On the surface, starting a construction business might seem as simple as drumming up some clients and getting to work. But when you look a little deeper, there are actually quite a few steps involved—and it can quickly become an overwhelming process. However, if you’re informed and prepared, you have a good shot at successfully building your own construction biz.
Steps to Starting a Construction Business
Ready to get started? Here are some things you want to do to get started on the road to success with your new business.
Make a plan
When starting any kind of business endeavor, it's critical that you have a plan. You might want to start with a little research, like what kind of companies are already in the area, as well as which specific services they provide, and how many there are.
Next, create a business plan. This should be an overview of how your business will operate, including what types of services you’ll provide, how you’ll manage the business, your target market, and initial startup costs.
Register your company
Once you’ve got your plan in place, it’s time to make it official! Registering your business as a legal entity can project you in the case of a lawsuit and provide tax benefits. In most cases, registering your company is a simple process through state and/or local governments.
Once you’ve registered your business name, you also want to get your federal tax ID or Employer Identification Number (EIN) from your state’s department of revenue.
Obtain necessary licences, permits & insurance
The licences and permits your business requires will depend on your state, the size of your company, and which services you’ll provide. You may need a variety of permits or only a few.
Insurance is another must for construction business owners. Accidents aren’t uncommon in the industry, so you want to make sure you and your employees are protected. Most states require construction businesses to carry workers comp insurance. Personal and general liability are also recommended.
Ensure all contractors are properly licensed
Depending on which services you provide, you’ll likely work with a variety of contractors or outside vendors. It’s essential to ensure you obtain proof of insurance and a 1099 from any contractor you work with. Some jobs require the bidding contractor to have insurance and workers comp coverage. While this is more often seen in commercial construction, many residential clients will ask for it, too!
Track all income and expenses
You might not want to think about the back-end side of the business, but it’s imperative that you keep a close eye on the books. Watching your budget, your expenses, and your income can ensure that your pricing is right, that you’re on track to meet your financial goals, and you aren’t about to run into any problems down the road. We’d recommend Quickbooks for this!
Hire an accountant
Unless you have a solid understanding of finances and balancing business accounts, it’s not a bad idea to get some professional advice. An accountant can help you decide the right tax structure for your business. He or she can set up payroll and can take care of annual business taxes (and possibly personal taxes, too).
Get an office manager
If you plan to be out in the field, working or overseeing projects, then odds are you’re going to need an office manager. This person will take care of office tasks and field communication from clients. Unless you have time to devote to emails and phone calls, research, drumming up leads, ordering materials and supplies, and balancing books, an office manager is an office essential!
Hire a marketing team
The key to a successful business is good marketing. Unless you have an established network of clients, it’s likely you’ll need to find a way to get your name out and connect with leads. This is where your marketing team homes in. You can either hire an in-house marketing person or work with an outside company, but either way, be sure to communicate your goals on a regular basis. Sharing photos, videos, and personal business stories can help, too—that’s what your audience wants to see!
Take lots of photos
In the construction business, your portfolio is everything! Think about it: if you were going to hire a contractor or carpenter, would you be more likely to hire the company who says they’re good, or the company with a portfolio of beautiful pictures? Your clients won’t take your word for it. They want to see the proof!
Register with Google Business
Google business is a fantastic way to get your name out, make your business look official, and start gathering reviews. If clients can’t find you on Google, or if your business lacks the authenticity of reviews or a spot on Google’s maps, they might be less likely to choose your business over a competitor.
Like photos, reviews are everything! Two builders might be able to produce work of similar quality, but if one has an arsenal of positive reviews, clients might feel more confident about signing on with them than with an unreviewed business. Don’t be afraid to ask past clients for a testimonial! Good reviews go a long way.
Feeling a Little Overwhelmed?
Hey, we get it. Starting a business is no walk in the park—but it’s incredibly rewarding! Remember though, you don’t have to go it alone. If you’re feeling overwhelmed by the process, we’re here to help. Contact Corridor Consulting today to learn more about the services we offer and what we can do to help you build your business.