Are you planning on starting or expanding a property development company and need a business plan? Investors are likely to request a business plan or investor presentation of some kind. A vital cornerstone for property development companies, business plans give important information about how your business will be run and how it will operate while also working to secure vital funding.
Every company creates something that outlines who they are, what they plan to do and how they plan to do it. How it will be funded, what kind of properties will be acquired, marketing and everything in between, the information gives anyone who reads it a deep look into the ‘nitty gritty’ of the property development company.
Why Do I need A Business Plan For My Property Development Business?
You need one because it’s an essential document providing vital details. The information it gives isn’t just there for investors, and its purpose doesn’t just start once it’s been written.
It’s a Learning Experience
Each individual business plan is exactly that, individual. It’s a daunting thing to undertake, especially not written one before. However, discovering the best way to property development business plan together helps you gain in-depth knowledge of the industry while learning more about your own business.
You’ll also find yourself going back to your business plan frequently and amending it according to new information or new ideas. It becomes an ongoing learning experience that gives you valuable insight into the world of property development
It Ensures You Know The Business Inside And Out
When you’re forced to sit down and actually think about every aspect of your business in painstaking detail, it gives you a detailed and informed plan. People who may opt not to create business plans can have much more scattered ideas about to achieve certain things or run their business to be successful.
Writing your business plan means that not only will you have that super detailed plan, you’ll be able to answer any questions and will have a clear, focused picture of what lies ahead. It means you’ll know your business as well as you know yourself, so you’ll be in sync with it and more adaptable to change.
It Attracts Investors And Funding
The primary goal of your business plan is to attract the interest of investors and secure funding for your business. Property development takes quite a bit of start-up money and it can be a while until you see any profit, so funding and investors can be a necessity.
It also helps you to secure any loans you need, such as bank loans. If you want a business loan, you’ll usually need a business plan complete with financial data and projections so the bank can assess the risk of lending.
What Information Do I Need To Include?
There are a plethora of different things you need to portray in your business plan. There are some sections that all business plans will have, no matter what the industry, and there are some that are unique to property development.
Each business plan will be unique, with some requiring sections that others don’t, but all property development business plans should include the following comprehensive sections:
Acquisition
This includes where you plan to buy property, the price range you wish to purchase in, projected timescales, ideal exit value, construction type and planning permission status. This is a vital part of your business plan and gives you a clear strategy to move forward with.
Funding Strategy
This is the section where you need to outline how you intend to raise the capital you need to purchase properties. Without a solid funding strategy you don’t have a business, so make sure you know exactly how much loan money, personal investment and outside investment you plan on using.
Development Strategy
This is the section where you’ll need to outline exactly how you plan on conducting developments and what kind of properties you’ll be targeting. Will you be doing loft conversions? Extensions? Buying land or existing property? Will planning permission be needed?
Company Structure
This might not seem important, but it is. It should be all ready to write up as you should already know exactly what the structure of the company will be. The easiest option is to set yourself as a limited company, but there are other options available and which one is right for you will depend on your individual business. If you’re unsure or confused about your options, you can always seek professional advice on the matter.
Exit Strategy
You’ll need to think about and outline how you intend to get the money out of the property. You can either sell a developed property or rent it out. It’s an important distinction to make and your investors will want to know. Whether you buy to sell or buy to let will have tax ramifications as well, so make sure you’ve thought it through and have outlined your reasoning.
Financials
Arguably the most important aspect of your business, this section outlines your financial projections. Expressed as a percentage and not as a figure, your projected profit margins should cover the amount of profit compared to revenue, the amount of profit compared to cost and your return on investment.
If you’re not sure how to calculate this, you can do some research about how profitability is assessed in property development.
Sales And Marketing
With more and more people going away from the traditional routes of simply using an agent, there are a long list of alternative methods of selling and marketing for you to consider. Do some research about marketing innovations within the industry and discuss any social media, pay per click or any other strategies you have in mind.
SWOT Analysis
SWOT stands for strengths, weaknesses, opportunities and threats. This section is especially important if you want to secure external funding for your business from banks or investors. Make lists of each of the four pillars of SWOT, including costs of materials, current market values, projections, competitors and anything else you can think of that is applicable.
Even if you’re not looking to secure funding for your property development business, it’s still a good idea to do one for your own information. It gives you a bigger picture of the risks involved and you can tailor the rest of your strategy to account for key weaknesses or threats.
Personnel
Either somewhere near the beginning or end of your business plan, preferably not in the middle, you should outline who will be working for the company. Who the directors are, any consultants you’ll be working with long-term and a diagram of the hierarchy should all be included.
Market Research
Market research is essential to any industry and it allows you to have a deep understanding of the market you’ll be going into. The best way to do it is to do the market research first. Look at overall data within the market, as well as more niche data sets. You can formulate an ironclad development and sales strategy this way.
How Do I Write My Business Plan for Starting a Property Development Company?
The first thing you’ll need to do is research. Each business is different, so each business plan will be different – you shouldn’t just download a template for this. It’s important. It’s personal. It needs to be written from scratch.
Research into the sections you should include, how it should be structured and how to best optimize the way it’s written are good starts. You can download a few templates to give you an idea, but don’t copy them directly.
Once you know what the individual sections of your business plan will be, it’s time to think long and hard about your business.
You’ll need to do some further research into best marketing practices and other areas of your business. Think about what you want to achieve as a company, what you stand for and who you want to be, and translate that into what will work best to help you achieve your goals.
Keep it neat and organized but don’t over-format it. A bunch of different font types, sizes and colours is only going to draw attention away from the content itself – so keep it simple.
Use graphs and visual aids in your document when necessary, and have these professionally created. You can use the help of a graphic designer or, if you have the skills yourself, you can use editing software to create professional-looking graphs. Excel graphs are functional, but they don’t have the same appeal.
Your business plan is important, so don’t cut corners when it comes to putting it together. Do your research, try your best and ask for help from professionals if you need it. Make sure you know exactly what you want to achieve and how before you sit down to get started and you’ll soon have a picture-perfect business plan you can be proud of. If you are serious about making a go of working in this industry, then you should look to invest in a business plan.
If you find it hard to get the right kind of planning and writing down, then you should look to our team here at Business Plan Writers UK. We are experts in property development business plan writing, and can use the information and analysis we do together to help create a clear plan of action to help take your needs further and create a business plan that works.
To find out how we can help with your business plan either call us on 020 8242 1577 or complete the contact form and one of our consultants will get straight back to you.