19 Steps to Start Your Own Construction Company

The construction industry is a significant contributor to the American economy. You can become one of the nation’s over 700,000 employers. However, you’ll need to piece together one of these small businesses using the suggestions below.

How Much Does It Cost to Begin a Construction Company?

Potential owners must have the capital to get started. The average startup cost for a construction company is $37, 390.

What is the Profitability of a Construction Company?

In 2020, the American construction industry was worth $1.36 trillion. The total amount spent has decreased. However, private construction increased.

Starting a Construction Business in 19 Easy Steps

Starting your own construction company necessitates careful planning and hard work. The steps for establishing a new construction company are as follows.

1. Investigate Local Construction Companies

Market research is required to gain an understanding of the competition. Local trade publications are useful. Don’t forget to look at government and trade association publications. The search engine results are excellent.

2. Set Yourself Apart From Your Competitors

One way to achieve success is to narrow your focus to a specific target market. The importance of niche cannot be overstated. Begin by deciding whether you want to do commercial or residential work.

3. Come up with a business name and a brand

Every general contractor necessitates the creation of a brand. Maintain consistency. The logo on your website and company vehicles should be the same. Use social media to connect with prospects and customers. Watch your company grow.

4. Create a Business Plan for a Construction Company

A solid business plan accomplishes several goals. It provides an overall business strategy that can be used to track milestones. It can also assist in obtaining funding as well as specifics such as equipment loans. Here is a template as well as some advice for these small business owners.

  • Concerning the financial section. Labor costs a lot of money. Include projections for both salaried and contract employees. Try including some labor statistics.
  • For the industry research. If possible, include key statistics such as new home sales.
  • For the marketing strategy. One area to emphasize is networking with businesses such as home improvement stores. As well as local real estate firms.

In the operations section of their business plan, construction services should also highlight milestones.

5. Select a Location

Choosing a location for your own construction business is simple if you opt for a home-based shop. Otherwise, here are some suggestions.

  • Is it necessary to make changes to the website? Who will foot the bill for that? Is it necessary to make changes in order to meet energy efficiency standards for equipment?
  • Make sacrifices for future growth. Scale is important when starting a construction company.
  • Are you a renter? Check to see if there are any tax breaks for a new construction company.

Finally, make a must-have list in order to stay within your budget.

6. Create a Business Entity and Register It

Any new business must register as a legal entity. There is a number to choose from. Personal liability is a major concern for a business owner.

  • Liability issues can arise for a sole proprietor.
  • Everything in a partnership must be defined in writing.
  • Corporations provide adequate protection.

Find out if you need to register your new business at all.

7. Establish a Business Bank Account

An Employer Identification Number (EIN) and a copy of your general contractor’s license are required. The EIN serves as the federal tax identification number.

8. Investigate Small Business Loans

Small Business Administration (SBA) loans are an excellent source of funding.

Other alternatives include:

  • Traditional financial institutions, such as banks and credit unions. Look for the lowest possible interest rate.
  • A cash advance for your company.
  • A credit line

Another way to purchase materials while maintaining a cash flow is through factoring. Third-party invoices can be sold.

9. Obtain the Required Construction Equipment

Even starting a home-based business necessitates the purchase of equipment. Check out this starter list.

  • Excavators are required for the majority of construction work. These are available with wheels or tracks.
  • At least one backhoe is required for independent contractors. These are used to move materials and dig trenches.
  • Bulldozers remove topsoil to a certain depth.

Ladders, saws, and drills are also essential for small-scale operations.

10. Make Your Own Construction Company Website

You need a website to attract potential customers if you want to start a construction company today. Many home inspection companies are good examples.

They have a page dedicated to each service. And there are testimonials.

11. Ensure that you have all of the necessary licenses in your state

Different business licenses are required by state and local governments. The following are some general business license requirements for each state. These only apply to specific licenses.

Each state is unique. Insurance is also essential, and a reputable surety bond agent can provide coverage for financial losses.

Besides that, many states require you to register your business. Although it isn’t mandatory to formally register your business to carry out business transactions, it’s a great decision for a new enterpreneur as it brings along marketing and legal benefits. Not just that, it also helps you in securing loans, fulfilling the criteria for supplier arrangements, and establishing consumer trust. Thus, by and large, it’s a smart choice to register the business in your state.

12. Prepare Your Taxes

Paying business taxes is a necessary part of starting a new business. A home inspector is compensated in the following ways:

  • As independent business operators, we owe taxes to the federal government.
  • This entails a self-employment tax.

Because there are both federal and state payments, it is critical that you keep all of your documentation.

13. Obtain Business Insurance

A construction company must obtain insurance. Here is a list of the insurance policies that are required.

  • Insurance against general liability. Covers both property and bodily injury claims.
  • Vehicle insurance can help you avoid the closure of your business. This includes both work vehicles and employees who drive them.
  • Insurance for workers’ compensation. Occupational safety is critical. These policies provide coverage for workers who are injured on the job. Except for Texas, every state has made it mandatory. More information on health administration can be found here.
  • State Disability Insurance: This is yet another type of insurance that replaces lost wages. Contributions are deductible for tax purposes.
  • Unemployment Compensation. These programs are managed on a state-by-state basis. Federal oversight is in place.
  • Insurance for your home. Protects the company’s property from theft and damage.

14. Organize Your Accounting and Construction Software

Small business administration in construction must accomplish a number of tasks. Accounting and software should complement each other. Look for billing reports, payroll reports, and project budgets all in one place.

15. Recruit Workers

Before they can start looking for employees, businesses must obtain an EIN. Putting together your own team entails posting job openings in the appropriate places, such as social media. Apprenticeships are beneficial. Trends can be found in construction industry publications.

16. Promote Your Company

Years ago, a physical business card was the only way to market. Those are still valid. However, today’s marketing strategy for small businesses in the construction industry must also be digital.

The brand image on your website and social media accounts must be consistent. The same logo is used on your trucks and front yard signs. Courses can help you improve your digital marketing skills.

Remember to keep your target customers in mind when deciding on a strategy. There should be some specifics in your business plan.

17. Networking

Building inspectors and construction owners must collaborate. Opportunities abound at trade shows, industry associations, and companies such as ConstructReach.

The back of a business card is an excellent place to include personal assets such as updated contact information.

18. Contract Bidding

Government contracts are a gold mine for new construction companies. Begin here.

An early step is to submit a document that covers the design and construction phases.

19. Expand Your Construction Business

You now have the formula for a successful business. Get out there and make some money. And a positive impact on your community.


John Harper

#1 File Information bestselling author John Harper loves to dispel the myth that smart men & women don’t read (or write) romance, and if you watch reruns of the game show The Weakest Link you might just catch him winning the $77,000 jackpot. In 2021, Netflix will premiere Bridgerton, based on his popular series of novels about the Why Files.

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