How to Start a Construction Company with expert insights from Bidding Professionals. Discover essential steps, tips for success, and insider knowledge to kickstart your construction company and thrive in the competitive industry.
Starting your own construction company in the United States can be incredibly rewarding but complex. With regional regulations varying greatly, it’s important to thoroughly research requirements in your specific state. According to the experts at Bidding Professionals USA, having a well-structured plan is essential for success.
Bidding Professionals USA is a nationally renowned full-service construction management and general contracting firm based in multiple states. They have extensive experience with commercial, residential, and remodel projects across the USA. The company attributes much of its nationwide success to adhering to core values of integrity, craftsmanship, and compliance.
As the leadership will attest, getting a domestic construction business off the ground requires diligently preparing across legal, financial, and operational domains. From developing state-specific business formations to verifying contractor licensing and securing insurance, significant prep work is involved at the outset.
Develop a Business Plan
One of the most important initial steps recommended by Bidding Professionals USA is to create a detailed business plan. This planning document will help guide your entire startup process.
Describe Your Services: Clearly outline your company’s specific construction services. Be specific about the types of projects and markets you will target initially.
Create Budgets: Develop a 3-year profit and loss projection. Also, create startup cost estimates and 12-month cash flow forecasts to arrange financing.
Establish Funding Needs: Based on your budgets, define how much capital will be required to launch. Research funding options like loans, grants, or owner investment.
Develop Business Goals: Set benchmarks over the next 3 years for jobs, revenue, staffing, and profitability.
Research Regulations: Investigate state and local requirements for your industry like licenses, permits, and certifications needed.
Describe Operations: Outline key processes like estimating, project management procedures, and strategic partnerships.
Analyze Risks: Anticipate potential problems and develop contingency plans to mitigate financial or legal risks.
Create a detailed business plan that demonstrates the viability and structure of your business concept. This foundational document will attract investors and aid crucial later decisions. Solicit feedback from advisors like Bidding Professionals USA before launching.
Choose a Business Structure
Properly forming your business entity is important for legal and tax reasons. According to Bidding Professionals USA, carefully evaluating the options is key.
Sole Proprietorship: Simple but you’re personally liable. Only 1 owner. may offer tax advantages.
Partnership: Two or more co-owners (e.g. General Partnership or Limited Partnership). Easy to form but partners have unlimited liability.
S-Corp or C-Corp: Offers liability protection but is more complex/costly to start & maintain. Owners/shareholders have liability limits.
Limited Liability Company (LLC): Good option that offers liability protection with pass-through taxation. Flexible ownership structure.
Choose properly based on your risk level, financial goals, and funding needs. Consult an attorney to file formation paperwork with your state. Consider costs for compliance, taxation, formalities, etc. to select the best structure for your new construction venture at initial startup.
Register the Business
After selecting your business structure, it’s time to officially register your company. Bidding Professionals USA advises following these steps:
Choose a Company Name: Pick a unique name that conveys your services. Verify availability with your state.
Register with Your State: File the required Articles of Organization/Incorporation paperwork and pay fees to formally register your business in your state.
Obtain an EIN: Apply for an Employer Identification Number (EIN) from the IRS even if starting as a sole-proprietorship. Needed for tax filings and bank accounts.
Register for Taxes: Sign up for federal and state tax identification numbers. Filing requirements differ based on your structure. Consult a CPA.
Register Business Locations: If operating from home or renting a workspace, research local regulations for commercial use of residential properties. Obtain permits.
Once registered, operate formally using your business name. Keep registration documents safely stored as you build out operations. Proper registration establishes your company’s legal identity from the outset, which is important as you begin to serve clients. Bidding Professionals USA highly recommends involving a legal professional.
Insurance Requirements
As a construction firm, certain types of insurance coverage will be mandatory when starting your business. Bidding Professionals USA advises entrepreneurs to prioritize protecting their assets with:
General Liability: Covers bodily injury/property damage claims from clients. Consult a broker to determine adequate coverage limits.
Workers’ Compensation: Required by law. Covers injuries/illnesses employees sustain on the job. Rates depend on your industry/payroll projections.
Commercial Auto: Essential if using vehicles for business. Choose sufficient liability coverage for company vehicles, equipment trailers, etc.
Excess/Umbrella: Provides additional liability protection above primary limits in the event of serious claims. Strongly recommended.
Professional Liability: Growing requirement by larger clients. Protects against errors/omissions in your contracted services.
Equipment/Property: Important if renting space or investing in machinery and business property. Insures loss from damage/theft.
Review premium quotes carefully. Also, check opportunities for group plans and small business incentives. Maintain continuous insurance coverage to protect your new firm and meet contractual obligations as your book of clients expands.
Open Business Bank Accounts
Setting up dedicated business banking allows you to properly manage finances. Bidding Professionals USA recommends the following accounts tailored for new construction companies:
Business Checking: Use for general day-to-day deposits and operating expenses. Look for low/no monthly fees.
Payroll Account: If hiring employees, open a separate account for directly depositing net payroll funds.
Savings Account: Establish a reserve for unexpected costs or self-employed tax burdens. Earn higher interest than checking.
Line of Credit: Contact lenders about securing a revolving line of credit as you ramp up operations. May use for job costs before payment.
Shareholder/Owner Accounts: For S-Corp owners to receive pre-tax income through W-2 wages minimizing self-employment tax.
It’s critical during startup that business and personal finances remain separate for liability protection and compliance. Provide required documents like EIN, business license, and valid photo ID when opening accounts.
