Projection Revenues

Three Types Of Profitability

Business Plan

Other Source of Revenue

12% Mock-Up On Paintings and Coating

1. Written Business Plan

While we don’t always notice them, paint and industrial coatings are everywhere we look. For both decoration and protection, paint and various kinds of coatings are a necessity in the buildings where we live, eat, work, and play. Whether a building is meant for use as a private home or a medical lab, a power plant or a transit hub, chances are it will need plenty of paint and other coatings to keep it safe, usable, and attractive for decades to come. Where there is construction, in other words, there is a need for painting and coating services. And construction is booming.

A recent study by construction market analysis firm Cumming Insights demonstrates that, although the economy is going through a slow-down due to the effects of the COVID-19 pandemic, the construction sector has seen steady growth. Moreover, according to the U.S. Department of Commerce, U.S. construction spending reached a record high in December 2020, rising 1.0% to reach $1.490 trillion, accounting for 4% of GDP. Thomas P. Sloan, Inc. anticipates further spending increases over the coming year.

The outlook is especially good regionally, with a number of high-profile construction projects recently gaining approval in New England and the upper Mid-Atlantic. New York City, for instance, is likely to spend up to $10 billion overhauling Manhattan’s crumbling Port Authority Bus Terminal. The proposed renovation comes as part of Governor Cuomo’s larger redevelopment plan for Midtown West, which is projected to cost $51 billion. The city is also expected to spend up to $24 billion upgrading the JFK, LaGuardia, and New Jersey Airports over the next 10 years—along with another $4 billion to make needed renovations to the Rikers Island prison facility, which will require large amounts of specialty coating. Meanwhile, Providence, RI has made plans for the construction of three new skyscrapers in the near future.

The construction boom is particularly notable in Boston and the nearby city of Cambridge, where the ever-present need for construction services in the real estate, higher education, and healthcare sectors creates consistent demand.

In 2020, for instance, the Boston Planning and Development Agency (BPDA) signed off on $8.5 billion in new construction projects. Accordingly, TPS expects to see an increase in demand for painting and coating services by 2022, driven by the BPDA’s need to complete existing projects before moving forward with the proposed development. Moreover, prominent hospital Mass General is expected to invest at least $2 billion in expansions and new buildings.  

In addition, an unprecedented demand for lab space is driving a construction boom in both Boston and Cambridge. For instance, the first phase of work on Harvard University’s Allston-based Enterprise Research Campus is expected to begin shortly. And in December 2020, investment group Blackstone spent $3.5 billion dollars on lab space in the Cambridge area, betting on a significant return on investment in the near future. Even more recently, life science real estate developer Alexandria Real Estate purchased the Fenway-area Landmark Center for $1.5 billion, in order to develop the property into a life sciences hub. This is in addition to a large project awarded to Lincoln Property Company by Massport, which will see part of the South Boston waterfront redeveloped into a standalone Life Science and Technology Career Training Center.

Based on market and industry analysis, Thomas P. Sloane estimates that Boston will spend approximately $3 billion on construction projects in 2021, while Cambridge will spend approximately $2 billion. Federal stimulus money and infrastructure funding could lead to even more spending in the coming months.

2. Strategy

For the past year and a half, TPS has been bidding on a variety of union and public construction projects in Boston, Rhode Island, New York, and New Jersey. Having laid the groundwork for a number of projects, the company can begin work quickly once funding is secured.

The company will integrate its management team with its workforce, promoting efficient communication and on-site productivity. In addition, TPS will take special care to ensure that its funding process is transparent and well-understood, building trust in the company among current and prospective clients.

The company will generate revenue by offering multiple distinct services, including painting, coating, and wood finishing. The company will also explore opportunities to incorporate new, in-demand services to generate additional revenue streams.

3. Company Background 

   3.1    About the Owner

Thomas P. Sloane has 30 years of experience in the construction industry. At the age of 22, Tom opened up his first painting business, focusing on small home painting contracts. In 2003, he expanded the union company into commercial and industrial painting with $15,650 of working capital. Within eight years, the company was generating $2.3 million in annual revenue. Pushback from union trustees—who are also Tom’s main competitors—prevented further growth, and a resulting shortage of working capital eventually caused this first venture to stagnate. Despite these setbacks, Tom remains optimistic about TPS’s prospects—he suspects that local competitors have lost their edge, making room for new opportunities in the market.

Tom is a business fanatic who stays on top of the latest economic and political news via sources such as The Wall Street Journal, the Boston Business Journal, the New York Business Journal, and David Rubenstein’s The Economic Club. Decades of economic analysis and on-the-ground experience in the construction industry have made Tom highly skilled at sensing patterns, anticipating risks, and choosing projects accordingly.

