Despite the continued slide in the industry the US housing segment saw an unprecedented $550.14 trillion in revenue last year. This sector continues to show steady growth over two more years. The segment’s top revenue-generating sector is single-family housing construction. It accounted for 67% of all residential construction in the US.
Over the years, the industry’s business model had changed to increase efficiency and reduce costs. There are no barriers to entry (other than state-based registrations and licenses) which have led to more service providers. But, the competition is mostly based on reputation and demonstrated performance. Many new competitors have difficulty establishing a foothold in this market.
The existing firms have several advantages relative to new entrants. They:
- Get access to skilled subcontractors.
- Keep in touch with your suppliers.
- Establish ongoing agreements with financial institutions and property development companies.
- They can show completed examples of their work and generate ‘word-of mouth’ referrals.
KnaelHaed ASPware (KnaelHaed), is a provider Web-based software applications for vertical markets. KnaelHaed ASPware will offer the DigitalSuspenders online software solution for building construction.
The Problem
In terms of research and development (R&D), the construction industry is behind other industries. R&D investment for mature US businesses is typically 3.5% of sales. Aerospace, for example, may reinvest between 7% and 14% of their sales. Construction only reinvests 0.5%. There are many reasons why reinvestment is low, but they all stem from costs and complexity. Many construction companies have fewer than 10 employees and make very little profit margins. Technology spending is often viewed as an expensive luxury.
The solution
DigitalSuspenders is an integrated suite of Web-based software that supports the entire building lifecycle: from conception, through construction, and into management. This suite supports small contractors with online collaboration, digital takeoff and estimating as well as project and property management capabilities. It is easy to use and understand.
The Market size
According to the most current Economic Census, the home construction industry has 163,703 establishments. It employs 796.880 workers. The industry had grown in the last couple of years to a record 175,000 establishments, while the commercial and institutional building industry is comprised of 34,588 establishments in the US according to the most recent Economic Census. About 8% of US GDP is made up by the construction industry.
Start up costs
KnaelHaed ASPware expects to initially need $120,000 to complete the Beta prototype of the DigitalSuspenders. This will cover legal and infrastructure costs, as well as to cultivate customers. We are looking for angel investors and corporate partners to fund the initial capital.
KnaelHaed ASPware expects to break-even in two years. We expect royalty revenue from the licensing of our position sensing technology and software technology. KnaelHaed ASPware hopes to have the company listed or sold within three to five year to drive further growth and provide liquidity to investors.
Management Team
Paul Peen is the President and Chief Executive Officer. He has more than 20 years experience in software development for commercial purposes, including stints with Microsoft and Expedia.com.
KnaelHaed ASPware combines speed, connectivity and interactivity to provide a unique opportunity for subcontractors and builders to save money and be more efficient. KnaelHaed provides competitive pricing for outsourcing solutions. KnaelHaed ASPware has a commitment to creating new ideas for the development and implementation of its model. This is in order to achieve clients’ goals. Together, the owners’ passion and accumulated field work has made KnaelHaed ASPware more than “just-another-outsourcing-hub”, but a catalyst for the next e-commerce re-invention.
1.1 Objectives
The mission of KnaelHaed ASPware is to provide a medium for custom builders, general contractors, design builders, engineer-contractors, joint-venture contractors, and turnkey contractors to outsource their works with greater cost saving efficiency.
This model is designed to be disruptive against construction software companies that charge thousands of dollars per copy. KnaelHaed ASPware’s model is to offer a subset of these capabilities for free. KnaelHaed ASPware’s ideal mission is to offer better solutions to all stakeholders by using the open-source model.
1.2 Mission
Our target market is builders and subcontractors who want to profit from outsourcing. Software companies supply the industry with their products, which can be quite expensive for small and medium-sized businesses. Considering that the typical home builders construct only about a dozen homes per year, there are only a few companies that may then be considered large enough, with sufficient financial resources to pay for premium licensing of a software package.
We estimate that roughly 60% of the US market will fall under the category of small and middle builders. That would equal 118,980 establishments. Our focus will be directed to these establishments that are prioritizing on cost efficiency and precise results.
Success keys 1.3
We have targeted the construction market for several reasons. The construction industry is worth $787 billion. It has significant growth potential. The annual unit growth of the number of establishments in the housing sector averaged 6.45% and commercial/institutional sector 0.46% last year.
Despite its low growth, the market is still fragmented. Within the US alone there are over 200,000 establishments (both housing and commercial/institutional) on record.
These are the keys that will make us successful:
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- Building and maintaining strategic alliances with our software vendors and other industry related business partners
- Adopting a customer and market-oriented sales and marketing paradigm
- Managing the business by implementing, and consistently measuring and adjusting the fundamentals of a Balanced Scorecard:
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- Goals of Employee Learning and Growth Results
- Financial Goals vs. Results
- Goals for Internal Business Processes Results
- Customer Satisfaction Goals Vs. Results
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