Becoming a construction contractor can be both rewarding and daunting, but the process can be made simpler if you have an effective business plan in place. Before beginning any projects, ensure that you possess all necessary licenses and insurance to protect yourself as well as your clients.
Establish a Business Name: Create an eye-catching, memorable name for your construction company that’s easy to remember and spell. Doing this will ensure customers and potential clients remember you when searching for construction services.
Determine the Type of Services You Offer: Some contractors specialize in specific projects, while others take on a wide range of construction assignments. Knowing your desired range of services can help you budget for equipment and personnel costs, as well as assess your competition more accurately.
Consider Your Local Market: You’ll need to decide whether you want to specialize in residential or commercial construction. Generally, residential projects are easier to finance and usually involve smaller jobs; however, it may take longer for your cash flow to build up.
Start Investing: As your construction business expands, you’ll need to invest in equipment and supplies to stay ahead of demand. This could include purchasing tools and building materials as well as hiring subcontractors for specific tasks like carpentry or painting.
Be Licensed, Bonded and Insured: Protect yourself, your employees and clients by making sure you possess all necessary licensing and insurance. This includes business owner’s coverage, workers’ compensation insurance as well as liability coverage for vehicles and equipment.
Establish a Good Relationship with Your Vendors: Be sure to cultivate strong connections with vendors who offer quality products and services at reasonable prices. Reliable, trustworthy suppliers can save you money on materials and equipment while preventing costly errors that could cost your business both time and money.
Construct a Professional Website: Establishing a website for your new construction business can be an invaluable marketing tool, helping to attract more customers and expand your business. A site allows you to provide more details about your company, display pricing, and collect contact details from potential clients.
Funding Your Construction Contractor Business: New construction companies can raise capital through personal savings, loans from friends and family, small business loans or equity investors. If you plan on seeking outside funding, take the extra time to create a comprehensive business plan that outlines revenue projections and cash flow.
Make Sure Your Construction Company Has the Appropriate Legal Structure: For construction businesses, limited liability company (LLC) and corporation are popular business structures. A corporation exists independently from its owners and offers limited liability as well as stock ownership options. On the other hand, an LLC provides flexible management structure and less paperwork – ideal for smaller businesses that wish to minimize corporate formalities.
Before opening a construction business, it is necessary to register its name with government authorities. This can be accomplished via an easy online application. Furthermore, you may require applying for either a business license or permit.