Tips for building a ground-up construction business

Starting a construction business is an exciting but intimidating project. Construction companies are staples of our community and are a great opportunity to dive into entrepreneurship.  However, if not taken seriously or done properly, it can cost you more money than it will make you. In order to create a successful stream of revenue and a commercial business you can be proud of, try following these steps.

1. Conduct proper research:
The first crucial step when developing any business is to do your due diligence to conduct research. Focus on construction businesses in general and analyze the infrastructures of premium construction franchises in your area. Get a sense of the services they offer, their prices, and what type of niche your business could offer that others may not.
As time progresses, most construction companies will continue to find new ways to upgrade their ideal business model. It’s important to keep successful businesses in mind when framing out your own business model. See how they scale their company, in terms of employee on boarding, project funding, internal benefits and marketing to find overall success. If you’re starting with little to no experience, consider hiring a business consultant. A business consultant will assist in your research and help you in acquiring new ideas that will translate into profit. This is a reliable way to create a construction organization that franchises, and consumers will desire.

2. Develop a business plan:
The next best step is to develop your business plan based on the research you’ve completed. Like most business plans, you’ll want to include sections such as:

  • Company overview
  • Market analysis
  • Customer analysis
  • Competitor analysis
  • Marketing plan
  • Operations plan

This will be your layout to reference when making future business decisions. Keep in mind that it should be flexible for when you want to make changes to your business down the road.
When writing out your business plan you should also start thinking about your financial plan for this venture. Depending on your preference, you can include your budget in your business plan, or you can make it a separate plan entirely. Your financial plan will need to include your start-up costs, your start-up funds, any preliminary budgeting, and basic financial projections. You should spend some time evaluating your different options when it comes to your start-up funds.

Consider using your savings, outside investors, or even a home equity loan when starting your business. Each has its own benefits and drawbacks when creating a company. Using your savings is a suitable option but could take several years before you feel comfortable leaping into this journey with financial confidence. If you lack capital, utilizing investors means you’ll receive the money upfront, but you won’t own the business in its entirety and these investors may have stipulations to their investments. On the contrary, using a home equity loan is another reliable option because you receive all the money upfront based on the value of your home.

3. Confirm crucial permits & plans:
In order to finalize your construction franchise, you must complete all of the necessary paperwork to make sure your business is running legally and safely. First, decide on a name for your business and register it as either an LLC or corporation.  Next, apply for an employer identification number, even if you’re running the business without other employees. For the time being you need this registration to pay taxes, create a company bank account, and apply for business licenses. Then, you want to make sure you apply for the correct tax agencies, and state agencies. The specific agencies you need to register with will depend on the state. This is where you could benefit from talking to a business consultant or a legal professional who will make sure you do everything correctly. Additionally, you’ll want to make sure you register with any local agencies.

To run your business legally, in addition to registering with the proper agencies, you’ll also need to apply for the correct licensing information. This, at the very least, will include a general contractor's license, but if your services include any specialty like carpentry, painting, HVAC, electrical, or roofing you’ll need to apply for additional licenses.
Once you have completed all these requirements, you’re well on your way to starting your organization. This is an exciting time; just remember you can always go back and adjust your plan if it needs tweaking. For additional information or insight, your friends at Commercial Construction and Renovation are here to help!

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