Starting your own small construction company can be a daunting task, but with the right planning and preparation, you can make it a success. There are some important things to consider when planning this project but once you check them off your list, you can confidently get started on your own.
1. Business Plan
Your business plan is a crucial element to starting a small construction company. It will become your best friend when you’re out knocking on doors, trying to get work for your company. And the great thing about planning is that it doesn’t have to be perfect; just do everything in your power to make it complete and accurate (or as complete and accurate as you can manage).
2. Insurance Coverage
If your construction business will be doing work for clients, make sure you consult with an insurance agent to find out what types of liability coverage are necessary for your industry. You should also consider purchasing general business insurance; it will protect you against accidents that occur on-site or damage to property. Some possible coverages you should consider include:
- General business insurance
- Vehicle insurance (if you’ll be using these for work)
- Worker’s compensation insurance (or a professional employer organization if applicable)
3. Get Your Business License and Permits
In order to get your small construction business up and running, you’re going to need to apply for a number of permits. A business license will be necessary in most cases when starting out along with a workman’s compensation. You also need to consider which permits are required by your city or county that relate to the type of construction you’ll be doing. For instance, if you’re working on commercial construction, you’ll need a general business license. If you’re working on residential work at a single-family home, you’ll need a contractor’s license to get the job done.
Once you’ve done your business plan and looked into the necessary permits, it’s time to look for funding. While many construction businesses start out with an initial investment from the owner, banks will be more likely to loan money when there is already some equity in place. So, if you’re planning on starting a small construction company without any help, you should be prepared for the long haul before making your first dollar.
5. Equipment and Vehicles
Do you already have the necessary tools and equipment to get started as a small construction company? If not, you’ll need to make sure you have enough money on hand to purchase them. Tools for contractors can run anywhere from $500 to $1,000, but if you’re looking at heavy equipment, rigging blocks and tackle, manual tools, and other advanced construction technology, this can run into the thousands of dollars. Of course, purchasing tools and equipment for your construction business is an investment in your future; it’s necessary to ensure you’re ready to get work done as soon as possible.
If you’re not working on commercial construction, you probably don’t need a storefront. However, if you do have the option to set up shop in your own premises, then this can be an advantage when it comes to getting clients through the door. Having your business in a prime location will help ensure that passersby are aware of your company and what it has to offer.
7. Find Your Employees
It may sound like an unneeded step but hiring employees can give your company an edge when it comes to getting work done quickly and efficiently. It also makes the job easier for you, as well; if you’re knowledgeable about construction but aren’t familiar with running a business, it might be difficult to keep costs low and overhead costs stable. When looking for people to work for your construction company, you should hire employees that meet the following criteria:
- They have experience in this industry (this is usually necessary but not always possible)
- They will follow instructions and come to work on time
- They are readily available (this is important if you’re working on commercial projects)
8. Building Relationships
Lastly, while you can’t expect to win your first client or be an overnight success, there are some things you can do to build relationships that will help you get your foot in the door. When it comes to small construction companies, word of mouth tends to carry a lot of weight since many clients are looking for someone they can trust who is reliable and provides excellent workmanship. That means if you’re new in town or just getting started, it’s important to cultivate good relationships with businesses and homeowners in the area who may refer you to their friends or family.
Starting a small construction company can be challenging, but there are many steps that you need to take before opening up shop. If you’ve done your research and put in the work on your business plan, along with having enough funds, you can start taking action to set up shop immediately.