Starting a construction business can be a daunting task; we know this has been some of the scariest years of our lives. We’ve talked to alot of people through the years, and it’s actually incredible how many people are too afraid to start something on their own. But, despite that there are hundreds of entrepreneurs starting their own business each year in the construction industry. Some failing and some succeeding.
In this article we’re going to walk you through some of the basic steps to starting your construction company and what to look out for on the way.
Don’t Start Your Construction Business Too Early
Let’s all be honest, we learned alot in our first few years in this business. After school the industry can seem ruthless at times and your first few years are critical. Get a job with a larger company and as bad as it is to say, make mistakes with someone else’s money. You’ll learn what you hate, and what you need to know.
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Starting a construction business is going to be a challenging task and take persistence, you don’t want to find out you hate the subject when you’re two years into it.
Pick a Niche and Purpose
There are hundred’s of different areas that you can start a business in construction. From drywalling to mechanical work to general contracting. Any industry can be a source of income for you. Our recommendation is to pick something you’re good at. For example, if you’re a plumber, don’t start a painting business. You know the trade, (one would presume) you know how to do it well. So use something you’ve mastered already.
Once you have an idea of the area you’d like to focus on next step is to understand what you’d like to do with it. Not everything needs to be on the tools, there are lot’s of different categories to start with. Starting a construction business in any one of the following can be successful:
- Consultant – make recommendations to people
- Designer – design whatever it is you’re good at
- Contractor – build and install your niche
- Supplier – supply products to the niche you’ve chosen
- Service Provider – provide a service to your niche – as an example provide an online course to plumbers
Having A Business Plan (Pro-Tip: It Probably Won’t Be Right The First Time)
If someone had of told us that we’d be running a consultancy when we launched this website we’d have called them crazy. Our initial business plan was to conquer the world of construction social media. How wrong were we!
A business plan is a document which will outline what you are going to do with your business and how you are going to do it. A lot of people will tell you it’s crucial to starting a business, but the honest truth is it’s not. Yes it is important and yes it’s good to have a clear idea of what you will be doing but it’s not essential.
That being said, do spend the time to put together a document, we won’t go into too much detail on how to prepare a business plan, there are lots, and lots and lots of great articles on the internet to help you with that!
What you need to take away from this exercise is how you will make money. That needs to be one of your primary goals and the path to do that needs to be clear.
The M Word (Money)
One of the biggest hurdles for people that we’ve seen trying to get into the industry is money. People are always afraid that by giving up their salary they risk not bringing in money. And for some, that fear is a reality. Your first idea may not be a money maker and because of that you need a contingency plan. Here are a few ways you can start a new construction business and deal with the money issue:
Start The Business Part Time – by maintaining a full time job and starting the business part time you’re leveraging your salary and not placing all of your eggs in one basket. If the business fails you have something to back you up.
Save Your Money Up – if you save your money up over a number of years and build yourself an allowance, it may not matter if your business does well in the first year. You will have an allowance to rely on and can always go back to a job if it doesn’t work out in the first few months.
Financing – banks love small businesses and are more than willing to throw you heaps and heaps of money if you have the equity. Depending on the type of business you decide to start (more on that later), you can leverage your own assets. This should be done in caution, as if your business fails so could your own personal life.
Crowdfunding or Investors – this has become a more popular route in the last few years. Sites like GoFundMe have made getting larges amounts of capital much easier and approachable. If you have an interesting product or service, consider launching a campaign on gofundme. Find a friend or relative that may be able to invest in your business for a percentage.
Whichever route you decide to take, make sure that you have a breaking point. A breaking point is a defined spend amount or date whereby if your business isn’t returning it’s target goal it will be time to change strategies or pack it in.
Registering A Construction Business
This is one of the easiest tasks and most exciting, the day you decide to register. If you live in the United States or Canada starting your own construction business is fairly straight forward. Simply go online ( USA / Canada ) and fill out a few forms and presto, you’re a business owner. Before you do though, there are a few things you need to know:
Sole Proprietorship or Partnership – In most countries these only require a small fee and you can register a business number. These are the most common and easiest to start. If you’re not sure what to start with you should start with this. Don’t branch out if you don’t need to. With either of these your personal assets and credit are on the line, so if the business fails so do you.
Corporation – A corporation in business is basically creating independence for your business. To get incorporated it typically costs more money and you need to get a lawyer involved. What this means however, is that your business is it’s own entity and separate from your personal finances.
Giving Yourself a Presence Online and In Real Life
Before you start a construction business you’re going to be forced to pick a name. Whatever that name is you need to create a brand for yourself and your company so people know who you are. If you need to engage a graphic designer and web developer we recommend you do that. We’ve wrote a whole article on why creating an online presence is important for construction companies, essentially having one allows people to find you.
Having a brand and website or office allows people to recognize who your company is and recommend it to other people. Word of mouth is one of the best types of advertising, whether it’s done online or in person. Leveraging this method requires the above. There are lots of other ways to grow your construction business as well, make sure you try them all!
Starting A Construction Business? Learn To Fail
Above we’ve provided you with some of the basic lessons to starting a construction business. The amazing part about this is you don’t need to be an expert to jump in.
One of the biggest pieces of advice we give to small business owners and budding entrepreneurs is don’t be afraid to fail. It took months to actually get our first customer and a year before we ever even came close to turning a profit. Three ideas and initiatives later we finally have a method that works. But guess what? We failed many times before finding a solution and you need to be prepared to adapt and fail. Don’t get discouraged it’s all part of the process.