Starting your own construction contracting business is an exciting thought that everyone in the industry has probably had at one point or another. After all, being your own boss sounds pretty nice.
That said, construction contracting businesses don't just appear out of thin air and take a lot of work and dedication to get off the ground. However, when starting a business, there are a few common processes and best practices that can be done to lead to a more successful launch of your business. Luckily, the article below will explain these best practices for anyone looking to start their own construction contracting business. Those steps are:
Do Initial Research
When making a big decision, it's a good idea to conduct as much valuable research as needed in order to gain a good understanding of the situation at hand (and that's probably why you're reading this blog!). That said, when conducting research about starting your own contracting business, there are a couple of key aspects of the industry to keep in mind.
First, it's crucial to do research on your already-existing market. This includes identifying and evaluating your potential customer base, your competition, and the activities taking place in your local area. Fortunately, there are online tools and resources that you can use in order to help complete this research. Depending on where you'll be operating from, these tools may vary.
For example, The U.S Small Business Administration offers free-to-use online tools to assist you in your research. Their Market Research and Competitive Analysis webpage offers a wide variety of resources that provide information about the demographics, like income statistics and employment rates, of the target customer base in your operating area.
Another great method of researching the market is through industry publications. Every state, province, or region most likely has some kind of construction news publication that provides details about the industry in that area.
Lastly, use Google to your advantage. A fantastic way to identify and evaluate the competition that you'll face is to search: "your service + near me" or "your service + in your region". The results from conducting this search will show you a map and list of all the competition in your area. From there, you can determine what gaps exist in the market and how your business can stand out from the rest.
Next, it's crucial to find out what permits, licensing, rules, and regulations are required in order to legally register and operate your business.
For this aspect of the industry, the rules and regulations of registering and operating your construction contracting business may vary from region to region and service to service. That said, performing a quick Google search will provide you with a good starting point for tackling this. Here, government resources will definitely be the best way to identify whatever you'll need.
All of that said, completing this preliminary research is a great way to gain an early understanding of your construction contracting business, as well as provide yourself with some information that will help with planning your business strategy.
Plan Your Business Strategy
Now that you've completed your initial research and are ready to see what your business would look like, creating a plan for your business strategy is a crucial next step. This is important to complete as it will provide you the opportunity to create a framework for your business, and have a written copy of your strategy that can be referred to during the rest of the process.
To begin creating your business plan, make a document that will contain the answers to questions like:
What exact services will you provide?
Where will you operate from?
Who is your target market?
How do you plan to advertise?
How are you unique from the competition?
What is the initial estimated cost of launching and where will this funding be secured from?
How much money will be needed to maintain the business on a monthly and annual basis?
How will the management of the business be structured?
What is the sales process?
What CRM will be used to manage customers?
It's important to remember that this is a general overview and it's recommended you research other sources to determine all the factors that should be considered when writing your business plan. However, the point is that your basic operating procedures should be recognized and accounted for in order to launch your business.
A great way to keep this information organized is to create an executive summary. An executive summary is a document that contains an overview of the main points of your longer business plan. It should be short (one page or two at max), simple, and clear. Some great, free-to-use executive summary templates can be downloaded from a quick Google search.
With all that said, and depending on your expertise and level of comfort in launching a business, it's recommended that you meet with a professional business consultant who will help draft your business plan, create your executive summary, and give any expert recommendations.
Finally, once your business plan is complete, it's time for legal action.
Register and Protect Your Business
You've done your research, you've made a concrete plan, and now it's time to truly bring your business to life. To do this, you must complete some administrative tasks regarding the registration and protection of your business.
First, you have to register your business. Registering your business, much like the other steps that will be mentioned in this section, will vary from region to region. That said, there are some commonalities that can be discussed and should be considered. For example, before you register your business, consider what kind of business you want to register. Do your research on the pros and cons of registering your business as a sole proprietorship versus an LLC. It's worth knowing the legal and administrative advantages and disadvantages of the kind of business you'll be registered as in your region. Especially for accounting purposes!
Next, depending on your region's legal requirements, obtain the required licensing. Research what kind of licensing you and your business need in order to legally operate within your specific field. For example, it's almost a guarantee that an electrician needs licensing to operate anywhere in the United States or Canada. Performing any job without that license could land you in a lot of trouble.
Finally, and perhaps most importantly, get insurance. You need to make sure your construction contracting business is legally insured before beginning any work whatsoever. There are different regulations and types of required insurance from region to region and service to service. That said, in order to determine how you can fully insure yourself and/or your business, it's highly recommended that you conduct preliminary research in addition to consulting an industry professional about insurance.
Once your business is registered and legally allowed to operate, it's time to put it all into motion.
Virtually every business needs some amount of capital to begin operating. Obviously, as a construction contracting business that needs tools, equipment, and materials, this is especially true. With the high level of overhead costs that you'd need to start, it would be hard to finance it all yourself.
If you're unable to start your operation with your own personal savings or source of funds, then some form of a loan is required from a third-party or external source. That said, there are many types of lenders and different forms of loans. For example, loans can be acquired from sources like banks, private lenders, government entities, and credit unions. Further, loans can come in the form of small business loans, working capital loans, purchase order financing, vendor financing, and even equipment loans. For example, while it may be preferable to own all of your own heavy equipment like excavators and skid steers, utilizing online rental companies like DOZR Marketplace go a long way in cutting down on initial costs when starting a business.
All that said, it's recommended to speak with a financial advisor and even other business owners in the industry in order to gain an understanding of these options and figure out what's best for you. Financing a business is typically the most stressful aspect of the entire process. Making sure to do this the right way, with the right help, and with a clear vision of how to use money long-term will hopefully reduce the number of headaches and worries it can cause.
Once you secure funding, the business is essentially ready for operation. All that's needed now is some work to do.
Market and Grow Your Business
Marketing and selling your business services should be your biggest priority when launching. After all, it would very counterproductive to legally register and establish a business that has no work to do. So in order to combat this issue, you have to focus on promoting your business and generating as many leads as possible.
Although this section is featured last, it should be on your mind throughout the entire creation process. If you're determined to start your own business, then marketing yourself before you're officially in operation is actually beneficial since you'll likely have work to do the moment you're legally allowed to start.
There are many methods of advertising your business. Do your research and test out which methods work best for you and which don't. For example, other than just relying on word of mouth marketing, try using social media to promote your services, traditional methods like local newspapers and radio adverts to get your name in the public, and even meet with larger companies that may be able to use your services as subcontracted work.
Furthermore, the goal of marketing your business should not only be to generate leads but to also create sustainable work. You want your actual work and your customer service skills to leave a lasting impression on whomever you're completing a project for. Great work and a great experience are always the best forms of marketing.
At the end of the day, there's no end-all-be-all way to start and launch your own construction contracting business. That said, the steps you'd want to take, and the order you'd want to take them, would look very similar to the above framework.
Finally, there's one thing not mentioned above that's important for those who are about to start and launch their own business to remember; be persistent, be consistent, work hard, and trust in the process.