If you are passionate about construction and skilled as a worker, then it’s only natural that you would want to start a construction business. As an employee, your earnings are capped, and there is only so far you can advance. By opening your own business, you can run things how you want to, take on the projects you like best, and build a team that you will enjoy working alongside. Not to mention, if the business is run right, ownership comes with much better financial benefits than being an employee.
Therein lies the problem. There are many thousands of people in the construction industry who are very talented and start on their own. However, many of them fail very early on. Why is this? Being talented does not mean that someone is suited to running a company. Too many people get into the business thinking they will let their work will speak for itself when in reality, owning a construction company requires a completely different skill set. To avoid being one of the many failures, you have to set yourself up for success. Here are some tips to help you start a construction business.
Do Your Research
Unfortunately, wanting to run a construction company and it becoming a viable enterprise are two different things. Do your research to see what the consumer options are in your area. Is the market already full of competing construction companies that do the same thing but are fighting for customer attention? If so, then you might be starting up a business only for it to fail when you can’t get break free from everyone else. However, if you do your research and find there is either a shortage of competition or that there is a need that is going unmet, it might be the perfect time for you to strike.
Your research should focus on the competition, such as how many there are, what their specialties are, and how much they charge for their services. You may find that you are able to beat those prices and still make a profit. You should also look into the demographics of the customer base. What is trendy right now? What are the ages of the people looking to build or renovate? All of these answers will give you insight into how feasible a new construction company will be.
Develop a Business Plan
If you fail to plan, you plan to fail. A detailed business plan is a must for anyone looking to go into business, not just those in the construction industry. A business plan should encompass everything about your business, from the way you will structure your company to marketing, to sourcing materials, to the market that you will target. It should have some key performance indicators to use as signposts as you grow your business. It gives you a roadmap to how you will find success and keeps you focused on what is ahead.
Your business plan is not just about providing you with direction. It is also what lenders and investors will use to decide if they want to support your company. Make sure that it is clear and detailed so that they can be confident in what you are going to accomplish and that they will recoup their investments.
Choose a Speciality
You should think long and hard about what you want to focus on for your business. You can be a general contractor, but many like to start as subcontractors. That way, while the profit margins are lower, there is less risk, and you can worry about building up without as many competing responsibilities. Think about what you are best at, what is in demand, and what will help you get some projects right off the bat. Once you have made your choice, work hard to be the very best you can be at it. Over time, you can then grow and add more specialties to the services you offer.
Get Your Insurance In Place
The construction industry carries with it a lot of risks. There is, of course, the safety risk of working with heavy machinery and materials. You also have equipment and materials that can get damaged or stolen. Plus, if a mistake is made by yourself or an employee, you could be at risk of a lawsuit from a client who has suffered a loss because of it.
You need to make sure that you have your construction liability insurance and other coverages in place before you knock down your first wall or hammer the first nail. If you don’t have the right protection in place, you will end up needing to pay for legal fees, medical bills, building repairs, or any number of costs related to the risks that you face.
Registration and Licenses
You will have to register your business with the local authorities. This means making it a legal entity for tax purposes and being able to apply for permits and licenses. It’s always a good idea to register with local, state, and federal authorities to make sure that you have tax IDs for each.
Many different types of permits and licenses may be required for a construction company. They will depend on the type of work you are doing, how big your company is, what equipment you use, and what specialty you choose. There are permits for heavy equipment, you will need tickets for any specialties you want to legally claim to have, and there are restrictions on certain materials. Check with an attorney to make sure you have everything you need, otherwise, you could be shut down, even in the middle of a job.
Find Some Funding
Remember your business plan? This is where it can play a big part beyond simply planning out your approach. With a good business plan, you can approach potential investors for money to help build your business. You can approach private citizens, other businesses, government funding agencies, and financial institutions. They will want reasonable assurances that you will be able to pay back the funds or provide them a profit over time. Without a business plan, they will not feel confident in funding your business. A big part of being a business owner is sales, and getting funding will require all of your sales skills.
Hire the Right Staff
Unless you are starting on the very smallest scale, you will need to hire some help. This can be someone to manage the administration and finances while you are out working, or it could be a team to handle your projects. The important thing is getting staff that can do the job, but also that you can work with. A job site can be a terrible place if there are toxic elements on it. Remember, you can always teach skills to willing learners, but you can’t teach work ethic and personality. Build a team that you will enjoy being around who can also provide quality workmanship, and it will be much easier to grow your business.
At this point, when you have everything in place, it’s time to launch! Blast out your marketing materials and get your business in front of the eyeballs of prospective clients. This is where the fun begins, but it’s also where the hard work starts. Be true to your customers and treat your employees right, and you could make your construction business a success story.