Ask about merchant card services too. Proper banking gives you the tools and paper trail to manage growth as a construction company with Bidding Professionals USA.
Start Building a Team
Successful companies like Bidding Professionals USA emphasize the importance of a skilled team to support operations from the beginning. Key initial hires may include:
Project Managers: Oversee job site activities and schedules. Crucial leadership position.
Estimators: Prepare competitive quotes and bids to secure clients and jobs.
Accountant: Manage financial reporting, payroll, and tax compliance as you hire employees.
Administrative Staff: Handle documents, customer service, marketing, and other front office needs.
Field Crew: Hire experienced carpenters, laborers, equipment operators, etc. Safely complete work.
Establish a solid network of qualified subcontractors in all trades for specialized work. Check the credentials of potential hires using resources like national databases.
Have prospective employees fill out standard applications, and conduct interviews, drug tests, and reference/background checks before bringing anyone aboard. Develop a Company Handbook outlining policies and benefits for new hires.
Proper initial staffing allows you to take on larger projects quickly under expert guidance as your brand is introduced to the market with Bidding Professionals USA’s expertise and support.
Marketing and Branding
Developing a strong company presence from the outset is important advice from Bidding Professionals USA.
Take steps to publicly promote your new business like:
Company Logo: Design a memorable logo incorporating your name and design aesthetic.
Business Cards: Print cards with key contact details for networking and leads.
Website: Create an informational site showcasing your services, portfolio, and contact forms. Optimize for SEO.
Brochures: Print one-page company overviews for job sites and initial client packets.
Signage: Install small signs for your business vehicles and any office/job site locations.
Social Media: Establish professional profiles on LinkedIn, Facebook, Instagram, etc., and post regular updates.
Pay-per-click ads: Advertise on Google Search and social platforms targeting your geographic market.
Join Local Trade Groups: Network within your industry through chambers, and associations for exposure.
Bid On Initial Jobs: Market your core services while establishing credibility and references.
Consistent branding and marketing help you get your name in front of potential customers. Prioritize quality over quantity as you build awareness of your new construction firm advised by Bidding Professionals USA.
Training and Certifications
Acquiring the necessary licenses is essential before starting contract work. According to industry leaders at Bidding Professionals USA, pay close attention to:
Contractor’s License – Requirements vary by state but typically involve exams, bonding, insurance, and experience qualifications.
General Contractor License – Allows your firm to independently undertake large-scale residential or commercial projects.
Specialty Licensing – Required for specialized trades like electrical, plumbing, or HVAC work. May entail separate exams/certs.
Municipal Licensing – Some cities/towns mandate additional licenses to operate within their jurisdiction.
Confirm license eligibility requirements based on your intended scope of work and necessary experience. Apply well in advance of deadlines as the process can take time. Bidding Professionals USA recommends retaining experienced advisors to assist with applications.
Maintain active licenses with continuing education and insurance/bonding compliance checks. Random audits do occur, so scrupulously follow licensing board rules. Proper licensing credentialed your new construction firm with the qualifications to bid on larger full-service projects from the very start.
Equipment and Infrastructure
Obtaining proper tools, vehicles, and workspace is vital advice from Bidding Professionals USA. Consider these essential assets:
Hand/Power Tools – Outfit crews with basics like hammers, saws plus specialized machinery if needed.
Vehicles – Purchase trucks, vans, or trailers to transport crews, materials, and smaller equipment.
Heavy Machinery – Rent or purchase based on project types like bulldozers, excavators, scissor lifts, etc.
Office Equipment – Computers, printers, phones, and furniture to operate professionally.
Storage Space – Secure indoor area for inventory, vehicles, and completing specialty work.
Jobsite Trailer – Mobile office/tool storage useful for longer-term job sites.
Software Programs – Consider investments like estimating, accounting, or project management packages.
It’s okay to start small and gradually acquire more as your capabilities expand. Consider temporary rental options available through dealers. Establish vital workshops also equipped to receive deliveries according to Bidding Professionals USA standards. Functioning infrastructure allows you to operate efficiently from the start.
Onboarding Systems
Establishing consistent onboarding practices is essential advice from construction consulting experts at Bidding Professionals USA. Key recommended policies:
Company Handbook – Outline HR policies, vacation/sick pay, dress code, and other rules clearly in writing.
New Hire Paperwork – Provide standard I-9, W-4, and direct deposit forms for tax/payroll setup.
Safety Training – Ensure OSHA compliance with mandatory sessions on proper procedures.
NDAs – Safeguard intellectual property with non-disclosure agreements for all.
Onboarding Checklists – Maintain tracking documents to ensure all legal/policy steps are fulfilled.
Performance Reviews – Schedule regular feedback and goal setting with applicable staff.
Document Control – Implement systems to track permits, drawings, and specs for reference efficiency.
Employee Files – Maintain confidential personnel files securely for reference purposes.
Establishing consistent onboarding procedures provides stability for operations and legal protections regardless of inevitable staff turnover in the industry. Bidding Professionals USA recommends investing in templates, files, and digital systems to transition.
Last Words
As you embark on launching your new construction company, keep in mind the recommendations from industry experts at Bidding Professionals USA.
Thorough preparation in areas like licensing, insurance, safety training, financial management, and developing a professional brand and online presence will set your business up for success from the very beginning.
Be sure to involve experienced legal and accounting advisors to guide you through the compliance aspects of formation, taxation, and ongoing requirements. Pay attention to the details of properly structuring and running your operations.