There’s a certain magic to being in the construction business, especially if you love seeing something you’ve created come to life. According to the Associated General Contractors of America, the construction industry is responsible for a whopping $1.3 trillion worth of structures each year.
If you’re interested in starting your own small construction business to add to that number, you’re not alone! With more than 680,000 construction employers, you’ll have plenty of company—and plenty of competition.
When it comes to starting a business, it’s important to keep a few construction startup tips in mind. Read on to learn how to put your best foot forward.
Research Your Market
Before you get too far into how to start a construction business, you’ll need to consider whether a construction company is viable in your area at all. If the market is oversaturated, and if your business doesn’t fill a specific niche, it may be a recipe for failure.
This is where market research comes in. Sit down to consider a few questions about your audience, to learn about the competition, and to research spending habits in your area.
Develop a Business Plan
Once you’ve researched your market, developing a business plan may be a little easier. A good business plan will detail your business goals, your plans for funding, and anything related to your business’s operation.
As you look for opportunities for construction business financing, you should be ready to provide this plan to potential investors.
Take Legal Steps
Now that you’ve ironed out the details, you’ll need to legally register your business. This will include everything from getting a federal tax ID to trademarking your business logo.
It’s often best to seek help from an attorney for these steps, especially if you don’t have a legal background. This person can also help you ensure compliance with any necessary certifications and standards, as well as helping with the steps below.
Get Licenses and Permits
The U.S. Small Business Administration has a page on federal licenses and permits, but state requirements can vary. They’ll also depend on the size of your company and the type of construction you’re doing. Check into your local zoning ordinances, look at your state website, or reach out to officials at your county courthouse for more information.
Consider Taxes and Insurance
If you don’t have a finance background, an accountant or consultant can help you figure out what documentation you’ll need for tax purposes, allowing you to prepare for potential audits. Likewise, speaking to an insurance agent can help you protect the business assets you have or plan to buy, as well as protecting you and your employees in case of health concerns or property damage.
Hire Employees or Contractors
When it comes to how to run a construction business, each company is different. However, as a new startup, it can be helpful to hire contractors on an as-needed basis rather than paying for full-time employees. If you’d like to make the switch to full-time workers as you grow, you can reconsider both options later.
Invest in Construction Tools
You’ll need to invest in the basic material and equipment you’ll need for your jobs. From construction management software to brand-name Hitachi parts, you’ll spend a disproportionate amount of money upfront before a project, and you’ll want to keep an eye on your cash flow management until you get those necessary cash receipts.
Start Your Small Construction Business Today
Starting a small construction business can be an incredible challenge—but it’s also incredibly rewarding. With these construction business tips in mind, however, you’ll find it easier to navigate the initial steps and get your company up and running. Consider getting the process started today!
Want more of the key tips you need in business and beyond? Check out our other posts for additional insights.