Getting into the construction business is no easy task. It’s not as simple as grabbing your toolbox, loading up your truck, and heading out to a job…it’s actually quite a process to undertake. From licenses you have to apply for to finding the right type of equipment, if you want your construction company to be successful, you’re going to need to get things right from the very beginning.
Now, if you’re looking to start your own construction company, there’s no time like the present. The construction industry is actually thriving right now, and according to the American Institute of Architects, it’s expected to increase in 2019 by at least 4%. So with this expected increase, now would be the perfect time to get your business started!
Back to the Basics
Now, regardless of how you decide to get your business started, there are some basic business and financial principles that you’ll need to know and implement in order for your business to be successful. Take a look at what those principles are so you can make sure your business gets started on a solid foundation.
Your Business Can’t Start without a Business Plan
The first step towards your business getting off to a successful start is drafting your business plan. Your business plan not only solidifies your vision, but it also lays out all your ideas and allows you to see them in writing to make sure they make sense… that’s very important because it’s the aspect that can lead you to revenue.
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Your Business Plan Outline is the same as Any Other Business
With your business plan, it is the blueprint to why, how, when, and where you’re starting your business, along with a step by step layout of how you intend to get the business going. All in all, you have an idea, create a plan for it, refine and revise, take action, and keep improving during the process. This process is standard whether you’re starting a construction company or your own medical practice.
Get Your Business Registered
So you’ve created your business plan, refined and revised it, and now it’s time to take action. By taking action, you’ll need to look into the requirements to get your business started based on your location (licenses/registrations).
Now, I know we stated earlier that the business plan principles of a construction company are the same across the board for any business, but the requirements are totally different. The state, city, and county your business is based in may have certain laws in place that you need to be aware of. So be sure to do your research on your location’s requirements and restrictions to move forward with getting your business registered. Here are a few considerations.
Obtaining a Business Entity
Obtaining a business entity is what makes your business a “real” business. Of course many avenues you can take to get your construction company registered, but the most common way to do it is with a limited liability corporation (LLC).
An LLC not only provides options for you to pay your business taxes but it also protects your personal assets in the event that your business faces any type of legal or debt issues. There are also different types of LLCs. Some are relatively small to where you can pay your business’s taxes from personal filing and then there are some that are more structured.
Applying for Necessary Licenses
Several, if not all, construction companies require proper licensing. This can be dependent upon your state, the area you will be servicing, and the particular niche or service you are offering. You’ll want to be sure to do your research and check to see which states require the different types of licensing. Just keep in mind that if you are in a state where being licensed isn’t required, you are prohibited from working in another state where licensing is required unless you get a license for that state.
Make Sure Your Business is Covered with Insurance
Getting insurance for your business is very important… it’s actually just as important as registering your business. The construction business is a business that can be dangerous and is prone to having accidents and injuries due to working with heavy machinery, electricity, sometimes operating at high altitudes, and working with other tools and equipment that can do bodily damage.
Most of the times, a construction company can get by with just one type of insurance to stay legal and that insurance is general liability insurance. If you’re going to have a construction business, general liability is an absolute necessity. It protects you from on-the-job injuries and accidents; it pretty much protects you in issues that you could be held legally liable.
Surety Bonds
With your construction business, you’ll want to acquire a surety bond as a second form of coverage for your business. For certain projects, surety bonds are a requirement so it’s important to have a list of reliable and reputable surety bond companies to ensure performance guarantees.
To go along with your business insurance, you might also want to consider looking into vehicle and property insurance. This will protect your company’s equipment and machinery in the event of an unforeseen incident.
It Takes Money to Make Money: Small Business Loans and Financing Options
Besides needing to know how to start a construction company, you’ll also need to know how to finance one too! To own a construction company, it’s a very expensive business venture. You have to consider equipment, tools, and a vehicle fleet. Luckily there are small business loans out there willing to help you get your business off the ground. Here are some different loan and financing options for you to consider.
- SBA Loans
- SBA Micro Loan
- Equipment Financing
- Business Term Loans
Opening Your Business Recap
There are several aspects to consider before starting a construction business and financing your company is a huge part of investing in your company. The biggest investment you could ever make in your company is your time and effort.
All the steps listed above will certainly get you off to the right start and put you on the road to long-term success, and isn’t that the goal of any company? All in all, it’s better to take the necessary steps, no matter how complex or tedious they may be. It’s better to do things right the first time than to play catch-up later.