Global Knowledge Management and Economy - Nik Zafri

Posted on The Star Global Malaysians Forum: 08 October 2007 at 9:06pm

preferred anonymous by e-mail wrote:
Hi Nik, I saw your comments in Global Malaysians and got quite interested in them. I google and found your name in the internet which has led me to your website and how I got this e-mail address.

I am thinking of expanding my construction business and I thought of seeking funds from the financial institutions. I've done a business plan reflecting all the necessary items to qualify for financial assistance. Some of the important contents are (apart from the opening/executive summary & company background):

Construction Service & Product Description, Target Market & Analysis for both Product & Service, Competition, Marketing Strategy, Financial Projections - P & L, Cashflow & Balance Sheet.

Is there anything more I should add?


Dear Madam

At one glance, I think your business plan has all the necessary elements (in the context of business plan format). If I may say something - I noticed that you didn't really mention in what capacity your construction firm is in. Or what type of financial assistance you're looking for - Loans? Venture Capital? P.O Financing? Factoring?

This is the typical problem when it comes to e-mail query - a bit of limited space.

The reasons I asked:

a) since I saw the word "Product" (or for BOTH Product and Services - you are implying that you have two not one)....you see "Product" can mean many things when it comes to construction...it can mean that you are manufacturing and installing construction materials as well e.g. cement for concreting? Steel for reinforced concrete? (Which also serves to make you a supplier & sub-contractor for concreting works as well...)

b) The construction service is also not clear - Civil & Building Engineering? M & E?

All the two aforesaid examples are categorized within the trade "Construction".

So, I'm assuming you are in both sectors but I'm unsure of the weight between the two (which one your company focus on e.g. 60% - construction services and 40% Product/Construction Materials)

Based on my experience assisting construction companies doing business plan, if a company has something to do with construction materials manufacturing, then it should be a wise move to first separate the financial projections between the two before consolidating them both (or you can have both separated..that wouldn't be a problem).

In the Product Description - if your company is a specialized trade contractor i.e. Cement & Concreting, then you should be including the quality and safety of your products for construction application for various structures such as residential, commercial - hi/low rise building etc.

One of the most difficult part in the 'Target Market and Analysis' section, is finding the statistical figures (I sure hope you have included statistics as well) based on the different category of construction (let's say concreting) e.g. you should estimate the number of establishments in a particular geographical area vs no. of people being employed vs total annual sales.

You should also take into account, your current and past performances - say..a cut off period of 3 years (depending your financial projection) - meaning you will have to include audited accounts alongside with some accounting records for support. (e.g. how much sales you have made for your 'product' in the past 3 years. When you have these intact, you can make a better forecast for 3 years ahead based on the current trends.

Another part that is posing many problems to construction business plan is to include the business ratio (usually immediately after the financial projections) - this is about your industry profile statistics - comparison of industry standards and the key ratios for this business plan.

It's also good if you can include graphs for each projection - where applicable - besides than tabular explanation.

One important point to note, you must be able to convince the 'financiers' that your company and your project venture have the 'viability' and can 'sustain'/'survive' in the market for quite sometime. In order to do this, you need a separate analysis on the current construction trend...which is quite volatile..sorry to tell. (which is why business ratio is recommended to be included)

Overall, in this limited space, I would recommend you to first split between 'construction services' and 'construction product' - in short, make two business plans first then consolidate them together. Otherwise, you may potentially face confusion here and there if you mix both together. (Trust me)

Okay, that would be all for now....I wish you the best in everything you do.