Introduction
Our company, which focuses on empowering the Deaf community and providing professional construction services, will be led by passionate Deaf individuals dedicated to enhancing society. We value diversity and recognize that everyone brings a unique perspective. Our team will consist of experts fluent in American Sign Language and knowledgeable about Deaf culture (Lualdi et al., 2019). We will offer a comprehensive set of construction, renovation, remodeling, and repair services to both commercial and residential customers. Our approach will involve working in close partnership with our clients to achieve their desired outcomes. We aim to increase social consciousness and acceptance as we provide excellent service. Let us help you with your next building project in your construction.
Costs that will be incurred
Variable, Fixed, and Mixed Costs:
Expenses that fluctuate based on business operations are referred to as Variable Costs. For instance, building supplies, labor, and fuel for machinery are all part of variable construction costs. The cost can constitute as much as 50% of the overall project expenditure. Labor costs will account for 20% to 40% of the total project cost and will depend on factors such as required skill level and regional wages. Compared with other existing established companies such as SignBuild, the expense of fueling construction machinery could make up around 5-10% of the total budget.
Fixed costs such as office space rent, insurance, and property taxes are expenses that a company will consistently bear. The insurance premiums will also depend on coverage type, construction project magnitude, and company efforts toward completing projects on time and effectively, thus costing between $2,000-$10,000 per year. Property tax costs depend upon a company’s assets and local tax rates; they may total between $5,000–$20,000 annually.
Utility and maintenance expenses are classified as mixed costs since they consist of a monthly service charge and electricity usage fees that vary based on energy consumption levels and office size. Monthly utility expenditures might reach $500–$1,500.
Product vs. Period Costs:
Examples of products required for the business include construction materials, labor, rent, and utilities. These products will require approximately 80% of the entire budget, depending on the scope and complexity of the project.
Period costs include those that arise through regular company activity rather than the creation of a tangible product from the business. Pay for office staff and advertising charges are all recurring costs. A variation of $30,000 to $100,000 per year in administrative income is required depending on staff numbers, while monthly office rent costs of $1,500 to $5,000 will depend on location. The marketing strategy will attract an estimated $10,000 to $50,000 in annual costs.
Direct vs. Indirect Costs:
The project will need skills that will match the available workforce, which will be affected by the local market, which determines the labor cost. A quarter of the total project budget will be required for these costs. Additionally, an extra cost inclusive of utilities will range from 10% to 20% of overall project expenditures and will depend on the scope and length of the project undertaking.
Budgeted income statement
| Amount ($) | |
| Revenue | 1,000,000 |
| Variable Costs | 500,000 |
| Direct Material | 350,000 |
| Direct Labor | 200,000 |
| Fuel Costs | 50,000 |
| Fixed Costs | 80,000 |
| Rent | 36,000 |
| Insurance | 4,000 |
| Property Tax | 40,000 |
| Mixed Costs | 30,000 |
| Utilities | 18,000 |
| Maintenance | 12,000 |
| Total Costs | 610,000 |
| Gross Profit | 390,000 |
| Operating Expenses | 150,000 |
| Salaries | 100,000 |
| Marketing | 25,000 |
| Other Operating Expenses | 25,000 |
| Net Income | 240,000 |
A business named SignBuild is larger than a fictional Deaf Construction Business. The Deaf Construction Business has a gross profit margin of 30%, which falls within the industry standard of 20% to 30%. SignBuild’s pricing strategy and cost structure can influence its gross profit margin. Due to its size and complexity, SignBuild’s operational expenses are lower than the Deaf Construction Business’s $150,000. The hypothetical business earns $150,000 in gross profit after deducting operational expenses. SignBuild’s net profits are influenced by revenue, cost structure, and operating expenses (Robinson, Kucker & Gildner, 2021). SignBuild’s financial performance differs greatly from the Deaf Construction Business; hence their new business plan should leverage SignBuild as an example for expansion and competition without imitating it entirely.
References
Lualdi, C., Hudson, J., Fellbaum, C., & Buchholz, N. (2019, July). Building ASLNet, a Wordnet for American Sign Language. In Proceedings of the 10th Global WordNet Conference (pp. 315-322).
Robinson, R. A., Kucker, M. S., & Gildner, J. P. (2021). Application of design-build contracts to tunnel construction. In North American Tunneling 2002 (pp. 109-118). CRC Press.
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