Man at Construction Site
Man at Construction Site

A Comprehensive Guide in Starting Your Own Construction Business


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Today, the construction industry is continuously booming. The demand for construction services is high and this is because of the increasing demands for establishments and buildings used for a variety of purposes. If by any chance, you are planning to set up your own business in line in this industry, today is a perfect time. Respectively, interest rates are as of now relatively lower and the majority of banks are willing enough to offer business loans effective immediately compare from the previous years. Basically, there’s so much going on into learning how to establish a construction business. The focus doesn’t fixate only on the financial aspect because there are a lot of factors that need to consider firsthand. 

It doesn’t matter how you are going to start your own construction business because the most important thing is to learn the basics – several basic business and financial tenets. There will be a system to follow in order for you to be sure that you have a solid foundation upon building the business itself. Bear also in mind that a construction business demands a lot of careful planning and groundwork. 

A comprehensive guide will be detailed below for you to understand the entire cycle of establishing this kind of business.

  1. Educate Yourself 

To start with, it is important to know the 3 major types of construction companies:

  • General contractors– would you want to consider yourself an expert in construction? If you considered yourself one, this might be suitable for you. Companies specializing in general contracting usually have numerous sectors and trades under it. (Private or larger commercial projects)
  • Small renovation contractors– if you’re interest is drawn more in managing low-budget projects, this might be the business that suits you the most. The major benefit of establishing this type of company is you don’t need to work to the office or to put it up directly, you don’t need an office anymore. This is because of the small scale kind of work such as the paperwork permits you to work at home.
  • Owner-Builders– This is very unlikely to the contractors because owner-builders or usually known as self-builders only establish and develop buildings for personal possession purposes. It can either be for selling or renting. Normally, it includes the assumption of roles either being the general contractor or construction manager.

Once, you finally understand which type of construction suitable for you, moving forward in laying out the foundations of your business will come next. Here’s what to focus on to ensure that the business you will soon to build will certainly have a solid foundation:

  1. Draft a Business Plan

All successful businesses have to start first with a solid and effective business plan. This plan is essential for business for it helps to ensure that the basic and fundamental ideas behind the company make a sense leading to real revenue. In the business plan, you need to put the values, your goals, and visions for the company. It will help you to determine the course of your ventures and to thoroughly understand how the business will create revenue in relation to concrete terms. You have to be a visionary. Once you list down everything, it is easy for you to bring the goals into fruition. Later on, the business plan itself will come in handy.

Start first in assessing all your needs. Make sure that the list below will be taken into account:

  • Personnel –Generally, 4 helpful ways are available upon hiring labor: through hiring employees, independent contractors, subcontractors, and labor brokers. Implementing construction crew management can also be considered when you finalize your people already.
  • Equipment– A list of tools for a construction business is necessary and start determining which one will be purchased, rented, or leased. Start categorizing which of the equipment is pricey or affordable after determining the equipment cost. Consider also the brand of this equipment and make sure that you know the leading manufacturers today.

Other necessary things are to be included in the business plan:

  • Executive summary
  • Personal financial statements
  • List of Construction services
  • Marketing Strategy
  • Business Description
  • Production schedule
  • Suppliers and Vendors
  • Cost of permits, contract licenses, and bonds
  • Software tools ( project management software )
  1. Establishing a Construction Brand

Branding is also a key important aspect of starting the construction business. It is a way of telling the audience or the clients the story of your company through the use of written and visualizing cues. A unique and distinct brand identity will help you stand out and differentiate from your closest competitors. Apart from this, it is also important to establish a lasting connection between you and your potential clients.

  • Brand Personality 

What kind of people you mostly assume your audience prefers to connect with? Brand personality will be the “acting voice” and this is the option that must be consistent in terms of communicating to your possible clients.

  • Creating of Logo

The first interaction of your customers with your brand will be your logo. Hence, your logo must have an impression on the audience ensuring that it is catchy, memorable, and captivating. Make your potential customers convinced with your construction business and offered services.

