BONDING & ACCESS TO CAPITAL SMALL CONTRACTORS INITIATIVE

SESSION 4 BUSINESS PLANNING

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration INTRODUCTION −Course focused on getting bonded −Bonding agents require detailed information −Information similar to business plan −Session will draft business plan 3

4 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration PART A: BUSINNESS PLANNING 1

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration LEARNING OBJECTIVES 1.Review criteria for essential sections of business plan required for bonding application 2.Begin drafting business plan 5

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration WE WILL USE… −Within session: ○ Business plan examples from introduction ○ Your business’s information collected previously ○ Business Plan Template to be drafted during session −Outside of session: ○ Multiple edits ○ Resource list ○ Mentoring site visits 6

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration 7 6 PLANNING STEPS: THE ONE-HOUR PLAN

8 WHAT DEFINES “A BUSINESS”? unrelated U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration

9 ASSIGNMENT 1: DESCRIBE YOUR BUSINESS DESCRIBE YOUR BUSINESS IDENTIFY OBSTACLES TO CONSTRUCTION SERVICES FOCUS ON ORGANIZATIONAL STRENGTHS PROJECT FINANCIAL INFORMATION PREPARE MARKETING STRATEGY ASSESS RISK Take 10 minutes −Who are you and who do you represent? −What does your business do? −When are your projects? −Where do you conduct business? −Why does your business need a bond? U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration

Business success requires a consistent supply of… −List resources required to complete projects, including money, labor, building supplies, etc. −Which resources do you find in short supply? 10 DESCRIBE YOUR BUSINESS IDENTIFY OBSTACLES TO CONSTRUCTION SERVICES FOCUS ON ORGANIZATIONAL STRENGTHS PROJECT FINANCIAL INFORMATION PREPARE MARKETING STRATEGY ASSESS RISK U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration YOUR ENVIRONMENT

−Contracts −Equipment −Money −Skilled Labor −Other? 11 DESCRIBE YOUR BUSINESS IDENTIFY OBSTACLES TO CONSTRUCTION SERVICES FOCUS ON ORGANIZATIONAL STRENGTHS PROJECT FINANCIAL INFORMATION PREPARE MARKETING STRATEGY ASSESS RISK U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration WHAT’S SCARCE?

12 ASSIGNMENT 2: RESPOND TO SCARCITY U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration SCARCE RESOURCE STRATEGY 1STRATEGY 2STRATEGY 3 CONTRACTS EQUIPMENT MONEY SKILLED LABOR OTHER Take 10 minutes How can you create a consistent pipeline?

When analyzing a business’s bond application, bonding agencies want to see: 13 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration ORGANIZATIONAL QUALITIES

14 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration ORGANIZATIONAL SKILL SETS

15 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration ASSIGNMENT 3: SKILLS INVENTORY Take 10 minutes −Identify your employees who play the roles of those on the previous slide’s list −Describe their expertise and how it contributes to the success of projects −Who else could play this role or could be trained to play the role? −Can you identify any other skills needed?

16 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration PART A: BUSINNESS PLANNING 2

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration LEARNING OBJECTIVES 1.Continue reviewing criteria for essential sections of business plan required for bonding application 2.Continue drafting business plan 3.List next steps to finalize business plan as key to bond application 17

18 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration FINANCIALS

19 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration SECTIONS OF FINANCIALS −Number of projects −Total revenue from projects −Fixed and variable costs −Salary −Equipment −Buildings −Depreciation −Taxes Describing the project’s expenses and income on a yearly basis for the life of the project

20 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration SECTIONS OF FINANCIALS −Cash used for and collected from business operations −Property and other assets −Paying or collecting interest and dividends −Loan repayment schedules −Timely payments −Labor and supply costs

21 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration ASSIGNMENT 4: GATHER FINANCIAL INFORMATION Take 10 minutes −Who can help me? −Where are the numbers?

22 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration REQUIRED INFORMATION −What are your goals for growth? −Who are your known customers? −What can you deliver? −How will you achieve those goals?

23 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration STRATEGIES INCLUDE:

24 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration APPENDICES TO COLLECT What strengthens your position? −Proof: list all past successful projects which your business has completed, including accolades, awards, certificates, special recognition, etc. −Track Record: collect references from contacts from past successful projects −Work in progress (WIP): list all current projects

25 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration ASSIGNMENT 5: DRAFT MARKETING STRATEGIES Take 10 minutes to list the following:

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration RESOURCES These resources provide more information: −“Getting Started in Federal Contracting – A Guide through the Federal Procurement Maze,” Barry L. McVay (2009) −“Technical Assistance Guide for Federal Construction Contracts,” OFCCP (2009) −“New Contractors’ Guide,” DOL (2009) −“Contract Interpretations,” R.S. Means 26

27 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration RISK ANALYSIS −Seeing what might go wrong −Taking steps to avoid problems −Planning for problems −Identifying events beyond control −Knowing when to fold

28 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration RISK CONTROL

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration UNIVERSAL RISKS −Cost overruns −Funding politics −Community & client support −Pioneering −Optimistic assumptions −Competition 29 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration −Crucial factors −Cycles & trends −Asset & property management −Cash flow −Abilities −Schedule −Other

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration RISK MITIGATION 30 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration

31 U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration ASSIGNMENT 6: ASSESSING RISK Take 10 minutes to: −Identify and describe the top 5 risks that your business faces and their consequences −Outline mitigation step

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration 32 DRAFT BUSINESS PLAN 1.Verify decisions 2.Get reviewers 3.Run alternate pro formas 4.Solicit advisors 5.Complete written plan! U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration WHERE TO GET HELP −Small Business Development Centers −Bonding Agent −Accountant −Insurance Agent −Lenders −Mentors 33

U.S. Dept. of Housing and Urban Development - Community Planning and Development U.S. Small Business Administration RESOURCES 34 These links provide further detailed information: −Business Planning Software ○ ○ ○ Many others − ○ Market analysis ○ Mark up benchmarks − ○ Learning Center (lots) ○ Create Your Business Plan