is more than 1/8th inch deep, sand is added.

Before sealcoating, the driveway must be cleared of debris to ensure adhesion. Once debris is removed, cracks are filled. The sealcoat is then applied and the driveway must dry for 24 hours before use.

The typical cost for sealcoating a driveway ranges from $200-$300 depending on size and condition.

Market Analysis Summary

HodgePodge has identified two distinct segments of the population that consume sealcoating services. HodgePodge will have one marketing campaign that targets both groups.

4.1 Market Segmentation

HodgePodge’s market can be segmented into two groups:

– People with disposable income who can afford to pay for services. This group typically has a household income over $50,000 and pays for maintenance services like lawn care.

– Older people who believe they are not physically capable of doing the work themselves or choose not to. They believe sealcoating is too exerting or messy, especially at their age. They also believe it extends the life of their driveway.

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Construction Repair Business Plan Example

Market Analysis:

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers

Growth

Middle to upper class 9.00%

18,545 20,214 22,033 24,016 26,177 9.00%

Older people 8.00%

21,455 23,171 25,025 27,027 29,189 8.00%

Other 0.00%

0 0 0 0 0 0.00%

Total 8.47%

40,000 43,385 47,058 51,043 55,366 8.47%

4.2 Target Market Segment Strategy

HodgePodge’s strategy for reaching these people will be based on advertisements in the local paper’s metro section where service providers advertise. This section is well received by the community and often referred to when looking for a service provider.

Additionally, HodgePodge will have a yellow pages advertisement and leverage word of mouth referrals. Creating an economic incentive for current customers to make referrals will build a loyal customer base.

4.3 Service Business Analysis

The sealcoating business consists primarily of independent contractors, larger paving companies, and a few franchises. Independent contractors make up the bulk of the business.

4.3.1 Competition and Buying Patterns

The sealcoating industry is composed of independent contractors, as well as two sealcoat-specific companies, Dura-Seal and Sealer King.

Consumers’ buying patterns are typically based on price and perceived customer service, with an emphasis on price. Since there is often little differentiation based on the actual product, price becomes the primary factor. The industry is not known for its stellar customer service.

Strategy and Implementation Summary

HodgePodge will aggressively court new customers by leveraging their competitive advantage of superior customer support. Good customer service is rare in the industry, so HodgePodge will stand out. During initial estimation phases, HodgePodge employees will professionally respond to customer questions and provide a written pamphlet with information about the company, sealcoating, pros and cons, and reasonable expectations.

This initial interaction will demonstrate HodgePodge’s stellar customer service, turning prospective individuals into clients.

5.1 Competitive Edge

HodgePodge’s competitive edge is outstanding customer service. This begins with the initial interaction and continues when the company is on-site. Employees will inform customers about the completed job, curing, expectations, and provide contact information for any problems or questions.

Employees will be specifically trained to interact with customers, serving as HodgePodge’s representatives.

5.2 Sales Strategy

HodgePodge will impress customers with excellent customer service during initial meetings. Competition on price is difficult, so HodgePodge will focus on providing detailed information about sealcoating, advantages and disadvantages, and reasonable expectations. By empowering customers with information, HodgePodge believes they will choose their service.

5.2.1 Sales Forecast

The first month will be dedicated to setting up the work area and office, with no sales activity. The next month will involve lining up initial customers, hiring, and employee training. By the third month, HodgePodge will begin sealcoating driveways. Business will steadily grow until September when the season winds down. Profitability will be reached by the seventh month.

Construction Repair Business Plan Example

Construction Repair Business Plan Example

Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Middle to upper class $30,129 $85,474 $92,454
Older people $29,551 $83,254 $90,145
Total Sales $59,680 $168,728 $182,599
Direct Cost of Sales Year 1 Year 2 Year 3
Middle to upper class $3,013 $8,547 $9,245
Older people $2,955 $8,325 $9,015
Subtotal Direct Cost of Sales $5,968 $16,873 $18,260

5.3 Milestones

HodgePodge will have several early milestones:

  1. Business plan completion. This will be done as a roadmap for the organization, serving as an indispensable tool for ongoing performance and improvement.
  2. Office set up.
  3. Hiring and training three full-time employees.
  4. Profitability.

Construction Repair Business Plan Example

Milestones:

Business plan completion: 2/1/2001 – 3/1/2001, $0 budget, ABC Manager, Marketing Department.

Office set up: 2/1/2001 – 3/1/2001, $0 budget, ABC Manager, Department.

Hiring three full-time employees and training them: 2/1/2001 – 4/1/2001, $0 budget, ABC Manager, Department.

Profitability: 2/1/2001 – 10/31/2001, $0 budget, ABC Manager, Department.

Management Summary:

HodgePodge is owned and operated by Dan Slopster. Dan first learned about sealcoating before starting college. He started his own small sealcoating company where he would sign up neighbors for jobs after sealcoating his parents driveway. Dan handled everything himself, from soliciting the job to completing the work.

