Opportunity
Problem
Customers in the Houston area are in need of beautiful office buildings, warehouses, public works etc. The area is expanding rapidly and they need a company that can provide high quality work and materials to build the spaces that were needed.
Solution
Fosse Commercial Contractors (FCC) strives to offer the finest quality design, site preparation, cost estimates, construction, repair, and alteration to clients needing large scale construction services, whether it be office buildings, warehouses, large apartment complexes, public works, etc. Fosse is committed to providing the best service in commercial construction.
Market
Houston is booming. The area has seen a lot of business growth in recent years. This is expected to continue for at most the next four years. Fosse Commercial Contractors sees this as a highly attractive market.
We will be focusing on the clients that will offer us the highest return, which is those who require office building construction. This is the fastest growing group of commercial clients who require our services. Other potential clients we can serve are those in the restaurant and special facility segments.
Competition
Currently we have three major competitors within the Houston area. These are Texas Specialty Construction & TNT General Contractors. Fosse is the target client of each company, and all of them have excellent customer service records. Houston is experiencing rapid growth and demand for services is higher than supply. This is an excellent chance to gain market share, and to be able to defend your industry position.
Why Us?
The best way to compete in the construction industry is through lower costs or better project management. The bid process is one of the most critical steps in winning a contract. Fosse is able to compete with most of its rivals because it has an unique competitive advantage. FCC’, General Projects Manager David West, is Charles Nunn’s nephew. McHoughton’, one of the Midwest’s top-rated construction material suppliers, owns McHoughton’. Fosse has been able gain an extremely advantageous supplier contract, which allows Fosse to purchase its materials at significant discounts. With this advantage, Fosse can outbid its competition and be a leader in the market at a lower cost.
Expectations
Forecast
Fosse has a very small amount of debt, and plans to keep it that way. We expect to see an increase in profits due to our market shifting efforts by the year’s end. As we enter this difficult market, we expect lower profits for the next three-years. As we grow, and take advantage of economies-of-scale, we anticipate that we can reduce marginal cost and increase overall profitability by year 3 or 4.
We believe we can also grow. For this next year we intend to significantly increase overall revenues to close to $900K, from $572K this past year. We have the market. We have the people. And we have the capabilities. It’s now that it is time to move forward.
However, growth can be costly. We’re willing to invest new capital to help offset losses during the majority of the first year. We can turn profits in years 2 & 3.