He models his work ethic after the philosophies of entrepreneurial mavericks such as CEOs Jamie Dimon, Mohammed El-Erian, and Laurence Fink, as well as former Secretary of the Treasury Hank Paulson and Christine Lagarde of the European Central Bank and the International Monetary Fund. Their strategies and success stories—grounded in humbleness, shrewd decision making, and honorable relations—guide him in his own decision-making.

   3.2    What Makes TPS Different

Tom’s deep knowledge of the construction marketplace—grounded in three decades of hands-on experience—makes him a uniquely qualified judge of subcontractors and potential management team members. Tom will use this knowledge to hire a highly qualified management team capable of overseeing multiple projects and sources of revenue, leading to greater profit and return on investment.

In keeping with Tom’s established approach to risk assessment, TPS will rigorously research any potential opportunities to avoid unnecessary risk to investors. For example, following a recent negative assessment of WeWork’s near-future prospects by The Wall Street Journal, TPS declined to bid on a project associated with the company. Even though the contractor involved in the project had an established history of good dealings, Tom deemed the risk too high, and chose to protect his company rather than pursue the deal.

Moreover, Thomas P. Sloane, Inc. is notable for a client base with heavy involvement in charity work. There is opportunity to partner with these and future clients in their charitable work, both to benefit the community and to promote good public relations for TPS.

TPS also stands apart for its willingness to embrace new technologies. By keeping up with the latest tools, techniques, and materials in the construction space, TPS is able to offer its clients the most up-to-date, high-quality service possible.

Finally, TPS employs a unique company structure involving four journeymen and one apprentice. This allows TPS to charge lower rates, making the company much more competitive and profitable for investors.

To the best of Tom’s knowledge, TPS is currently the only local painting and coating contractor looking to raise money for an expansion into New York, Rhode Island, Connecticut, and New Jersey. Moving quickly will give TPS a competitive edge.

4. Managing Risks

Thomas P. Sloan, Inc. prides itself on knowing its market inside and out. Therefore, in addition to doing in-depth research on all clients, contractors, and subcontractors before, during, and after any project, TPS will routinely consult with attorneys specializing in construction law, in order to prevent costly lawsuits and protect investors’ money.

As a successful subcontractor, TPS is sometimes pressured to push out projects as quickly as possible. An annual springtime surge in workforce demand—which can as much as triple demand for quality construction workers—can make it difficult to fulfill projects on time. TPS will address this risk through careful monitoring of the market.

Currently, TPS works in 30-60 day receivables, with a 10% retainer held back. The company is working to get this number reduced to 2%. To avoid liquidity traps, the company will continue to work with existing clients as it expands into new marketplaces in New York, Rhode Island, Connecticut, and New Jersey. While TPS carries some outstanding debt, Tom believes this obligation can be settled with favorable terms for both parties.

Lastly, with about 80% of its projects focused on indoor painting and coating, TPS is resilient in the face of unexpected weather changes, which can disrupt similar companies with a greater focus on exterior painting. Moreover, change orders—a common occurrence due to changes in scope of work or damage caused by other contractors—can increase the revenue of TPS projects by as much as 20-30%. Historically, these factors have had a positive effect on cash flow.

5. Future Services

As the company grows, success in initial services will allow TPS to explore other sources of revenue. Along with regional expansion, TPS is interested in new, in-demand services. TPS anticipates introducing new specialized coatings—such as Gyp-Crete, a durable cement underlayment—to its offerings. Gyp-Crete’s application ranges from fire-proofing to sound absorption. It is used in everything from residences to the Second Avenue Subway project in New York. Servicing coating is already a hallmark of the TPS brand: these products are made for protection, functionality, and aesthetics, making them marketable to all clients.

6. Network

The TPS name has wide recognition and a strong reputation within the construction industry. With funding, the company’s longstanding relationships will continue to grow. The list below offers a sample of the clients TPS has done business with in the past. These credit-worthy clients represent $3 billion in construction in Boston and $2 billion in Cambridge.

• Bond Brothers
• Boston Property
• Bovis Lend Lease
• Columbus Construction  
• Skanska USA Construction
• Consigli Construction Co., Inc.   
• Corman Construction
• Cranshaw Construction    
• D.F. Pray, Inc.          
• Elaine Construction   
• G. Greene Construction Co., Inc. 
• Gilbane Building Company 
• J. F. White Contracting Co.
• John Moriarty & Associates
• Jones Lang LaSalle
• Lee Kennedy Company, Inc.
• Sachse Construction   
• Shawmut Design & Construction 
• Suffolk Construction
• Structure Tone  
• Tishman Construction Corp.  
• Trinity Building + Construction
• Turner Construction Co.  
• Wise Construction

7. Exit Strategy and Investor Returns

Tom believes that, in time, TPS could exceed revenues of $100 million, and have the opportunity to be purchased by a painting manufacturer such as Benjamin Moore, Sherwin Williams, Pittsburgh Painting, or PPG.

Bids