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How to Start a Construction Business the Right Way

How to Start a Construction Business the Right Way

Before you open the doors of your new construction company, it’s important to understand the scope of preparation and work involved in running a construction business. Establishing any business, for that matter is far from easy, and there are always things that slip out of mind, even with experienced entrepreneurs. If you feel ready to launch your construction startup, here are eight things to include into your business plan.

Spot a Good Location

Recently, we’ve seen many startups starting up in the owner’s homes. While this is definitely the cheapest option, sooner or later you’ll want to relocate to more official business premises. If you have the means, you’d be better off skipping the “home stage” and moving into a property that has adequate office and storage space. Also, make sure the location you choose has a plenty of space for parking your construction vehicles.

Legalize It

Build your company’s reputation as a professional operation that instils confidence by making it organized, efficient and compliant with all relevant regulations, laws, and standards. There are certain licences and certifications, as well as permits and registrations, that a construction company needs to obtain.

Take Care of Insurance

Set up a meeting with an insurance agent and find out what coverages are required for your business. Your insurance needn’t just protect your business assets, but also yourself, in case of work-related injuries, personal liabilities, or damage to a client’s property. Ask for an option that will have you and your business fully covered.

Get your Financing in a Row

As soon as you open up, you’ll need to purchase, lease, or rent equipment, tools, and vehicles, in order to land your first clients. Aside from that, you’ll need to pay your bills, invest in advertising, and meet the monthly payroll. It often means that you’ll have to secure funds even before you bid on your first contract, so make sure you get your financing lined up early on.

Employees vs. Contractors

As a start-up company, using contractors is perhaps a better option than hiring full-time employees. Contractors usually come with a lower cost, as well as greater flexibility, because you don’t have to pay benefits or continue providing salaries when the business slows down. It’s important, however to know the difference between what constitutes an employee and an independent contractor, since misclassifying a worker could have some serious consequences for your business.

Still, you might want consider having a full-time assistant who will eventually become your right hand. When clients call you, they appreciate hearing a familiar voice at the other end of the line.

Connect with Suppliers, Business Associates, and Other Contractors

The best course of action would be to meet with several suppliers and open accounts with each of them. Maintain good relationships with other entrepreneurs in your industry, so you have people to call upon to help you when you cannot complete a job yourself or finish within a deadline. Not to mention, make sure you establish good relations with industry professionals such as building and safety inspectors.

Secure Funds for Equipment

At the beginning, a van or will be enough to carry all your toolboxes and portable power tools. As your business starts to grow, you’ll need to upgrade both your fleet and the equipment. It is true to say that a lot of equipment can be rented, but if you plan on doing construction as a serious, long-lasting venture, it certainly pays off to invest in quality equipment (such as modular aluminium scaffolding solutions, a transit mixer, tower crane,  and  a hydraulic breaker).

Set Up a Marketing Budget

If you decide that your advertising is covered by simply posting signage at your job sites, so be it. On the other hand, there are many more assertive options to consider like radio, TV, and online marketing. A website or blog has the added benefit that you can communicate with your potential clients on your own terms. Perhaps you’ll want to create the logo to represent your brand, as well as business cards, brochures and, at some point, a business portfolio. In short, it’s always advisable to allocate more funds toward marketing than you think is enough.

Your business plan should include your business goals, but also plans for every stage. If you manage to properly cover every aspect that leads to smooth operations of your business, the chances are your construction start-up will develop into a lucrative venture.

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by Lillian Connors // Lillian is a senior business consultant and the co-editor at She's mainly focused on business optimization and sustainable growth. In her leisure time, she likes to lose herself in a good book or drink a couple of hoppy pale ales.

Opinions expressed by contributors are their own.