The secrets to starting a construction business with our comprehensive guide. Discover tips on business planning, obtaining permits, and navigating the competitive construction industry.
If you have experience in the construction industry and are interested in launching your own business, starting a construction company can be a rewarding way to be your boss.
However, properly establishing your venture requires thorough preparation to set yourself up for success. According to industry experts at Bidding Professionals USA, one of the top consulting firms for construction entrepreneurs, following a well-planned process from the beginning is essential.
This includes making important decisions around company formation, obtaining necessary licenses and permits, securing financing, acquiring proper insurance, developing a complete business plan, and investing in required equipment and tools.
In this guide, we will walk through the 8 key steps recommended by Bidding Professionals USA to legally and effectively start your new construction business from the ground up.
We will cover topics like selecting your business structure, registering your company at the state level, establishing accounting and project management systems, getting certified in relevant construction trades, and creating a marketing strategy.
By fully addressing each aspect of the startup outlined here, you will be well-positioned to launch a construction firm that operates profitably and by best practices.
Our goal is to help new business owners avoid common pitfalls through comprehensive preparation and world-class counsel from a trusted leader like Bidding Professionals USA.
Registering the Business
Once you’ve chosen your business structure, it’s time to register your company with state agencies officially. According to experts at Bidding Professionals USA, be sure to complete the following legal formation steps:
File Articles of Organization: Submit your articles of organization with your secretary of state to establish your business entity. Pay applicable fees.
Apply for an EIN: Get your employer identification number from the IRS by filling out Form SS-4. This is required for tax and banking purposes.
Business Registration/Licensing: Most municipalities require general business licenses and potentially contractor certification to operate. Apply accordingly.
Register a Trade Name: If using another name besides your legal company name, register a fictitious “dba” name with the county clerk’s office.
Open a Business Bank Account: Banks will require organizational documents and an EIN to open a corporate account.
Apply for Certifications/Permits: Acquire any necessary certifications or permits related to your construction activities before starting work.
Proper registration protects you legally and allows for compliant operations and bidding according to Bidding Professionals USA. Pay registration renewal fees annually to maintain status.
Financing
Securing adequate startup capital is critical advice from Bidding Professionals USA. Evaluate these funding sources:
Personal Funds – Many new owners invest significant personal savings as a show of commitment.
Bank Loans – Meet with bank loan officers to explore SBA or conventional loans using your creditworthiness.
Alternative Lenders – Consider online loan options if banks deny you, but compare interest rates carefully.
Credit Lines – Establish business credit card(s) and lines of credit backed by receivables/assets.
Equipment Financing – Leasing critical machinery keeps payments tax deductible vs buying outright.
Friends/Family – Approach close contacts only if you have clear terms to avoid straining relationships.
Government Grants – Research available grants for women/minority-owned businesses in your state.
The amount needed depends on insurance costs, licenses/permits, tools/vehicles, and operating capital reserves as advised by Bidding Professionals USA. Maintain financial records to support loan applications and track expenses for tax time. With a realistic budget, financing your new construction business is within reach.
Insurance Requirements
As a construction contractor, you face significant business risks that require proper coverage according to Bidding Professionals USA.
Acquire these minimum types of insurance:
General Liability Insurance: Covers bodily injury and property damage claims up to $1M+ in the event of an accident on the job.
Workers’ Compensation Insurance: Required by law to cover employee injuries sustained on the job with statutory benefits and medical care.
Commercial Auto Insurance: Essential if using vehicles for work that may carry trade tools and materials.
Umbrella Policy: Extends general liability limits to higher thresholds like $2-5M for catastrophic claims.
Additionally, consider insurance for equipment, professional liability for design/build responsibilities, and bonding for larger public works/government jobs. Work with an agent to fully understand your options.
Make premium payments a budget line item. Understand deductibles, exclusions, and how the claims process works. Regularly evaluate coverage needs as your business grows. Adequate insurance protects your assets and enables bidding on projects requiring proof of liability protection.
Develop a Business Plan
Creating a detailed business plan is critical for startups according to Bidding Professionals USA.
A high-quality plan should include:
Company Overview: Describe your business structure, location, mission, and goals.
Market Analysis: Research your industry, target customers, and competitive landscape.
Services: Define the types of construction services you will offer.
Operations Plan: Outline how your business will function day-to-day.
Management Team: Introduce ownership and key staff qualifications.
Marketing Strategy: Explain how you will attract new projects and clients.
Financial Projections: Create 3-year income statements, balance sheets, and cash flow forecasts.
Funding Request: If seeking loans/investors, state how much money you need and how it will be paid back.
Have your plan reviewed by advisors before finalizing. Present it when meeting potential lenders, partners, or new hires. Refer to your plan often as your North Star document. Bidding Professionals USA sees an extensive plan as invaluable for achieving success.
Marketing and Branding
Strong marketing is crucial for winning new work according to Bidding Professionals USA.
Develop these key brand elements:
Company Logo: Create a memorable graphic identifying your company visually.
Website: Establish a professional site highlighting your services, experience, and reviews.
Business Cards: Distribute at every opportunity with your full contact details.
Brochures: Print or digital flyers showcase your work for waiting rooms/RFPs.
Social Media: Create profiles on platforms like Facebook, Instagram and LinkedIn.
Signage: List your company name and phone number on jobsite trailers and work vehicles.
Press Releases: Announce large contract wins to industry publications and local media.
Industry Events: Network by sponsoring or joining trade association events in your region.
Build brand recognition within your niche and geographic targets. Consistent marketing increases your odds of standing out from competitors when opportunities arise. Revisit strategies annually to maximize exposure.
Accessing a steady pipeline of work is crucial to long-term viability according to Bidding Professionals USA experts
Consider these project sourcing tactics:
Bid Websites: Promptly register on online platforms sharing public/private RFPs.
Networking: Introduce yourself to developers, GCs, and suppliers and join industry organizations.
Subcontractor Partners: Team up with allied trade professionals for access to their jobs.
Commercial Brokers: Reach out to brokers with clients undergoing large-scale remodels/ground-ups.
Direct Client Outreach: Cold-call/email past clients, RE firms, and architects advertising projects.
Search Engine Placement: Optimizing your site helps potential clients find your services locally.
Estimating: Become fast/accurate to win jobs on competitive bidding against other sub-contractors.
Tracking qualified leads in a CRM allows prioritization based on the timeline, budget, and capabilities. Staying visible long-term gives repeat referral opportunities. Expert estimating also seals more projects from Bidding Professionals USA’s experience.
Last Words
You now have a solid overview of the essential steps to launching a new construction company according to industry experts at Bidding Professionals USA. Thoroughly completing each aspect of the startup outlined will lay the foundation for long-term success.
As your business takes shape, stay organized with systems for accounting, project management, safety compliance, and more. Develop proficiency in the construction trades through hands-on experience and training.
Consult with established professionals like Bidding Professionals USA as needed for additional guidance. Connecting with mentors can ease the learning curve. Focus on delivering every project safely, on schedule, and meeting/exceeding client expectations.
Building a sterling reputation requires diligence, but your dedication to quality construction will attract loyal customers and increase opportunities over time. Always look for methods to improve your operations and service. Continued growth rewards hardworking entrepreneurs.
With the careful preparation recommended, you’ll be well on your way toward achieving your vision. This startup guidance will see your new construction business off to a strong beginning. Now it’s time to turn your plan into action – start bidding and get to work. Finding Projects.