Construction is a massive industry, raking in an astounding $1,231 billion that go toward related projects.
If you have a passion for the construction business, you might want to figure out how to start a construction company of your own. In order to do this, you will need to learn the ins and outs of not just the construction industry, but business as a whole.
Below we’ll dive into everything you need to know when it comes to getting your construction business off the ground. Follow these points so you understand what you need to know to get up and running.
Figure Out What Kind of Construction Company You Want to Start
Before you start dotting your i’s and crossing your t’s, make sure you know what you want when it comes to running a business. The more you know about your endeavors, the easier it will be to map out the steps.
Below are a few things you need to know when you are at the preliminary stages for starting a construction company.
1. What Is Your Primary Area of Focus?
Before you take the necessary steps to start a construction business, you need to start brainstorming what you’re all about.
The more niche and specific you can get, the easier it will be to find your audience and deliver them the services that they need.
For example, even though you may be a jack of all trades, focusing on specifics like storm restoration, renovating houses to flip, upgrading old properties, and building new construction homes from scratch gives you a clear direction to build your company around.
When you have this direction, not only will you move toward your passion, it makes it much easier to market your services and carve out a segment of the market.
Once you have decided on a primary area of focus, you can then begin running through the other preliminary steps that will help you start your small business successfully.
2. What Are Your Strengths?
Knowing yourself inside and out is another important factor when it comes to starting a business.
For example, what are your strengths?
Rather than trying to do it all, play to your strengths and get help when you need it.
If you are a wizard with construction but aren’t great at pre-planning and designing the details of the project, perhaps you will want to bring an architect on board.
If you’re great at the hands-on part of but don’t have the savvy of a business person, it would be wise to bring in an accounting team and advisors to steer you in the right direction.
The last thing you would want is to go into starting any new business blindly. It takes a lot more than good ideas to get up and running with any sort of company.
Since construction is such a deep industry, the more you know about your strengths, the better.
If you are truly having trouble understanding where and how you shine, consider asking people within your trusted circle.
Have conversations with your circle on a regular basis to point out strengths and weaknesses and to have accountability sessions.
This is even better if your circle of influence is filled with other business owners.
This is a group of people that you can regularly exchange notes with in order to stay up to par with the operations of your own business and to make sure that you are always growing.
3. Take Geographics into Consideration
Geographics play a huge role in any business, but this will particularly come into play with construction.
The reason for this is that a lot of your work will revolve around working with weather and other elements.
You may also need to have an understanding of different municipalities when it comes to getting building permits and licenses.
Geographical location also comes into play when it comes to the type of business you will receive. Areas that are prone to flooding and hurricanes will be huge when it comes to certain types of construction services, while other specialties may not have as much of a presence.
Decide exactly where you want to set up shop and make yourself aware of the implications that come with that.
4. Understand Your “Why” for Starting a Construction Business
Finally, make sure you know exactly why you want to get into the construction business and start your own company.
Becoming an entrepreneur is a labor of love and is never something you should take lightly. You are better able to navigate the twists and turns and understand what is expected of you when you have a true passion for the business.
If your only intention is to try to make you a lot of money, this is really not enough to sustain you.
Make sure you know exactly why you are doing what you are doing every day and this will drive you toward success when undergoing the launch of a new construction company.
Go Through the Steps for Starting a Construction Company
Now that you’ve knocked out some preliminary thinking and actions, it’s time to get to the nuts and bolts of actually starting your construction business.
Let the following points guide you:
1. File For and Receive a Business License
Once you are ready to launch your business, it’s not official until you get a business license.
A business license is very inexpensive and takes a bit of paperwork, but it is the factor that legitimizes your enterprise.
When starting out, you need to know exactly what kind of business designation you are starting. If it’s just you and your box of tools, this is considered a sole proprietorship.
There are several other types of businesses, including partnerships and limited liability companies (LLC).
The type of business you file will depend on what you are trying to accomplish and what kind of team you have around you. Make sure to handle these preliminary matters so that you are able to launch your construction business where you live.
