The construction industry brings in over a trillion dollars every year, and it’s one of the fastest-growing sectors. If you’re ready to join in that success by starting a construction business, but aren’t sure how to get started, you’re in the right place. Here’s how you can start your own construction business in just five quick steps.
1. Get a Contractor’s License
There are strict requirements in some states regarding who is allowed to do professional construction work. In Virginia, for example, you must secure a contractor’s license before bidding on or doing any work that costs more than $1,000. Not adhering to the rules can be costly, to the tune of hundreds of dollars a day.
To avoid any potential problems, you need to become a contractor. To do that, you must pass the contractor’s exam. You can achieve this quickly if you take RocketCert’s pre-licensing exam course.
The program covers everything you need to know to receive your Class A, B, or C license and is just eight hours long. A prep course is a requirement for eligibility to take the exam in Virginia and many other states. With that in mind, go ahead and take this first step on your journey to opening a construction business.
2. Write a Business Plan
A business plan contains your goals, a method for achieving them, and an estimated timeframe for doing so. The plan serves as a representation of your business model and is crucial for seeking loans or other funding.
A traditional business plan includes nine sections.
- The Executive Summary. Where you explain what your company is and what its goals are.
- The Company Description. Where you tell them more about your company, in detail.
- The Market Analysis. Where you explain the industry outlook and your target market.
- Organization And Management. Where you show how your company is structured and who runs it.
- The Service Or Product Line. Where you explain what you sell or what service you offer.
- Marketing And Sales. Where you layout your marketing strategy.
- The Funding Request. Where you break down how much money you need.
- Financial Projections. Where you predict how much money your company will make.
- Appendix. Where you provide supporting documents.
Your business plan is what potential investors will judge you by, so take your time to ensure it’s convincing.
3. Register your Business
Once you’ve completed your business plan, it’s time to file your company as a legal entity, which will include personal responsibility insurance, legal advantages, and tax advantages. Typically, registering your corporation is as easy as registering your company’s name with state and municipal governments.
The criteria of the construction sector make beginning a company a specific process. Relevant laws in your state, county, or town can apply, so make sure you understand what you need to know before getting started. However, as a starting point, here are a few broad criteria.
4. Get Your Finances in Order
With your business plan in hand, you’re ready to seek financing. You can appeal directly to investors, ask a bank for a small business loan, or search for small business grants. To get your company off the ground, you’ll need to buy, borrow, or lease supplies, materials, and cars.
You’ll just have to pay your bills, advertise, and pay your employees. Before you bid on your first deal, you’ll need to secure capital, so apply for funding as soon as possible. While all of these are good options, a small business grant provides you funding without an obligation to pay it back or be indebted to an investor. Grants are provided at the federal and state level.
For example, in Virginia, you can apply for a grant for your construction business through the Virginia Small Business Financing Authority. You can also receive grants and tax credits for investing in training. This is a great opportunity in the construction field in particular, as there is a shortage of highly skilled workers.
5. Start Funding
In addition to simple finance, you can consider how you can secure funds for your projects. Keep in mind that the building industry is known for its poor profit margins. Because of the erratic nature of building billing times, cash flow is critical to your company’s success. Many schemes would necessitate a greater proportion of expenditures at the start.
6. Apply for License
It’s almost likely that the municipality wants building contractors to obtain special permits in order to operate within its borders. Being a known contractor within the area, city, or state may be one of them. Based on your jurisdiction, your business’s venue, its scale, and even the kind of construction you want to do, you’ll almost certainly need a license.
7. Find a Good Crew
The next step is to find your crew. You need a team of reliable people to help build your business. Consider taking on a mix of experienced workers and people who are willing to be trained.
This will help you save a little money and give someone the chance to try out a new career. Whether your crew is new to the business or not, do an in-depth training course to ensure safety before putting them on the job.
8. Start Marketing
As with any business, you need to market. Come up with a plan to make you stand out to potential clients. They need to know why you’re the best choice, and what you can do for them. When it comes to branding, you’ll want to make sure you’re still promoting your company.
Though it’s still ideal to gain clients by word of mouth (which can happen if you have excellent service), creating a clever marketing campaign is a promising way to expand the company even further. Using some basic branding software will help to get the company’s identity out there so that it can be found. Use a mix of print marketing, online marketing, and physical marketing materials, like business cards, to cover all of your bases.
If you have contacts in the industry, reach out and let them know about your new venture. Marketing is the key to finding clients, so take it just as seriously as your business plan. If you take these five quick steps, your construction business will be up and building in no time.