If you live in or around a major city, driving past construction every day seems to be the norm after a while. There is construction to widen an interstate, remodel a house in your neighborhood, or add more stores to the strip mall down the road.
While it may seem that the construction industry is booming, you might be surprised to learn that the construction industry is currently facing a decline, due to an impending worker shortage.
There are still certain areas around the country that are experiencing a stronger than average construction market but that is not the norm everywhere.
That means that starting your own construction company is a huge opportunity and can quickly become a highly successful business. Your company can fill in the gaps and provide construction services for many.
Draft a Perfect Business Plan
This is almost the norm for any new company or business, but it’s worth mentioning here for your new construction business.
A business plan is more than just laying out what you want your company to be, it’s also about figuring out how you’re going to solve people’s needs. You’ll also need a business plan in order to apply for loans and meet with investors.
You might not have the best idea of how to exactly start your business plan, but there are plenty of online templates that are easy to follow. From there, you’ll be able to customize yours depending on the type of construction you’re in, whether it be buildings, infrastructure, or industrial.
Go Through the Legal Hoops
The Business Entity
Unfortunately, you can’t just wake up one day, decide to start a business and be done with it. There are plenty of legal hoops that you’re going to have to jump through.
The first thing you’re going to have to do is register your business while deciding on a business entity. The vast majority of construction companies are LLCs (limited liability corporations). These corporations were designed to protect your personal assets in case the business goes south.
Each state has unique laws when it comes to forming an LLC, so make sure you check with a business attorney to make sure you’re doing everything right.
Your business entity is also going to determine what kind of taxes you pay and what loans are going to be available for you.
With construction being such a physical job with plenty of risks, you’re going to need to make sure you have proper insurance for your business.
You’re going to want to find general liability insurance, which will protect you from any worksite accidents or injuries. In addition, you’ll also need to invest in insurance for your workers. The one you’ll probably hear about the most is worker’s compensation, which will help an employee keep paying their bills in case of an injury.
The licenses you need are going to vary by state, county, and city so you need to check out which ones you need before you start working. Some licenses are broader while others are incredibly specific on what they allow you to do.
Look for Loans
As with many small businesses, you’re going to have to go out and search for loans. There are many different types of loans available for construction businesses, including:
- SBA 7(a) Loans-popular and available up to $5 million
- SBA Microloans-for businesses that need less than $50,000
- SBA CDC/504 Loans-for businesses looking to purchase assets
- Business Term Loans-for those who don’t qualify for SBA loans
All of these loans come with their own set of pros and cons and there is no “perfect” loan out there for every business. It’s best that you speak with a business accountant in your city to find out which loan would be the best for your business.
Research Tools and Software
When it comes to the everyday workings of your business, you need to have a good idea of what you will need. For example, will you be keeping full-time staff or going with contractors? Will you be purchasing large assets or renting things like trucks or equipment?
Construction is quickly becoming a smart business and you’re nowhere without the right software. Make sure you research different software like Procore, Sage, and ComputerEase to find out which one is the best for you.