Starting a construction business is an appealing prospect for several reasons, especially when local markets are booming. If you don’t know how to start a construction business the right way, however, you could struggle to see success.
As complicated as this process can be, it doesn’t need to be as overwhelming as you could think. By following a few particular steps, it could be relatively simple. As obvious as that sounds, quite a few steps can be overlooked during the process.
How Much Does It Cost To Start A Construction Business?
One of the first steps you’ll need to take in starting your construction business is figuring out how much it’ll cost. You’ll need to determine this to make sure you can afford it or obtain outside funding, if needed. While this varies from company to company, it could be more expensive than you’d expect.
You’ll need to consider multiple expenses, including:
- Equipment – You’ll need quite a bit of equipment when starting your construction business, ranging from drills to dump trucks and everything in between. The good news is that you can lease many of these rather than buying, which should be more affordable.
- Office Space – While most of your employees will be out on the job, you could need office space, which varies dramatically depending on how much space you need.
- Marketing – You may need to advertise your construction business to start generating leads and sales. That could be relatively expensive, especially in your early days.
- Payroll – Perhaps your largest ongoing expense, you’ll need to pay your employees. Naturally, how much this costs depends on the number of workers, their experience, and other factors.
Once you have a detailed list of your expenses, you can budget accordingly while figuring out how to obtain funding and pay for everything.
Essential Equipment You’ll Need
Your equipment will be one of your larger expenses when you’re starting your construction business. It wouldn’t be able to function without them. While the debate between leasing versus buying persists, you’ll need to get some of the larger equipment, including:
- Excavators
- Bulldozer
- Dump Trucks
- Backhoe Loaders
Then there are all of the smaller items that are equally as vital as the above, such as air testers, drills, hammers, nails, and more. Add in health and safety equipment, and there’ll be more than a few things to pick up.
Make sure to have a detailed checklist of the equipment you’ll need for your company. Once you have this, you’ll be one step ahead in figuring out how to start a construction company the right way. There are a few other steps you’ll need to take, some of which could be overlooked.
How To Start A Construction Business: 4 Overlooked Steps You Need To Make
1. Research The Local Market
Before you start your construction company, you’ll need to know whether or not it’s viable. That means researching the local market to determine whether there’s an opportunity for you to capitalise on and make money from. At the same time, you’ll need to figure out who your target customers and largest competitors are.
The more you know about the market, the better you can position yourself for success. Though this takes a significant amount of time and effort, the rewards will be more than worth it. Without performing this research, you’re essentially starting your business blind.
While it can still be done, it’ll be easier with this in hand.
2. Put Together Your Business Plan
Now that you know about your target market, it’s time to put together your business plan. As one of the most important documents you need to create, you’ll need to put a significant amount of time and effort into this. It’s what you’ll give to financiers when you’re trying to get funding and serves as a guideline for how your company should operate.
When you’re putting this together, make sure to include:
- How the business will be structured and managed
- The services you provide and jobs you’ll bid on
- Your company’s expected costs
- How much the company expects to make in its first year
The more comprehensive your business plan is, the better.
3. Get The Right Permits
When you’re starting your construction business, you’ll need to make sure you’re legally compliant. There’s more to this than many entrepreneurs expect. One of the more notable parts of this is getting the right permits and licences. What ones you need can vary depending on where you’re based.
You can rest assured that you’ll need to get licences and permits on at least the local level. Should your construction company grow, however, you’ll need to get increasingly more of them, eventually culminating at the federal level.
In many cases, it can be worth getting these early so that you don’t need to repeat the process regularly. Though that means spending more time on the startup stage, and possibly money, it’ll help you ensure you’ve nothing to worry about.
4. Secure Insurance & Liabilities
Insurance is one of the most important factors to take care of as quickly as possible, especially given how dangerous the construction business can be. You’ll need to make sure that you or your employees are covered in the event of an accident. In most states, you’ll be required to have a minimum insurance policy, typically worker’s compensation.
It could be worth getting more than this, with general liability and professional liability insurance being recommended options. You might also want to consider builder’s risk insurance and auto insurance. While these may seem like extra costs, they can save you a significant amount of money in the long-term.
How To Start A Construction Business: Wrapping Up
Figuring out how to start a construction business the right way doesn’t need to be as overwhelming as you could think. While there are a few steps you’ll need to get through, they can be simpler than you’d expect.
Once you’ve gotten through them, you should find yourself on a strong foundation from which to grow your company. What’s stopping you?