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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
What Does It Take to Start a Small Construction Company?
The construction industry is booming. And experts from the National Statistics are predicting that this growth will continue to grow.in the US alone, it is predicted that the construction industry will reach a 1.4 trillion growth by the year 2020.
With this positive upward trend, it is no surprise that a lot of people are looking to capitalize on this and want to join the bandwagon by opening a construction company. But what does it take to open a small construction firm? Here are some ways that may help you get started.
- Familiarize yourself with the Industry
If you’re not already familiar with the AEC Industry, then there is no time like the present to do so .Get yourself mentored by people who are already familiar with the industry or attend seminars or short courses that can orient you about the industry.
Also acquaint yourself with the technologies that are used by the AEC industry which includes new materials used in construction, 3D printing, VR technology to name a few.
It might be a good idea as well to look at construction project management software for construction which can help a lot in making you competitive. And if you are interested in using software for your company, you might want look around the market for the best project management software for small construction company.
- Write a Business Plan
Any good business starts off with a good solid business plan. This paper is like a road map for your business and tells you how, when and why you’re starting the business. And it also tells how you’re going to get there.
Writing a business plan is typically the same format as writing a business plan for any other business. When you’re done with writing, refine it by getting feedback from industry experts if you can.
Don’t worry too much if you are not that good in writing papers. Business plans usually comes in a typical template that you can download from the internet which takes the guesswork out of what to write.
- Get Financing
If you don’t have the monetary capital to start the business, then you might have to think about taking out a loan.
Make a list of the banks that you think might give you a loan. Talk to the banks and find out as much aa you can about how it works, as well as their interest rates. The requirements for a loan can vary from country to country but almost all banks require a business plan that you would have had done by now.
- Get Permits and Licenses
Aside from the typical business permit that all businesses need to have regardless of which country you choose to operate in, you have to get permits depending on what kind of service you want to operate. For example, you may need a tradesman license if you want to offer services like HVAC, plumbing, electricity etc. Make sure that you ask the specific locality of the business that you want to operate in.
- Get Surety Bonds
Usually businesses that operate in construction need construction bonds so that they can operAte legally. This is called a surety bond and can be purcHased thru a third party provider. This provider basically tells your client that they will pay them should you ( the construction company) are unable to fulfill your work obligations as stipulated in the construction contract.
- Insurance
Insurance is an important part of any business, and depending on what kind of construction business you want to run, you might need few types of business insurance. Again check the laws of the country that you live in to see which ones you need to carry to operate
To start you off, here are some of the business insurance that you may want to look at: vehicle and property insurance, general liability insurance, workers compensation insurance
- Hire Employees
Construction needs workers so that it can implement projects. Generally, a construction company gets its labor from a few sources- hired. Employees, sub-contractors and independent employees.
Before you hire your first employee make sure that you familiarize yourself with the labor laws of the specific country that you live in . In addition to this, make sure that you are familiar with the tax requirements for employees in your particular country.
Successfully setting up a construction company is undeniably hard, but it is only the first step in the journey as a construction entrepreneur. The real challenge lies in your ability to adapt and compete in the extremely competitive construction industry. But, with grit and determination nothing is impossible.
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