Despite the continuing slide in this industry, the US housing sector saw its record-breaking $550.14Billion gain last year. The sector will continue to grow steadily over the next two years. New single-family housing construction, which accounted for 67% total residential construction in the US, is one of the highest revenue-generating segments in this segment.
The industry’s business model has changed over the years to be more efficient and cost-effective. Low entry barriers (other than the need to obtain state-based licenses and registration) in the industry had spawned more service providers in the industry. Competition is largely determined by reputation and performance, as many newcomers find it difficult to gain a foothold within the market.
Existing firms have many advantages over newcomers. They:
- Get access to skilled subcontractors.
- Keep in touch with your suppliers.
- Maintain good relationships with property developers and financial institutions.
- They can show completed examples of their work and generate ‘word-of mouth’ referrals.
KnaelHaed ASPware is a provider Web-based vertical market software solutions. The DigitalSuspenders is an online software solution to be offered by KnaelHaed ASPware in support of the building construction process.
The Problem
In research and development investment, the construction industry is not as advanced as other industries. R&D expenditures for mature US corporations are usually around 3.5%. For some industries such as aerospace that number can be 7% to 14%. Construction only reinvests 0.5%. The reasons for the low reinvestment vary, but are generally due to costs and complexity. The majority of construction firms have less than 10 workers and are limited in their profit margins. So, technology spending is often seen as an unaffordable luxury.
The solution
DigitalSuspenders, a suite of integrated Web-based software applications, will support the entire building cycle, from conception through construction and to maintenance. The suite offers online collaboration, digital takesoff, estimating, as well project and property management capabilities. This is all in an easily understood and easy to use format.
The Market Size
According to the most current Economic Census, the home construction industry has 163,703 establishments. It employs 796.880 workers. According to the most recent Economic Census, the industry has seen a record growth of 175,000 establishments over the past few years. Meanwhile, the US commercial and institutional building industries are comprised of 34,588 establishments. The construction industry accounts for approximately 8% of US GDP.
Start-up costs
KnaelHaed ASPware anticipates initially requiring $120,000 to complete the beta prototype of the DigitalSuspenders, provide for legal and infrastructure expenses related to start up and to cultivate potential customers. We are looking for angel investors and corporate partners to fund the initial capital.
Potential Payoff
KnaelHaed ASPware estimates break-even in less than two years. We expect royalty income from licensing our position sensing system and software technology. KnaelHaed ASPware plans to launch or sell the company within three to 5 years to stimulate further growth, and to provide liquidity for investors.
Management Team
Paul Peen, currently President & Chief executive officer, has over 20 year experience in commercial software development. This includes stints at Microsoft, Expedia.com, and Microsoft.
Leveraging connectivity, interactivity and speed, KnaelHaed ASPware is the first of its kind offering both efficiency and cost saving strategy to builders and subcontractors. KnaelHaed can offer competitive pricing for solutions via outsourcing. KnaelHaed ASPware is dedicated to the development of new ideas that are useful in achieving clients’ objectives. 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 intended to be a disruptive force against the majority of construction software companies, which charge hundreds of dollars for each copy. KnaelHaed ASPware’s plan is to offer a limited number of these capabilities at no cost. 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 provide software products that are very expensive for small and mid-sized users. 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.
1.3 Keys for Success
We have targeted the construction market for several reasons. As a $787 billion industry (both residential and commercial), it offers 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 the lackluster growth in the construction sector, it is still a highly fragmented industry. Within the US alone there are over 200,000 establishments (both housing and commercial/institutional) on record.
Our success is based on these keys:
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- Building and maintaining strategic alliances for our software vendors as well as other industry partners
- Adopting a customer-centric and market-focused sales/marketing paradigm
- Managing the business by implementing, and consistently measuring and adjusting the fundamentals of a Balanced Scorecard:
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- Employee Learning and Growth Goals Vs. Results
- Financial Goals vs. Results
- Goals for internal business processes Vs. Results
- Customer Satisfaction Goals Vs. Results
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