Action
Plan
It is the purpose of this action plan to develop the three areas that the presenters talked about to us in class. These areas are a start up plan for the company, obtaining a line of credit and starting a good banking relationship, and developing an outline for our project managers when they receive plans and specs for putting a project into place. The setting up of a good banking relationship will be done within the start up plan. To do this I will draw on the experience conveyed by the presenters and assimilate it to the best of my abilities with pertinent research.
The
Start Up Plan
There are many steps that have to be taken at
the same time it seems when creating a new business.
In the start up plan in this action plan I will attempt to delineate a
clear plan for getting a business started.
The first step that will let you know what you
still need to do for the rest of the start up is to begin to formulate a
business plan. There are many
organizations that are able to help with this step.
One easily accessible and free resource for help in creating and refining
a business plan is the SBA. They
can be reached on the web at http://www.sba.gov/starting/indexbusplans.html.
This site will walk you through setting up a business plan.
At this point you should have the basic issues covered in the business
plan. Such as the location, name,
and market that you will be going into business with. With this step attempted
you will soon realize what you don’t know or have decided yet.
Unless you have already done a considerable
amount of research on incorporating a business you may be clueless as to which
type of business entity best suits your needs.
There are a few different professionals that can help with this decision.
For this reason you might want to enlist their help at this point. The people you will need at this point are a lawyer and an
accountant.
The lawyer should be one that will have the
knowledge to help you set up your articles of incorporation and help you decide
what type of business entity is best suited to your needs.
Ed Witherington suggested a class ‘c’ corporation. This is the traditional corporation set up as opposed to a
sub chapter ‘s’ corporation. He
stated that a C-corp is what most boning agents will demand. This is due to the ease at which the owners may drain capital
out of an S-corp. The lawyer will
be able to walk you through the steps of incorporation while considering the
advantages of the type of business entity among other issues. For more information on the types of corporations please see
http://www.falc.com/corps/corporat.htm
or http://www.stewart-irwin.com/c_corp.htm.
The accountant needs to be brought in early
also to help you get your accounting processes in to working order.
This will include every aspect of accounting for a construction company.
It would be best to approach a company that has experience in the
construction industry. They will be
familiar with the demands of the construction industry on an accounting program.
They will be likely to be able to tell you what local banks are the best
in relations to your needs. While
the web should not be used in lieu of an accountant you may want to go over what
accounting packages can offer, a good site for this is http://www.findaccountingsoftware.com/.
With your business plan in hand with the
blessings from your new lawyer and accountant you are now ready to approach a
bank to get a line of credit. And,
as Mr. Teeples said, be prepared to beg borrow and steal to get the first line
of credit. To this meeting you
should bring the business plan, three years of your tax returns, your personal
financial statement and any other documentation of financial backing that you
can get your hands on to. This line
of credit is not a credit card account but to be used only in the extreme
situations when the operating capital has gaps in it.
It is important to have when going into your bonding agent.
You should have the proper capital to carry the company anyway this is
just a safety net. With the line of
credit set up you should also set up all the necessary account with the bank.
Mr. Witherington suggested the sweep account that John Teeples talked
about to increase return on your working capital in a money market account. If you don’t have liquid capital you should now try to
borrow money, but for the purposes of this paper we will assume that the working
capital is in place and that a line of credit is all that is needed at this
point. And the fact that without
the capital, liquid capital, in place you are not going to be able to get a loan
of any size anyway.
With your banking cares now in had you should
seek insurance and bonding. The
bond limit will depend on your experience and how much capital your company has.
You may want to have all of your subs bonded so that you may take on more
contracts under your bond limit. Insurance
will be a huge experience in the beginning.
Putting into place safety or drug programs at your company can cut some
of the cost of insurance. Taking
any steps possible to lower your EMR is important in the first year and for the
rest of the life of the company.