Tips for Small Construction Business Owners
If you are interested in construction, starting your own business may sound like a dream. However, running a construction company is not as easy as you may think. In order to create a successful business, it is essential you develop a strong business plan, secure financing and make sure that your company is properly licensed and insured. Luckily, you don’t need a construction management degree to accomplish these tasks. Simply follow the tips below, and you will have your construction company up and running in no time.
First Plan
The first step in starting your own construction business is to develop a business plan. Think of a business plan as a road map for your company, as the plan will help you think about all options available to you. When developing your business plan, it is important to consider how big you want the company to be, how much experience you have, what connections you have to obtain employees and clients and if you will need investors. Ultimately you will want to be as organized as possible when starting your own construction company and having a solid business plan will help you accomplish this task.
Then Money
Once you have established a business plan, you need to determine how you are going to finance your company. If you have money saved up, you might be able to fund your business on your own. However, most people will need a loan, which you can get a loan from a bank or the United States Small Business Administration. When applying for a loan, remember that you will need to have enough money to purchase equipment, hire workers, advertise and rent office space. However investigate the prospects of investors before applying for a loan. If you can get people to invest in your company, you can avoid having to make loan payments to the bank while simultaneously funding start-up costs, which can save you money in the long run.
Permits and Licenses
Now that you have your business plan and financing in place, it is time to get the necessary permits and licenses. The best strategy is to contact your state and county office and ask them what exactly you need. Make sure you tell them what services your company will perform and keep in mind that some jobs may require that you get additional permits. Similarly, getting your company properly insured is crucial; at a minimum you will need to have workers’ compensation insurance, liability insurance and auto insurance.
Infrastructure
Now that you have the basics of your company formed, it is time to get your equipment and hire your staff. Depending on your finances and services, you may want to lease all of the equipment you need. You should also consider renting office space so that you have a place to handle accounts and meet with clients. As for staff, you want to hire experienced construction workers. There are many different trades involved in construction work. As such, you will probably want to hire people how have experience in at least one of these areas as well as a manager, accountant and attorney.
Bidding Jobs
Before you are ready to start doing jobs, you need to learn about estimates.
Estimates are an important part of the construction business, as they will determine whether you are able to land jobs. If you give too high of an estimate for a project you will lose the job, yet if you underestimate the cost of the project you could be in trouble financially. To ensure you understand the delicate bidding process, take a course or read a book on all aspects of estimates. If you don’t feel comfortable making estimates, hire someone who can do this for you.
Getting Clients
With everything in place, it is time to build clients. Advertise your business by creating a Web site and by putting ads in newspapers, phone books and mailings. You should also hand out business cards to all of your friends, family and associates. Don’t forget the best form of advertising for a small construction business is word of mouth. Therefore, make sure you and your workers have strong customer service skills to go along with an efficient work ethic.
In Closing
Starting a construction business may seem like a lot of work, but if you follow the tips above, your effort will pay off. Remember that having a strong business plan is the most important step in maintaining a successful construction company. You will also need to be fully dedicated to the company, as you will be responsible for your livelihood, as well as many others.
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My family has been in the construction business for the past 3 decades, and as from what I have observed, the most important thing once you have your business running is knowing how to finance the firm as well as each project’s budget. Since in the long run, you’ll not be dealing with only one client. So it’s important to cultivate decision makers in your small business while it’s still on its starting phase, to have a stronger workforce in the future.
Jason – Meiji´s last blog ..JVM 16-63 Miniature Circuit Breaker
As someone who works for a small construction business, I could not agree more. I found these tips to be very helpful, thanks for sharing! I agree with Jason, financing and budgeting are both essential, especially in today’s economic environment.
ill be leaving the army due to injury, and i have extensive construction experience that i gain when i was a civilian, i wa license in florida but now we will be moving to dallas tx, and im working on my business plan, and i will have my company running next year.