The pandemic might have put a halt to a lot of things, but it didn’t put a damper on the demand for new housing. The rate of residential new construction was up 22 percent in February 2022 compared to the previous year. With demand like this, it’s only natural that you’d want to put your construction skills to work by starting a construction company.
Working in construction and running your own construction business are two different things, though. How do you get a construction business off the ground? Read on to find out!
Research the Construction Industry
Your first step is to determine what’s going on in the construction industry in your area.
This helps you determine if starting a construction company is possible in the area you’re thinking of starting it. We know that there is a lot of demand for new residential housing, but if your area is already saturated with established home builders, you might not be able to effectively enter the marketplace.
Construction industry research also lets you know who your potential competitors are, which helps you drum up ideas to improve upon their services. You’ll also have a better idea of how much to charge.
Finally, do some research on your potential customers. What is their potential age? What interests do they have that you can use to improve your services?
Create a Business Plan
Once you know all about your local market, it’s time to start drafting your business plan. Your business plan helps you stay organized as you get your business off the ground. It is also what you’ll present to lenders when you look for funding, so it’s important that you take your time to craft a polished plan.
Solid business plans include information about the business structure and management, the services you plan on offering, and the jobs you plan on bidding on. You’ll also want to include information about potential costs to start and maintain the business, how many employees you’ll hire, and how much you expect to make at the end of your first year.
Register Your Business
Once you have your business plan ready, it’s time to register your business in your state. Create a name for the business and determine which form you’d like to use to incorporate. You also need to register for a federal tax ID and Employer Identification Number (EIN).
Check If You Need Licenses and Permits
Every state and county is different and has different requirements for businesses. For this reason, it’s important for you to make sure that you obtain any required licenses and permits before you start operating. This includes licenses for anyone who you expect to work as a general contractor.
Most states require that general contractors obtain a license in order to work on projects over a certain dollar amount. Some states have complex licensing requirements, like California. California requires general contractors to have at least one of three different licenses depending on the work they’re doing.
On the other hand, Connecticut doesn’t require general contractors to have a license. Be sure to review all the requirements to make sure you’re in compliance. If you aren’t sure what you need to do, speak with an attorney to make sure everything is in order.
If you’ve spent time working in construction, then you know that it’s a risky business with tons of liabilities. For this reason, it’s critical that you obtain high-quality insurance to make sure you’re covered in the event of accidents or injuries. Look into general liability, professional liability, builder’s risk, and auto insurance.
Look for Funding for Construction Businesses
To get started on your first job, you’ll need employees and tools at a minimum. Unless you’re able to self-fund your business, you’ll need to find a funding source to help you get everything you need to start working.
The most common sources of funding include bank and government loans, as well as funding from credit unions and government programs. You can also ask customers for some portion of the money upfront to help secure the tools and materials you’ll need to complete the job. Once the job is complete, they can pay off what they owe.
Hire Construction Contractors and Employees
Unlike many new businesses, construction businesses require the help of employees to get the job done. This means you need to look for people to fill the roles of a construction contractor, construction estimator, and more.
Make sure to do some research on what the going salaries are for the roles you need to fill so you can attract the top talent. It’s also important to offer some form of benefits to enhance the attractiveness of your business. The more you can offer upfront, the better your applicants.
Start Marketing Your Business
You have everything you need to get your business going, now you just need customers. The best way to do that is through marketing!
Create a website for your business and build a social media presence. Consider some local social media ad campaigns to capture the attention of potential clients. You can also build a blog on your website and utilize the power of SEO to bring new customers in.
Once customers start inquiring, don’t forget to hone your customer service skills to keep them happy!
Are You Planning on Starting a Construction Company?
Starting a construction company is a great way to build a thriving business in today’s economy. Sure, it’s more complicated than starting a simpler business with fewer risks, but there’s also more payoff once you get going. With a little research and hard work, you’ll be on your way to building a business that can sustain you throughout the rest of your career!
Starting your own business isn’t easy, and you’re bound to need some help along the way. That’s what we’re here for. Check out the rest of our blog to stay up to date on the latest business news!