Construction is one of the top industries in the US, so owning your private construction company can be very rewarding; however, it requires detailed planning. If you’re also interested in starting a business and searching for the answers to “How to start a construction company?” this article is for you.
As per reports, the growth rate of privately-held construction businesses in the most recent period is 17 percent–fastest than other industries.
Now, when you learn that the construction business's profit ratio is good, it's time to plan. Not only will you need to compute the start-up costs, but you need to come up with many other things like its business plan, marketing strategy, etc.
63.6 percent of construction businesses shut down within the first 5 years, either due to a lack of experience or finances. You don’t have to be named one of them. If you commit yourself to plan professionally, you can establish the most successful construction company!
From researching the market, preparing a concrete plan along with financial forecasts, and getting help from experts can ensure that you are on the right path to grow your business. So where do you start?
Let’s dig into the details!
To begin your market research, first, you should take an idea of how many local construction businesses are currently operating in your area, what do they charge, what they specialize in, and what their reputation is.
Besides, you should learn about your target customer base — the number of potential customers, their median age and status, etc. Knowing these things will help you develop your business plan, and you’ll be more confident when you finally step out for other things.
The next step is to develop a smart business plan with the help of professionals. This is one of the essential business documents you’ll create every time whenever starting a business.
A business plan can help you keep focused and your business on track. In simple words, a well-developed plan increases your likelihood of success.
Standard plans incorporate the following points:
· Who your target market is
· How you’ll structure the business
· What will be the marketing strategies
· What kind of services will be covered
· The number of employees you’ll require
· The startup cost and estimated cost of maintaining the business
· The predicted revenue and expenses of the first 3 to 5 years and other important KPIs
As an entrepreneur, you’ll need to think professionally. Preparing a business plan isn’t a piece of cake, so you should never take a chance on that and get the help of an expert––the accounting computations need to be accurate in your business plan.
This plan helps you run your business operations smoothly and gives your lenders a detailed insight into source funding.
After you get your business plan ready, it’s time to register your business so that you can operate it as a legal entity that provides legal benefits such as personal liability protection and tax benefits.
Now you might be thinking that registering a business is a complex process and you need to hire a professional to do the job, right? Don’t worry! Registering a business is as simple as registering its name with state and local governments.
However, you’ll need to check your state requirements. You should also register the business on the federal level so that you can get a federal tax ID too. Also, don’t forget to get the logo for your brand. You can look out for a professional logo designing service to get a meaningful logo.
Once your business is registered, it’s time to get your permits in order. When you run any business, you need to get licenses to operate it on both the federal and state level. However, the type of permits you’ll need depends on your state, the size of your company, location, and even the type of construction you’re planning to do.
Without the correct license, your construction company can’t get that legal status, and you’ll have to pay hefty fees and tax penalties all the time. There might also be the chances of governmental closure.
While you’re considering licenses, it’s time to start thinking about your employee’s insurance. Due to the dangerous nature of construction activities, there’s always a risk of accidents, no matter how good SOPs (standard operating procedures) are in place.
Accidents happen, and being a business owner, it should be your top priority that all your employees are insured––you must carry valid workers’ compensation insurance.
Now, when you’re done with the above requirements, it's time to finance your new business. First, use your personal savings and if you aren’t able to do that, try securing funding elsewhere. These include government loans, private lenders, bank loans, government funding programs, or credit unions.
By visiting the USA.gov site, you can find loans and grants for your construction business. On top of primary financing, an entrepreneur's job also includes ensuring funding for their business projects, i.e., preparation and analyses of cash flows.
The irregularity of billing cycles, if continued long, might result in the closure of the company. Therefore, you must consider cash flow statements wisely. Moreover, to be on the safe side, it is advisable to have an emergency cash fund that can be utilized if the business encounters any problems.
Setting up a business is a complex process but maintaining its reputation in the market is the most challenging of all things. One of the greatest contributing factors of the long-life business is customer loyalty and reputation, which is achieved after a lot of hard work and patience.
You must aim to maintain good terms with clients. Likewise, you’ll need to take care of staff/workers. The best way to do this is to be clear about your company’s policy, be honest, and responsive. Update them with all the important information, so they understand when any issue arises.
In the era of technology, no business is successful without an online presence. From developing a site to updating social media platforms, you’ll need to take care of everything. Get your website developed professionally before you launch your construction company.
Finally, do detailed research on every single part of the construction industry so you know how rewarding it can be. And build a good team because the wiser your employees, the better it will be for you.
Waiting to welcome you to our amazing family of loyal customers and are excited to work with you.