The construction industry is among the leading businesses for startups. But, succeeding in this industry is challenging, with 63.6% of companies shutting down within the first five years. Most construction companies close due to inadequate planning, lack of knowledge, and financial problems.
However, you can successfully start your own construction business with these steps.
1. Research your local market:
The construction market in your area determines whether opening a startup is a viable option. For instance, an oversaturated market in your area means breaking through will be difficult because of the high competition.
Moreover, customers may be satisfied with the current local companies. So, adding yours can be a complete waste of time. Therefore, start by identifying how many construction companies are in your area, how much they charge, their specialties, and their reputation. You can easily find all this information on Google.
2. Create your business plan:
Drafting a business plan is a vital part of your construction startup as it allows you to keep your company on track, increasing your likelihood to thrive. However, make sure your business plan is highly detailed as you’ll give it to lenders for source funding.
Some of the information you can include in your business plan is:
• Services you’ll provide
• Your billing processes
• Your target market
• Estimated capital costs
• Number of employees
Alternatively, you can find reliable construction project management software for small business to help you with resource planning and budgeting.
3. Register your company:
After drafting your plan, you need to register your business to legalize it. Besides, you enjoy other perks, such as tax benefits and personal liability protection. All you need to do is register the name of your construction business with local and state governments.
You can also go the extra mile and register your business on a federal level to get your EIN (Employer Identification Number).
4. Find the right permits and licenses:
One of the reasons why construction companies closed down is because they don’t have the right permits and licenses, resulting in hefty fines and penalties. The proper permits and licenses allow your business to operate legally on a state and federal level.
The permits and licenses for your business depend on the location of your company, and the type of construction you plan. For example, your state may require a permit for overweight vehicles and drilling or mining activities.
You should also check your local zoning ordinance, as your location determines your state permits and licenses. For example, zoning ordinances can restrict or ban your company from operating in specific areas.
5. Secure insurance and liabilities:
Construction jobs are hazardous, and protecting you and your employees is vital to staying afloat. Hence, look for insurance to cover damages caused by injuries on your worksite.
6. Seek funding:
You can secure funding for your business through bank loans, private lenders, credit unions, or government loans, which ensures you have the money to finance your company.
Lastly, grow your business by being open and honest with your clients. The quicker you foster a trustworthy relationship with them, the higher the reputation of your company.