Building your own construction company is a fulfilling endeavor, but it can be overwhelming as well. Starting up a company in the construction industry, which is quite competitive, is one more reason you need to be adequately prepared.
On the bright side, the demand for new homes, hospitals, schools, and other buildings and infrastructure keeps soaring. But don’t be too excited- many new construction businesses wind down within 5 years. That’s why you need a well-thought-out approach to succeed.
Here, we uncover crucial steps every entrepreneur should take to launch a successful construction business. From carrying out research and obtaining the necessary permits to building a strong team and launching your company, we’ve got you covered. Read on to discover what it takes to succeed in your new venture.
1. Research Thoroughly and Plan Your Business
Research is a critical part that lays the foundation into launching a successful construction business. The first thing in research is to identify a viable niche. Identifying what your company should focus on should be guided by your skills and goals. You can choose between building or renovating residential or commercial properties. Alternatively, you can niche down to infrastructure development.
Other key aspects of research are identifying where to operate and identifying your competitors. That means performing a competitive analysis to assess each competitor’s strengths and weaknesses and possibly finding a gap that you can help close by improving the quality of service and offering competitive prices based on your strengths.
You also need to craft a comprehensive business plan detailing your objectives, how to attain them, and the expected results. For that, use experts like Costas Constructions for insights on planning and executions to ensure your business is ready to tackle the challenges ahead.
2. Register Your Construction Business
Registering your business begins with choosing an appropriate name that captures your brand as unique and memorable. Next, you must decide what type of business you want to operate: is it a partnership, corporation, or limited liability company? Once you are done, work towards getting all the required certifications, permits, and licenses for operating a construction business in your area.
The most basic one is a general contractor’s license, but more is required for special services like roofing, painting, or air conditioning. Check the relevant permits and licenses you need alongside the fees and requirements on the SBA official website.
This part of business formation is critical, so consider using legal and financial experts to comply with local and state regulations. The last thing you want is for authorities to come knocking and shut down your business because you are not taking care of the little things.
3. Determine the Cost and Get Funds
Unless you are a millionaire, you most likely need to seek funding to buy equipment supplies and run operations. You can secure financing in the form of business loans from banks, The Small Business Administration (SBA) government agency, or seek investor capital in exchange for shares in your business. First, identify the startup costs you need, weigh your financing options, and settle for the most favorable ones.
You need to set up bank accounts to receive and send funds. Setting up a separate business bank account from your account is advisable to avoid mixing up transactions. Check the bank charges, such as monthly fees and transfer limits. Finally, choose a billing method for tracking and managing cash flow.
4. Get Relevant Insurance
Construction businesses deal with many risks, making relevant insurance coverage crucial. Without insurance, you are looking at possible lawsuits from unsatisfied clients, injured workers, or even investors, and sometimes, it could bring a business to its knees. Never take on the simplest projects without insurance to avoid unforeseen risks and liabilities.
The basic insurance coverage you need is general liability, which protects against work-related accidents and property damage. Additionally, you’ll need other special coverages for business properties, worker salaries, unemployment, disability, and medical expenses.
5. Understand Your Business’ Tax Obligations
Like personal tax, your business needs to pay tax from the company’s revenue. As such, you need to understand your tax obligations and set systems in place that ensure tax compliance. Generally, you will be dealing with local, state, and federal taxes. Check on the government tax agencies in your area which taxes you need to comply with, and even consult a tax specialist for extra care.
6. Get Necessary Equipment and Plan for Safety
You’ll need various construction equipment to run the business, from small tools like hammers to huge machines like excavators and cement mixers. If you don’t know where to start, seek help from experts to list down all the basic equipment needed. Once you have the equipment, create a safety plan and perform drills to ensure workers are well-prepared to avoid accidents and tackle emergencies.
7. Hire a Team and Get Clients
The size of the team you need depends on the size of projects you plan to handle. But first, identify and start with the most important roles, such as project manager, general laborer, and administrative assistant. During the recruitment, be sure to hire people with the necessary skills, experience, and professionalism to guarantee the client’s happiness and safety compliance.
With everything set, it’s time to market your business to get your first clients. Set up a professional website that clearly shows services offered in past projects and even includes reviews from clients. Advertise locally and take advantage of social media to expand your reach and nurture good relationships with clients and partners for long-term success.
Conclusion
Starting any business is nerve-wracking, but with your entrepreneurial skills and a competent team, nothing is unachievable. These steps in this guide will help make your journey to launching a construction business easier.
Following them and delivering quality constructions will attract new clients through referrals and enjoy growth. You must also stay updated about the constantly changing laws, technology, safety regulations, and other important practices for long-term success.
