If you’re handy in the trades and you’ve worked in construction, you’ve probably given some thought to starting your own company. It’s a great idea, but it takes work to bring it to fruition. Over 60 percent of new construction companies fail within the first five years, so here are some tips for starting your own construction company.
Market Research
One of the reasons new construction companies fail is due to a lack of market research. If the market in your area is saturated and customers are satisfied with the local providers, then you’ve got a serious mountain to climb.
If the demand is high and there are few companies to meet it, though, you may be onto something. That’s the first fork in the road that will tell you if you’ve got something viable.
Write a Business Plan
Many of those who dream of starting their own construction company never nail down the specifics, and it ends up costing them.
You need to do a thorough business plan that covers how you’ll manage the business, the services you’ll offer, who your target market is, and the number of employees you’ll have when you start. You’ll also need to break down your costs and how you plan to market yourself and balance those costs against your expected revenue.
Get the Right Equipment
As a construction contractor, you need to invest in a lot of equipment, including both handheld and heavy machinery. It’s not always practical or cost-effective to purchase these tools outright, which makes renting or leasing equipment an appealing option.
Don’t shy away from utilizing equipment rental services when you need them, especially when you start out; it’ll save you money at a critical time in your company’s existence.
Licenses and Permits
If you’ve worked in construction at all, you know how important licenses and permits are, both as a whole and for individual projects.
Break down which ones you need from the top down first, then make a list of what you’ll need for a typical project. This will save you a lot of time, and it will help you delegate when you have actual employees and you need help getting specific permits.
Insurance and Liabilities
Construction work can be dangerous, especially if you’re going to be doing larger projects, so it’s important to protect yourself and your employees.
That means having your liability arrangements in place. If you’re using large equipment, you should have insurance for that, too.
You should also know the law when it comes to your insurance requirements. This may involve some research on your part, and you also need to back up that research by hiring a lawyer to see if you’ve missed anything.
Hiring a good lawyer—not to mention a good accountant—can mean the difference between success and failure, so this is one of the best tips for starting your own construction company.