Entrepreneurs don’t plan to start a construction company without having years of experience under their belt first. It’s one of those fields that requires them to work within it before they can run their own company.
Most construction workers have probably worked on job sites where they felt management could have done a better and more thorough job of running things. If that sounds like you, read on! Before embarking on this new path, here’s what you need to know before starting your own construction company.
Learn Beyond the Work
Starting a construction business goes beyond knowing how to do the physical labor. Years of experience will come in handy when it’s time to break ground on a new project. Know the market before making plans to venture out on your own. Is the current area you hope to work in viable for a new construction company?
Start your research at the US Small Business Administration, where they provide resources on customer data and business markets. There’s information on their site regarding your demographic’s age, employment status, and spending habits. Find out how often they hire contractors and which companies they trust the most. You’ll see what terms and services appeal to them most.
Write a Business Plan
After researching the market, start writing the business plan. Cover all the basics: company overview, market analysis, business structure, products and services, sales, and financial projections. Getting a solid idea in all these areas starts the business off strong.
Writing a business plan will take some time. Each one of these sections requires thorough research and strategic planning. The plan might take months or at least a year to draft. Every detail must be in place before taking the plan to investors or a loan office because they need to see you’ve thought of everything.
Research the Equipment
The equipment and materials for construction companies are expensive. This is the area newcomers will have the most experience in because they’ve done the work.
You’ll know what supplies and tools you need to complete the jobs and get the work done, but it’s important to also know the pricing and how to handle the equipment.
Because the equipment so expensive, you’ll want it to last as long as possible. There are several ways to improve the lifespan of job site equipment. It saves you money, time, and effort.
Secure the Permits
Naturally, you’ll have to fill out and file paperwork when starting a construction company. You’ll need to decide on the business entity, register for an EIN (employee identification number) on your federal taxes, and register with local and state agencies.
Acquire the necessary licenses and permits because doing construction work without permission is dangerous for many reasons as well as illegal. Furthermore, customers don’t want to work with uncertified contractors. You want to appear trustworthy to all your clientele.
Get Insurance
Insurance matters most in this business. The company needs to be insured, and this is not negotiable. Construction is an accident-prone business, and making sure your company and the workers are taken care of saves you money.
Start investigating liability insurance, property insurance, vehicle insurance, workers’ compensation, unemployment, and state disability insurance.
Starting a construction company is exciting, but there’s a lot you need to know first to start off on the right foot.