During college breaks, Dan would receive calls from old customers asking him to do their driveway. He enjoyed the easy money. After graduating, Dan worked in the Human Resource department of Heinz in Pittsburgh but decided he didn’t want to work for someone else for the rest of his life.

Dan left Heinz, moved to Washington, PA, and explored opportunities as his own boss. After researching the market, he discovered that sealcoating was an attractive industry due to its poor customer service. Dan believed a new company could succeed by prioritizing customer satisfaction.

Personnel Plan:

Dan will work full time for HodgePodge, handling hiring, training, sales, strategic development, and assisting with driveway work for training purposes.

By month three, three full-time employees will be hired and will work with HodgePodge until November, when the sealcoating season ends.

For the second season, an additional crew of three people will be hired.

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Table: Personnel Plan

Year 1 Year 2 Year 3

Dan $36,000 $36,000 $36,000

Employee 1 $8,960 $8,960 $8,960

Employee 2 $8,960 $8,960 $8,960

Employee 3 $8,960 $8,960 $8,960

Employee 4 $0 $8,960 $8,960

Employee 5 $0 $8,960 $8,960

Employee 6 $0 $8,960 $8,960

Total People: 1 7 7

Total Payroll: $62,880 $89,760 $89,760

Financial Plan:

The following sections outline important financial information.

Important Assumptions:

Table: General Assumptions

Year 1 Year 2 Year 3

Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

Break-even Analysis:

The Break-even Analysis determines the monthly revenue needed to reach the break-even point.

Construction Repair Business Plan Example

Break-even Analysis:

Break-even Analysis
Monthly Revenue Break-even $7,571
Assumptions:
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost $6,814

7.3 Projected Profit and Loss

Projected profit and loss:

Construction Repair Business Plan Example

Construction Repair Business Plan Example

Construction Repair Business Plan Example

Construction Repair Business Plan Example

Pro Forma Profit and Loss

Sales

Year 1: $59,680

Year 2: $168,728

Year 3: $182,599

Direct Cost of Sales

Year 1: $5,968

Year 2: $16,873

Year 3: $18,260

Other Production Expenses

Year 1: $0

Year 2: $0

Year 3: $0

Total Cost of Sales

Year 1: $5,968

Year 2: $16,873

Year 3: $18,260

Gross Margin

Year 1: $53,712

Year 2: $151,855

Year 3: $164,339

Gross Margin %

Year 1: 90.00%

Year 2: 90.00%

Year 3: 90.00%

Expenses

Payroll

Year 1: $62,880

Year 2: $89,760

Year 3: $89,760

Sales and Marketing and Other Expenses

Year 1: $700

Year 2: $700

Year 3: $700

Depreciation

Year 1: $2,160

Year 2: $4,260

Year 3: $4,260

Leased Equipment

Year 1: $0

Year 2: $0

Year 3: $0

Utilities

Year 1: $600

Year 2: $600

Year 3: $600

Insurance

Year 1: $1,200

Year 2: $1,200

Year 3: $1,200

Rent

Year 1: $4,800

Year 2: $4,800

Year 3: $4,800

Payroll Taxes

Year 1: $9,432

Year 2: $13,464

Year 3: $13,464

Other

Year 1: $0

Year 2: $0

Year 3: $0

Total Operating Expenses

Year 1: $81,772

Year 2: $114,784

Year 3: $114,784

Profit Before Interest and Taxes

Year 1: ($28,060)

Year 2: $37,071

Year 3: $49,555

EBITDA

Year 1: ($25,900)

Year 2: $41,331

Year 3: $53,815

Interest Expense

Year 1: ($65)

Year 2: ($180)

Year 3: ($270)

Taxes Incurred

Year 1: $0

Year 2: $11,175

Year 3: $14,948

Net Profit

Year 1: ($27,995)

Year 2: $26,076

Year 3: $34,878

Net Profit/Sales

Year 1: -46.91%

Year 2: 15.45%

Year 3: 19.10%

7.4 Projected Cash Flow

The following chart and table indicate projected cash flow.

Construction Repair Business Plan Example

Pro Forma Cash Flow

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $59,680 $168,728 $182,599
Subtotal Cash from Operations $59,680 $168,728 $182,599
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $59,680 $168,728 $182,599
Expenditures
Expenditures from Operations
Cash Spending $62,880 $89,760 $89,760
Bill Payments $21,678 $45,592 $53,285
Subtotal Spent on Operations $84,558 $135,352 $143,045
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,200 $1,200 $600
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $10,500 $0
Dividends $0 $0 $0
Subtotal Cash Spent $85,758 $147,052 $143,645
Net Cash Flow ($26,078) $21,676 $38,954
Cash Balance $2,722 $24,398 $63,352

