Getting a construction business off the ground takes time and hard work. You’ll need to create a business plan, wade through local and state registration, find the right staff, and develop a marketing strategy that sets your company apart.
Establishing a construction company is more challenging than it looks, so start early to ensure you have the best chance at success. These five critical steps will help you get started on the right foot.
Find a Location
Whether you operate out of a pickup truck or a dedicated office space, finding the right location for your new company is the first step to success. The site must be convenient to clients, employees, and suppliers and provide enough space for your equipment and office personnel.
In addition, the most critical factor is identifying and attracting the right people. A solid staff is essential to a successful construction business. This can be accomplished by setting a budget for hiring and implementing a formal hiring process.
It would help if you also did market research to identify your company’s best locations. This includes determining which neighborhoods are most attractive and examining current trends in the construction industry in your area. The most obvious way to do this is to conduct construction industry surveys or speak with local contractors and builders about their experiences in the industry. In the end, you will be able to determine which areas have the most potential for growth and what steps you should take to maximize your chances of winning new work.
Register Your Business
Registering your business is the first step to making it a legal entity. This can help protect your assets from business debts, offer tax benefits, and give you legal name and trademark protection.
The process of registering your business will vary depending on the type of structure you adopt and where you operate. Typically, sole proprietors do not need to register their businesses, while corporations, limited liability companies (LLCs), partnerships, and nonprofit corporations must file articles of incorporation and similar documents. There are also websites such as Rollbyadp.com that offer administrative services to process setting up a small construction business.
In some states, a company must also apply for a business certificate called a “certificate of assumed name.”
Once you’ve settled on your business name and chosen the appropriate structure, it’s time to register your company. You can do this online or at a local government agency.
The cost of registering your business will depend on the state and the type of structure you adopt. Some states have filing fees, while others are free. You’ll also need to determine how and where to get business licenses and permits. Fortunately, many states have websites dedicated to this information.
Get a Business Credit Card
Credit cards are essential for a construction company, as business expenses can be unpredictable. They’ll fluctuate based on projects, equipment needs and season.
Pay off your balance in full each month to make the most of your business card. This is an excellent way to avoid paying interest and fees and boost your business’s credit score.
Unlike personal credit cards, business credit cards offer better rewards programs. For example, many small business cards provide cash back on phone bills, online advertising and office supplies.
Some business cards also offer introductory 0% APR periods on purchases. This is especially helpful for a significant purchase, as it can help you save money on interest.
Getting approved for a credit card is essential, as it can boost your business’s credit score and give you access to loans and credit limits that you wouldn’t otherwise have. However, business credit cards can also affect your credit, so it’s important to know what you’re getting into before applying.
Get Your Licenses and Permits
Getting your licenses and permits is one of the most important steps to setting up a small construction company. These legal documents show potential clients that you’re a legitimate business and comply with local regulations.
Your state may have specific licensing requirements for different types of construction. The types of licenses you need will depend on your work and your business size.
For example, if you’re a general contractor, you must get a license before taking on high-value jobs. You also need a license to hire subcontractors or advertise your services.
You must go through your local city or county agency in New York for most licenses and permits. Some municipalities have additional requirements as well.
Before starting any construction projects, you’ll also need to obtain several insurance types. This includes liability insurance and workers’ compensation insurance. In addition, some states require a surety bond before starting any project.
Get a Bond
Bonds are financial instruments that allow a company to borrow money for a certain period. In exchange, the company must pay back the loan amount and interest at a specified rate.
Many types of bonds are available and have other risk levels and obligee expectations. The surety companies that provide them set rates based on these factors.
In the construction industry, a contract bond is typically needed for any job worth more than $150,000. It guarantees that the contractor will complete the project to the owner’s specifications.
General contractors are often required to obtain these bonds on larger projects. Still, some smaller or less established subcontractors can be exempt from the requirement depending on their reputation, longevity, and financial position.
The best way to get a bond is to approach a surety agency and ask for one. They will then assess your company and risk level and find the best type of bond for your needs. They will also help you obtain the best rates, which may be lower than you would have found on your own.
