Construction is a tough industry. Numbers from the U.S. Census Bureau reveal that this industry has the highest five-year start-up failure rates. However, with careful and strategic planning, a construction business can also be a profitable venture. If you are planning to start your own, here are some of the vital aspects you should consider.
Ensure you have the right licenses and permits to protect yourself, your business and your clients. Go to your local courthouse and find out what documents are mandatory for your construction business, depending on your location. Some of these licenses are secured after taking a test or series of tests. Starting your company in a legitimate way will make you appear professional and reliable.
You will need several types of insurance, depending on the nature of your work. General liability, vehicle and property insurance are the basic types to secure. It will protect you and your company against claims related to property damage and personal injury as well as provide you defense of these claims. In some cases, it also covers yourself in the event of work-related injuries.
Some states require construction companies to carry specific insurance. Likewise, some clients won’t allow you to work at their job site without proper insurance papers.
Meet with an insurance agent to find out what coverage you need.
3. Business plan
Your business plan is the road map to your success. Put one together to establish your business goals. It doesn’t really have to be long or fancy; what’s important is that it meets the needs and aspirations of your company. Include the stages involved, time frame, funding, and anything else that relates to your business operation. Change it as often as necessary.
If you don’t have a clear picture on how to manage the flow of your business operations, don’t be afraid to ask help from professionals. Project manager professionals from Foresee Consulting would recommend using construction management software to help you organize data and achieve your profit goals.
4. Start-up Money
You would definitely need to prepare start-up money for your construction business. You’d need it for buying or leasing equipment, vehicles, and tools for your business, In addition, you also have to pay the bills and provide salaries if you have staff.
Arrange your finances. Personal funds, funds from investors, loans from family and friends are some sources of start-up money. If your credit standing is good, you might be able to secure a loan from your local banker. Talk to several banks and see what their loan requirements are and how much they will be willing to lend. Most banks ask for your business plans when you apply for a loan.
Even if you’re the greatest contractor in the world, you won’t get any work if nobody knows you business. Develop a marketing plan and get it out to your potential clients. Build a solid web presence, ask referrals from friends, collaborate and trade with a local contractor group. If you have zero knowledge in marketing skills, you can hire a marketing team to do it for you.
What other details do you think are vital for a construction company’s startup? Let’s hear it in the comments section.