Whether you’re handy around the house, have had an apprenticeship or on the job experience, or are just looking to start a lucrative business, construction is a safe bet.
As one of the biggest construction markets in the world, the US is poised for profit in this sector. Previously stalled projects are firing up again, and the construction industry is raking in over a billion dollars in sales.
Starting a construction business is a great idea, but where to begin? Start right here – with our seven tips to get your business up and running!
1. Start With a Business Plan
Don’t be tempted to skip this step. Crafting a construction business plan doubles your chances of having a successful business venture.
Just like you can’t build without a blueprint, your business plan is the foundation to your success. You’re going to lay out all the important things your business needs, both tangible and intangible, to survive and thrive in a competitive market.
Start by asking yourself questions about what you see in your company’s future and what values you want to represent. Asking things like “what is my purpose” and “how will I grow” ensure you always have your feet on the ground with your eye towards the future.
2. Understand the Legal Requirements
Starting a construction company requires going through more legal loopholes than usual. Legal requirements can come down to the state, county, city, or sometimes even region.
One of the things you’ll have to consider is registering your business. The most common way to create your business entity is to start with a limited liability corporation (LLC).
An LLC makes covering any personal assets a priority just in case your company has legal issues or extreme debt. It also helps simplify paying taxes on your business.
3. Get Insured
When creating a general contracting company, having good insurance is a necessity. With employees working with electricity, heavy machinery, and on potentially dangerous worksites, being insured protects you both.
There are two main kinds of insurance you’ll need: employee and business. Here’s what you need to know:
Things like state disability insurance, workers’ compensation, and unemployment insurance protect employees in case of an on-the-job accident.
Any construction company will have expensive tools, machinery, and vehicles. Protect them with the right kind of vehicle and property insurance.
General Liability Insurance
General liability insurance is a must-have to protect you from costly legal problems due to worksite accidents and injuries.
Make sure you have these details hammered out before your company is up and running.
Any construction business needs the right tools for the right jobs. As you’re searching for a forklift, industrial diesel generator, or other heavy equipment, you’ll soon find they’re very expensive.
There are companies who sell and lease the equipment you need, and both options have pros and cons.
Pros of purchasing: you own your own equipment. Con: it’s prohibitively expensive and you’ll need deep pockets.
Pros of leasing: more affordable in the short term. Con: more expensive in the long run if you never end up owning them.
Decide which option is best for you. Of course, you can always change your mind.
5. Getting SBA Loans
Speaking of cash, SBA loans can help a small business get off the ground. SBA loans provide startups with a variety of loan amounts and low-interest rates.
Plus, there’s a guarantee of 85% on the SBA’s behalf. If your company ends up being unable to pay for any reason, the SBA will cover your costs up to 85%.
Here’s your guide to the three SBA loans you’ll want to look into:
SBA CDC/504 Loan
Best for companies with large, upfront expenses (like equipment). You can borrow up to $5.5 million and take up to 20 years to pay it back.
SBA 7(a) Program
With this loan, you can borrow up to $5 million but you have more flexibility in what you use it for.
SBA Microloan Program
Need just a little bit of money to start your new company? The microloan program is perfect for those who need less than $50,000.
These loan programs might be the difference between success or failure. Keep them in mind when looking for capital for your company.
6. Hiring the Best People
The construction industry offers several options when you’re looking for competent employees. You can hire full-time staff or contractors to staff your construction company.
As with everything, there are pros and cons to both options.
Pros of contractors: less expense up front. Cons: they might not be available when you need them.
Pros of full-time staff: familiarity with work practices and reliable. Cons: paying a full-time salary can take up your budget at the beginning.
At the end of the day, look for the employees that meet your budget and your staffing needs.
7. Marketing and Advertising
Budgeting for marketing might not be in your plan for starting a construction company, but this bit of advice is going to give you an edge over your competitors.
Put money aside for marketing and advertising to generate awareness and leads for your companies. Things like social media can be a way to get free exposure and purchasing ads there doesn’t have to cost a lot.
Focus on doing good work, make sure all the word of mouth you generate is great, but also market your company. A little effort goes a long way!
Tips and Tricks for Your Construction Business
Getting your construction business up and running doesn’t have to be difficult. With these tips and tricks, you’ve got a great guideline to get you started.
If you need more templates and forms to stay organized or just want to stay on top of business news, we’ve got you covered. We’ve got a great database of all the forms you’ll need to set up your successful business venture.
Plus, we’ve got the latest on business news for construction companies. Read our business blog to stay on top of what’s going on in your industry!