The creation of a logo is also considered as the starting point of identifying the rest of your brand identity. It includes the chosen color palette and fonts you’ll eventually apply subsequently. Upon designing your construction brand logo, ultimately consider the following:

  • Layout
  • Color palettes
  • Typography
  • Setting up a Website

Online presence is crucially important to establish as soon as you are starting the business. The goal will be appearing on the search engines like in Google in order to acquire potential clients who are expected to read all company details and services at the respective website. The website is a known platform wherein you can able to put all details of your company and also a way of reaching on your clients. You can picture a virtual forum to the brand with the logo. The platform is also a way of posting informative resources such as construction-related blogs. Posting articles about construction crew management and other related topics can be done.

  1. Registering Your Business

Once you are satisfied with drafting your business plan and creating a logo, you’ll have to look for registrations and licenses required for your business. The requirements in construction in the construction industry should be necessarily complied for it can also be a unique starting procedure. The most effective way to register the business itself is to start setting up the Limited Liability Corporation. Generally, LLC will be going to protect the proprietor’s personal assets especially on the instances when business falls down leading to many debts.

  • Get Licenses and Permits

In some states, residential construction which was new-build basically requires license while in others, a license is just necessary for remodeling jobs. Generally, most likely one has to avail more specific licenses varying on the construction type and how you wish to plan to operate it. Mostly, the states are requiring a General Contractor License to work legally.

  1. Insuring your Construction Business

Insuring the construction business is just as significant as registering it. Everybody knows that this type of business is danger-prone due to many factors involved.

  • Employee-Related Insurance 

If you decide to hire workers straight to your company, you’ll have to consider the 3 main forms of insurance – compensation of workers, unemployment, and insurance for state disability. The workers’ compensation will basically help your hired employees to cover expenses and other bills if they’re injured at the worksite providing them medical costs coverage, etc.

  • Business Insurance 

Staying at the right side of the law is the goal and one way to stay put is to at least avail one kind of insurance. Construction companies have to consider the general liability insurance since it is capable of protecting the business owners against accidents, injuries, and other mishaps which usually happen at the worksite. It is also important to put into consideration the vehicle and property insurance policies to ensure that the company’s equipment and machinery will be covered if any unforeseen incidents might occur.

  1. Accessing Financing and Small Business Loans 

Apart from learning how to successfully start a construction business, you need to consider also how to manageably finance it. Basically, this type of business is a costly endeavor. As an owner, you’ll have to do and provide in order to sustain it. Buying supplies, renting and purchasing machinery and equipment, maintaining the tools, ensuring that vehicles and tracks are running are generally what needs to be done on a regular basis. Take note, this is just the beginning.

Luckily, there are a few business construction loans available out there that always become handy when someone has to start their own business. Some of it is offering tons of availability and flexibility, one general example is offering a business line of credit. The others prefer to provide a much enormous amount of cash directly. Small Business Administration (SBA) is one of the examples.

Availing Surety Bonds

Surety bonds are a promise from a third-party which offers payments to your client of you can’t able to fulfill your obligations which are contractual already. Your company might fail to complete the work at the scheduled time. Generally, the surety bonds will help your company to legally operate the business.

Surety bonds are categorized into 3 types:

  • Payment bond– define as a material payment bond normally provides a financial guarantee towards the contractors in paying both employees and subcontractors.
  • Bid bond– acting as a guarantee to a project owner ensuring that a particular contractor is capable of completing the job for which he has been bidding.
  • Performance bond– provides protection to the project owners from possible financial loss if ever the contractor’s work hasn’t met the necessary conditions and standards from the original contract.

Key Takeaways

There’s a lot of hard work to do when you decide to put up this kind of business. Regardless of the fact that establishing a construction company takes time, it’s is a beneficial investment. It’s definitely worth the wait and effort. Always keep in mind the importance of branding and how it is equally essential as getting insured and licensed. 

If you are already decided, you also ought to understand and learn further about managing your people. Your focus doesn’t have to be limited to the company’s status alone but also how you properly manage your employees and subcontractors. Your employees are a company’s asset as well. Crew management is essential for making the business successful. Implementing it together with the use of construction management software is a perfect match. Good thing that there are resources available today that could help a starter in knowing the basics of managing his employees. 

The E-book Crew Management 101: From a Subcontractor’s Perspective is made available and free for everyone. Check it out!

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