Lec MT 05 Business Plan

BUSINESS
PLANNING
AR BUSINESS
MANAGEMENT 01
Definition
 A business plan is a document t h a t defines in
detail a company's objectives and how i t
What is a plans t o achieve i t s goals.
 A business plan lays out a written road map
Business Plan? for the firm from marketing, financial, and
operational standpoints. Both startups and
established companies use business plans.
 A business plan is an important document aimed
at a company's external and internal audiences.
 For instance, a business plan is used t o at t r act
investment before a company has established a
proven track record. It can also help t o secure
Importance lending from financial institutions.
 Furthermore, a business plan can serve t o
keep a company's executive team on the same
page about strategic action items and on
target for meeting established goals.
• Get a business loan
• Raise equity funding
• Fix business objectives
• Review the business idea
• Agreement between partners
Importance • Set a value on a business
• Evaluate a new product (or service) line
• Unique selling proposition
Why is a  If you’re looking t o s t a r t an architecture
business, or grow your existing firm, you need a
Business Plan business plan.
important for  A business plan will help you raise funding, if
needed, and plan out the growth of your firm
your in order t o improve your chances of success.
 Your business plan is a living document t h a t
Architectural should be updated annually as your company
grows and changes.
business?
 A well-considered and well-written business plan
can be of enormous value t o a company. While
there are templates that you can use t o write
a business plan, t r y t o avoid producing a generic
Writing a result.
 The plan should include an overview and, if
Business Plan possible, details of the industry of which the
business will be a part. It should explain how the
business will distinguish itself from its
competitors.
1. EXECUTIVE SUMMARY
 Your executive summary provides an

introduction to your architecture firm business
plan, but it is normally the last section you
write because it provides a summary of each
key section of your plan.
 The goal of your Executive Summary is to
quickly engage the reader. Explain to them the
type of firm you are operating, and its status.
For example, are you a startup, do you have a
firm that you would like to grow, or are you
operating a firm in multiple markets
2. COMPANY ANALYSIS
 For example, you might operate one of the
following types of architecture firms:
Residential Architecture: this type of
architecture business will focus on designing and
developing homes. These architects collaborate
with homeowners, builders, and developers and
design various types of houses.
Commercial Architecture: this type of
architecture specializes in projects for
business entities. The most common non-
residential building projects are office
buildings, though hospitals are a close second.
2. COMPANY ANALYSIS
Municipal and Historical Architecture: this
type of architecture company works on local
government buildings or focuses on historic
building restorations.
 In addition to explaining the type of architectural
firm you will operate the Company Analysis
section of your architecture firm business plan
needs to provide background on the business.
3. CUSTOMER ANALYSIS
 The customer analysis section of your

architecture firm business plan must detail the
customers you serve and/or expect to serve.
 The following are examples of customer
segments: homeowners, government,
businesses, contractors, developers, etc.
4. COMPETITIVE ANALYSIS
 Your competitive analysis should identify

the indirect and direct competitors your
business faces and then focus on the latter.
 Direct competitors are other architecture
firms.
4. COMPETITIVE ANALYSIS
 Indirect competitors are other options that

customers have to purchase from that aren’t
direct competitors. This includes interior
designers, home builders, and construction
managers. You need to mention such
competition as well.
 With regards to direct competition, you want
to describe the other architectural firms with
which you compete. Most likely, your direct
competitors will be architects located very
close to your location.
5. MARKETING PLAN
 Traditionally, a marketing plan includes the

four P’s: Product, Price, Place, and
Promotion. For an architecture firm business
plan, your marketing plan should include the
following:
 Product: In the product section, you should
reiterate the type of architecture company that
you documented in your Company Analysis. Then,
detail the specific products you will be offering.
For example, in addition to architectural services
or products, will you provide other services such
as interior design consultations or landscape
planning?
5. MARKETING PLAN
 Price: Document the prices you will offer and