Projected Balance Sheet

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $2,722 $24,398 $63,352
Other Current Assets $0 $0 $0
Total Current Assets $2,722 $24,398 $63,352
Long-term Assets
Long-term Assets $10,800 $21,300 $21,300
Accumulated Depreciation $2,160 $6,420 $10,680
Total Long-term Assets $8,640 $14,880 $10,620
Total Assets $11,362 $39,278 $73,972
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $957 $3,997 $4,414
Current Borrowing ($1,200) ($2,400) ($3,000)
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities ($243) $1,597 $1,414
Long-term Liabilities $0 $0 $0
Total Liabilities ($243) $1,597 $1,414
Paid-in Capital $40,000 $40,000 $40,000
Retained Earnings ($400) ($28,395) ($2,319)
Earnings ($27,995) $26,076 $34,878
Total Capital $11,605 $37,681 $72,558
Total Liabilities and Capital $11,362 $39,278 $73,972
Net Worth $11,605 $37,681 $72,558

Business Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 182.72% 8.22% 7.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 29.80%
Total Current Assets 23.96% 62.12% 85.64% 67.00%
Long-term Assets 76.04% 37.88% 14.36% 33.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities
Accounts Payable -2.14% 4.07% 1.91% 43.50%
Long-term Liabilities 0.00% 0.00% 0.00% 14.10%
Total Liabilities -2.14% 4.07% 1.91% 57.60%
Net Worth 102.14% 95.93% 98.09% 42.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.00% 90.00% 90.00% 29.40%
Selling, General & Administrative Expenses 141.12% 74.62% 71.00% 15.50%
Advertising Expenses 1.21% 0.41% 0.38% 0.30%
Profit Before Interest and Taxes -47.02% 21.97% 27.14% 2.40%
Main Ratios
Current -11.20 15.28 44.81 1.55
Quick -11.20 15.28 44.81 1.17
Total Debt to Total Assets -2.14% 4.07% 1.91% 57.60%
Pre-tax Return on Net Worth -241.23% 98.86% 68.67% 6.50%
Pre-tax Return on Assets -246.39% 94.84% 67.36% 15.40%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -46.91% 15.45% 19.10% n.a
Return on Equity -241.23% 69.20% 48.07% n.a
Activity Ratios
Accounts Payable Turnover 23.65 12.17 12.17 n.a
Payment Days 27 19 29 n.a
Total Asset Turnover 5.25 4.30 2.47 n.a
Debt Ratios
Debt to Net Worth -0.02 0.04 0.02 n.a
Current Liab. to Liab. 0.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $2,965 $22,801 $61,938 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios

General Assumptions:

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss:

Sales Month 1 2 3 4 5 6 7 8 9 10 11 12

Sales $0 $0 $2,801 $5,042 $7,199 $9,660 $11,265 $11,825 $11,888 $0 $0 $0

Direct Cost of Sales $0 $0 $280 $504 $720 $966 $1,127 $1,183 $1,189 $0 $0 $0

Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $280 $504 $720 $966 $1,127 $1,183 $1,189 $0 $0 $0

Gross Margin $0 $0 $2,521 $4,538 $6,479 $8,694 $10,139 $10,643 $10,699 $0 $0 $0

Gross Margin % 0.00% 0.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 0.00% 0.00% 0.00%

Expenses

Payroll $3,000 $3,000 $6,840 $6,840 $6,840 $6,840 $6,840 $6,840 $6,840 $3,000 $3,000 $3,000

Sales and Marketing and Other Expenses $0 $0 $100 $100 $100 $100 $100 $100 $100 $0 $0 $0

Depreciation $180 $180 $180 $180 $180 $180 $180 $180 $180 $180 $180 $180

Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50

Insurance $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100

Rent $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Payroll Taxes 15% $450 $450 $1,026 $1,026 $1,026 $1,026 $1,026 $1,026 $1,026 $1,026 $450 $450 $450

Other $0 $0 $

Pro Forma Balance Sheet:

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Construction Repair Business Plan Example

Business Plan Outline

Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $28,800 $25,667 $21,568 $16,398 $12,539 $10,614 $10,934 $12,617 $14,704 $16,800 $10,904 $6,813 $2,722
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $28,800 $25,667 $21,568 $16,398 $12,539 $10,614 $10,934 $12,617 $14,704 $16,800 $10,904 $6,813 $2,722
Long-term Assets
Long-term Assets $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800 $10,800
Accumulated Depreciation $0 $180 $360 $540 $720 $900 $1,080 $1,260 $1,440 $1,620 $1,800 $1,980 $2,160
Total Long-term Assets $10,800 $10,620 $10,440 $10,260 $10,080 $9,900 $9,720 $9,540 $9,360 $9,180 $9,000 $8,820 $8,640
Total Assets $39,600 $36,287 $32,008 $26,658 $22,619 $20,514 $20,654 $22,157 $24,064 $25,980 $19,904 $15,633 $11,362
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $966 $965 $1,888 $2,104 $2,312 $2,549 $2,703 $2,757 $2,762 $959 $958 $957
Current Borrowing $0 ($100) ($200) ($300) ($400) ($500) ($600) ($700) ($800) ($900) ($1,000) ($1,100) ($1,200)
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $866 $765 $1,588 $1,704 $1,812 $1,949 $2,003 $1,957 $1,862 ($41) ($142) ($243)
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $866 $765 $1,588 $1,704 $1,812 $1,949 $2,003 $1,957 $1,862 ($41) ($142) ($243)

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