When more people are renovating and remodeling their houses, the construction industry has become more lucrative than it already was. While it remains one of the top industries for startups, many new construction businesses end up closing within the first 5 years, just like other small businesses. Fortunately, you can avoid being part of this statistic with enough research and planning and the right business strategy.
Whether you’re starting a business for the first time or entering a new business venture, here are a few steps to get your construction business started.
Create a Solid Business Plan
Business plans are an important part of any business. It helps business owners define their mission, vision, long and short-term goals, and how these goals can be achieved. Having this information handy also allows business owners to create more effective strategies for the different areas in their business like marketing, finance, and operations.
Without a solid business plan, it can make it harder for businesses to figure out how to budget their finances to achieve their goals and attract investors.
Choose the Right Location
Most startups begin their businesses at home, and construction businesses aren’t an exception to this. While this is okay while you’re starting, you’ll eventually want to move to a more official location with an office and storage area to make your business more legitimate. When choosing a new space for your office, it’s also important that you have space for the vehicles and wheeled equipment that you use on the job.
Make It Legal
Once you’ve created a solid business plan, it’s time to legitimize your business. It’s important to make your business a legal entity. It can help protect you from liabilities and allow you to take advantage of the legal and tax benefits of owning a business. You’ll also need the proper certificates, licenses, and permits necessary for you to operate your business legally.
These permits often depend on the state you’re business is located in, the type of construction services you’ll be offering, and the number of employees you have. Licensing your business is likely one of the more lengthy and tedious processes you’ll go through while starting your business, but having these documents will benefit you in the long run by helping you avoid fines and give customers peace of mind.
Insure Your Company
Making sure that you’re covered in case of an emergency or accident is important for any business. It is good to be ready even before you officially start projects. Here are a few kinds of insurance that can benefit your construction business.
General Liability Insurance
Accidents are bound to happen in this area of business, whether it’s property damage, worksite accidents, or injuries. Having this type of insurance can help protect you from facing high-cost lawsuits and also allows you to qualify for leases and contracts.
Workers Compensation Insurance
If one of your employees gets injured on site, this will cover the costs brought about by the accident, such as medical and wage benefits.
Vehicle Insurance
Since construction companies tend to use heavy machinery like forklifts, excavators, and bulldozers, among other things, you’ll need to make sure that the construction equipment you own is insured. This is because equipment can get expensive to replace and easily drain a business’s funds if it isn’t insured.
Property Insurance
This is helpful for businesses that have physical offices. In case of theft, natural disaster, property damage, or even client injury, having property insurance ensures that you’re covered for any of these events.
Invest in Good Equipment
Like with any business, investing in good equipment is important to avoid unnecessary delays and keep your business running smoothly. More importantly, you need to know which kinds of equipment will benefit your business and which ones won’t. Once you’ve figured out the kind of equipment your business needs to run effectively, it’s time to find suppliers who can get you the equipment at good prices.
Fortunately, finding suppliers is as easy as ever and can be done with the click of a mouse. Whether you’re looking for suppliers that sell order pickers for your warehouse or bulldozers to help with excavation work, you can easily find them online.
Create a Network
Part of what makes a business successful is the connections you establish with other people in the industry. Suppliers, fellow contractors, industry professionals, building inspectors- having them in your circle will allow you to seek advice and even ask for help on projects and jobs that you can’t finish on your own.
Construction businesses are one of the hardest businesses to start, but many successful contractors can tell you just how rewarding they can be. And with high closure rates for these kinds of companies, the biggest challenge you’re likely to come across is how to build a strong foundation for your business that will last.