how they compare to your competitors.
Essentially in the product and price sub-sections
of your marketing plan, you are presenting the
architectural services you offer and their prices.
5. MARKETING PLAN
 Place: Place refers to the location of your
architecture company. Document your location
and mention how the location will impact your
success. For example, is your firm located in a
busy commercial district, an upscale office
building, etc.? Discuss how your location might
be the ideal location for your customers.
5. MARKETING PLAN
 Promotions: The final part of your marketing
plan is the promotions section. Here you will
document how you will drive customers to your
location(s). The following are some promotional
methods you might consider:
• Advertising in local papers and magazines
• Reaching out to local websites
• Flyers
• Social media marketing
• Local radio advertising
6. OPERATIONS PLAN
 While the earlier sections of your business plan

explained your goals, your operations plan
describes how you will meet them. Your
operations plan should have two distinct
sections as follows.
 Everyday short-term processes include all of
the tasks involved in running your firm, including
marketing your business, working on current
projects, preparing for upcoming projects, and
overseeing the entire project.
6. OPERATIONS PLAN
 Long-term goals are the milestones you hope

to achieve. These could include the dates when
you expect to design your 100 th building, or
when you hope to reach a certain amount in
revenue. It could also be when you expect to
expand your firm to a new city or expand your
architectural services.
7. MANAGEMENT TEAM
 To demonstrate your architecture firm’s ability

to succeed, a strong management team is
essential. Highlight your key players’
backgrounds, emphasizing those skills and
experiences that prove their ability to grow a
company.
 Ideally, you and/or your team members have
direct experience in architecture. If so, highlight
this experience and expertise. But also highlight
any experience that you think will help your
business succeed.
8. FINANCIAL PLAN
 Your financial plan should include your 5-year
financial statement broken out both monthly
or quarterly for the first year and then
annually. Your financial statements include
your income statement, balance sheet and
cash flow statements.
8. FINANCIAL PLAN
 Income Statement: an income statement is
more commonly called a Profit and Loss
statement or P&L. It shows your revenues
and then subtracts your costs to show
whether you turned a profit or not.
8. FINANCIAL PLAN
 In developing your income statement, you need to

devise assumptions. For example, will you work on 1
project at a time or will you oversee multiple projects
at any given time? And will sales grow by 2% or 10%
per year? As you can imagine, your choice of
assumptions will greatly impact the financial
forecasts for your business. As much as possible,
conduct research to try to root your
assumptions in reality.
8. FINANCIAL PLAN
 Balance Sheets: Balance sheets show your assets

and liabilities. While balance sheets can include
much information, t r y to simplify them to the key
items you need to know about. For instance, if you
spend 50,000 on building out your architecture
business, this will not give you immediate profits.
Rather it is an asset that will hopefully help you
generate profits for years to come. Likewise, if a
bank writes you a check for 50,000, you don’t need
to pay it back immediately. Rather, that is a liability
you will pay back over time.
8. FINANCIAL PLAN
 Cash Flow Statement: Your cash flow statement will

help determine how much money you need to
start or grow your business, and make sure you
never run out of money. What most entrepreneurs
and business owners don’t realize is that you can
turn a profit but run out of money and go bankrupt.
 8. FINANCIAL PLAN
In developing your Income Statement and Balance
Sheets be sure t o include several of the key costs
needed in starting or growing an architecture
business:
• Location build-out including design fees,
construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid t o s t a f f
• Business insurance
• Taxes and permits
• Legal expenses

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BUSINESS

 Your executive summary provides an

 The customer analysis section of your

 Your competitive analysis should identify

 Indirect competitors are other options that

 Traditionally, a marketing plan includes the

 Price: Document the prices you will offer and

 While the earlier sections of your business plan

 Long-term goals are the milestones you hope

 To demonstrate your architecture firm’s ability

 In developing your income statement, you need to

 Balance Sheets: Balance sheets show your assets

 Cash Flow Statement: Your cash flow statement will

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