Throughout the last couple of years, countless businesses have been negatively impacted by COVID 19. Yet, some businesses continue to flourish. Within these industries, entrepreneurs are finding new opportunities.
One such industry is the construction industry. People will always need new homes, home repairs, commercial buildings, building repairs, etc.
If you have a passion for contracting work, you’re probably wondering how to start a construction company. In today’s climate, this career path could lead to unbelievable wealth and success.
We want to help you get there. Keep reading for everything you need to know about starting a business.
Define Your Niche
First, within any industry, business owners are more successful when they learn how to separate themselves from their competition. By defining your niche or specialty, you can focus on a specific corner of the market.
For example, if your goal is to build new construction homes, define what types of homes you want to build. This can help you refine your target audience. It will also help you plan ahead for your business.
Alternatively, you might want to focus on home renovations, repairs, or commercial buildings. Where does your specialty lie? Is there a gap in the local construction industry that you could fill to make your company invaluable to the community?
Conduct a Market Analysis
This is where market research comes into play. Learning how to start a construction company means taking time to understand the local market. The more you know about the existing construction companies in your community and the services they offer, the better prepared you’ll be to succeed.
For example, entering into an oversaturated market will make your life incredibly difficult as a business owner. You’ll constantly be battling for clients and competing with already established construction businesses.
That’s why finding a niche (particularly one that isn’t filled) can be vital to your success. You can learn more about the construction industry by conducting a market analysis. Seek to answer the following questions:
- How many other construction companies are there in the community?
- What services do they provide?
- What companies will be my biggest competitors?
- What are they doing right?
- What are the average costs of operating a construction company?
- What are the average costs of starting a business in the construction industry?
- What licenses and certifications do I need?
- What are the best methods of marketing construction businesses?
- What can I expect in terms of revenue for the first year?
- What can I expect in terms of business growth?
As you can see, there are a lot of questions you need to answer before starting a business.
Create a Business Plan
Once you’ve completed your market analysis, you can begin to build your business plan. Your business plan should incorporate everything you learned while doing market research. It should outline the structure, function, and purpose of your business.
Additionally, your business plan needs to include your operational costs, financial projections, and plans for business growth. Naturally, this will serve as a guide or roadmap to success.
Just as importantly, it will be your business plan that lenders used to determine the validity of your future business, as well as your personal credibility. As such, you need to spend time and effort creating a professional business plan to impress lenders and/or investors.
Procure Startup Funding
Now, let’s talk about how to start a construction company in terms of funding. With your business plan in hand, we recommend approaching your bank to pursue an SBA loan. SBA loans are backed by the government’s Small Business Administration.
The SBA doesn’t give loans directly to entrepreneurs. Instead, it provides a set of guidelines that applicants must meet in order to get approved for the SBA loan. If you meet those standards, the bank will be able to provide you with a low-interest SBA loan with favorable terms.
However, if you can’t get approved for an SBA loan, you have other options. For example:
- Donations and investments from friends and family
- Personal loans
- Credit cards
- Angel investors
- Equipment financing
- Venture capital loans
- Revolving lines of credit
- Government grants
- And more
You can use these sources of funding or some combination of them to procure the financing you need to get your construction company off the ground. Alternatively, consider bringing on a business partner with whom you might qualify for an SBA.
Take Care of the Logistics
Learning how to start a construction company also means taking care of the logistics of owning and operating the business. For example, you’ll need to lock down a commercial site to serve as a home base for employees, equipment, materials, your office, etc.
Most construction companies also consist of several qualified contractors. However, if you can’t afford to bring on any employees yet, you might need to stick to smaller jobs that you can complete by yourself.
Then, consider the tools and equipment you’ll need to complete the projects that fall within the realm of your expertise. Once again, you might need to start small and build up your arsenal of equipment as you secure more jobs and gain more clientele.
The best business advice is to start with manageable overhead. As your business grows, you can buy bigger and better equipment, hire new contractors, purchase company vehicles, and commit to bigger projects.
Lastly, look into the software and technology that you’ll need to run your business. This includes estimation tools for contractor and customers, point of sale software, bookkeeping software, etc.
Start Marketing Your Construction Company
Finally, it’s time to start marketing your business. This is one of the most important steps in learning how to start a construction company. People can’t request bids or hire you for jobs if they don’t know you exist.
Start by building a professionally designed website for your business. Then, create social media profiles on the major platforms, like Facebook, Linked In, YouTube, and Instagram
There’s a steep learning curve to digital marketing. It might be beneficial (particularly in the beginning) to hire a marketing agency to help you establish visibility in the community. They can also help you build a blog on your website that will increase your SEO ranking, and thus, your organic website traffic.
Do You Know How to Start a Construction Company?
Now that you understand how to start a construction company, are you ready to begin the process? Clearly, this is a big decision and one that requires a lot of thought and planning. However, if you’re committed to the success of your budding business, there’s no reason you can’t achieve great things. For more professional advice or business tips to get you started, stick around. Browse through some of our other articles to find more information that can aid you in our venture. We want to help in any way we can.