Of course, you need to have your construction license valid, and be able to develop a business plan so that you know exactly where you are heading with your company.
2. Put Together a Team to Carry Out the Business
The people you surround yourself with will dictate a lot about your business. When you have a great core team of professionals, this is the lifeblood of your business.
Make sure that you start small so that you are keeping your overhead costs down. Reach out to people that you trust so that you are always covered when it comes time to put together some projects.
Aside from construction, you will need a team of business savvy individuals that can help you patch up specific details. For instance, having access to a qualified certified public accountant (CPA) and lawyer will be incredibly valuable when launching your business.
You may need an assistant or secretary to keep track of your files and make sure you are storing them properly.
Audit your company to decide exactly what you need and make sure you put together a team of people that can assist you.
Make sure your team is filled not just with seasoned professionals, but also team players that can help you accomplish your goals.
3. Open Business Checking and Savings Accounts
In order to have solid accounting practices, you will also need the right types of checking and savings accounts. Look into products with banks and credit unions that will allow you to facilitate the flow of money in and out of your company.
Be sure that you maintain access to these accounts and keep track of your expenditures for tax purposes. You may also want to set up mutual funds or other long-term savings accounts so that your business is growing for the future.
4. Scope Out a Space For Storage and Office Operations
You need a business space that will help you operate and store your equipment.
Today, many companies are setting up co-location spaces in order to share resources with other professionals. By going through a coworking space, you immediately lower your overhead costs, while giving your company access to great resources.
You can also rent several storage spaces around your area to store equipment and other materials. Storage rentals might cost between about $100 and $200 each month, so partner with a storage company that you trust.
5. Get Your Hands on Quality Construction Equipment and Resources
Without construction tools, you don’t have a construction business.
Make getting your hands on the best equipment your highest priority. This might mean purchasing tools outright or working with companies that offer construction equipment rentals. Be sure you keep track of all your equipment inventory and maintain your tools so that they serve you and let you conduct your best work.
Tools and equipment aside, be sure that you also have access to the software and devices to conduct business.
You can also get subscriptions for apps and CRM systems that aid you in doing business and completing projects. Look into cloud computing and other resources that will assist you with your information, and keep you on track.
6. Set Your Rates and Draw Up Contracts and Practices For Completing Projects
When you are starting a construction company, it is important to know exactly how much you are charging people.
When you are first starting out, you might want to keep your rates low and reasonable until you build more clientele. With that said, ensure that you are setting rates that still allow you to make a decent profit.
Put these rates in writing and be as specific as possible when giving estimates to new clients.
Hash out rates and contracts not just for your clients, but for your employees and contractors as well. This cuts out all confusion and allows you to manage the day to day operation out of your business without any questions.
For instance, you can set the rate of your construction manager at between 10 percent and 15 percent. This way, no matter what you are charging a client for a construction project, they’ll know how much compensation they should expect.
7. Start Marketing Your Business to the Fullest
Do your due diligence with business marketing to get what’s best for your construction company.
Social media is where it’s at right now, so be sure that you’re making your mark on all of the major outlets. If you are really trying to blow your brand up and make a name for yourself, it might behoove you to bring in marketing contractors that can design some plans for you.
Blogging is one of the best forms of marketing that you can do. Consider setting up a blog for yourself, or hiring a team of writers that can ghostwrite for you to build brand awareness.
8. Stay On Top of Your Budgeting and Accounting
Setting up a quality budget is one of the most important things for your business.
When you stay on top of your business accounting, you will have a better feel for how money is spent, can set your goals and accomplish them, and make sure that your business is organized.
Managing these details will allow you to operate your business accordingly.
Handle Your Construction Business On Your Terms
Use these tips to start your own construction company.
Running a business is an ongoing journey, but it begins with some baby steps. This guide will go a long way toward getting you on the right track.
For more information on starting and scaling your business, stick to our content and reach out if you have any questions.