How to Start a Construction Company: 10 Steps to Success

Construction is a popular industry offering an enticingly lucrative average income and the ability to work with your hands. While it’s an attractive industry for entrepreneurs, it also has one of the highest rates of failure for new businesses. Only 36.4 percent of construction businesses last beyond their first five years.[1] Don’t let that bleak statistic deter you, though! Consider it motivation to make your business better than the rest.

If you have decided that starting a construction business is right for you, we’re going to help you be one of the top thirds that make it beyond your first five years. Below, we dive into how to start a construction company by outlining the ten critical steps you’ll want to consider.

What to Know Before Starting a Construction Company

As you begin planning how to start a construction company, there are a few things you’ll want to square away first. These are things like insurance requirements, equipment, and the federal, state, and local regulations with which you’ll be forced to comply. There may be internal obligations you’ll face, like employee and site safety regulations, as well as external obligations, such as any hazard or site notices necessary to post on-site.

Beyond these details, there’s a lot more to consider. Below are the ten critical steps to consider when starting a construction company.

Step 1: Define Your Goals and Set Expectations

Starting a construction company is not for the faint of heart. It takes grit and perseverance. If you’re going to make it for the long haul, you need to have a good reason as to why you want to do it. Whether that’s your passion for the craft, your satisfaction with the end-product, the smile on the face of your customers, or simply knowing you did something worthwhile each day, consider your goals for this construction business and what expectations you have for it accordingly.

Why are you starting a construction company? 

As we touched on, the first question you’ll need to answer is: Why do you want to start a business in construction? There is a nearly infinite number of valid answers to this question, so take the time to find the one that is true to you. What about your company will make you excited to wake up each morning? What will you hold onto on the tough or boring days? This is the foundation of your construction business, so make sure your answer is rock solid.

What services will you specialize in?

Once you decide what makes you and your construction business special, the services you’ll specialize in (and the customers for which you want to specialize in it) should be a bit clearer. If your passion is first-time homeowners building their first homes, you’ll be able to dive into their interests and concerns to decide on a specialty. If you’re more of a commercial builder, your specialties will be different.

Find the services that matter most to your dream customer and build expertise (and hire) accordingly.

How much does it cost to start a construction company?

Next, you’ll need to consider costs. Startup costs vary widely from business to business. It can conservatively cost anywhere from $10,000 to $50,000, or more, to start a construction or contracting business today.[2]

While some costs are universal, such as safety equipment and tools, others are negotiable within your budget. Some flexible cost considerations and factors include:

• The number of people you hire.
• Licenses and business registration fees.
• Equipment: Some pieces may be worth buying outright, but others you may want to consider renting. You may also create an agreement to split the costs and equipment repairs with another company.
• Office space and equipment: Will you need a formal office with computers for business administration, or can you get away with working from a home office?
• Advertising: What will it cost you to build awareness about your business and start building out a customer base?

What do you need to start a construction company?

Starting a business in construction won’t be cheap. Beyond the money, you’ll also need to consider sourcing the proper equipment, sourcing the right experience and expertise, securing licenses, and more. Here are some things you’ll need to consider before starting a construction company:

Construction equipment

Materials, tools, and equipment need to factor into your startup costs. Even if you choose to rent equipment and build the cost of materials into the client’s project price, consider cash flow. If you bill the majority of your costs once the project is complete, as is the industry standard, you may run into cash flow problems.

It’s important to consider what equipment you’ll need to get started, even if you’re later reimbursed for it, before embarking on your construction business journey.

Contracting or construction experience

The next major expense is your crew. While inexperienced teams will initially cost less in wages, they may cost you a lot more in damage, time, and training than a more experienced team. Consider the skills and expertise your clients need, then hire accordingly. There are many ways to do this, but at a minimum, you will need a core crew, as well as some trusted contractors who can help you scale your team quickly for bigger projects.

Ideally, you want to spread your hiring over a range of experiences. Your more experienced crew members can help bring your less experienced crew members up to speed without risking safety, errors, and more.

What licenses do you need to start a construction business?

To start a construction business, you need a few basic licenses. Exactly which licenses you need varies depending on your state, but here are the two basic ones almost all construction business need:

• General Contractor’s License. In almost every state, you need a general contractor’s license to operate a construction business. Next Insurance offers an in-depth breakdown of the requirements by state.
• Specialty Licenses. If you plan to manage specialty work (like electrical, roofing, HVAC, carpentry, plumbing, surveying, etc.), you need a specialty license for each of these services in most cases.

To find all the licenses you need to operate legally in your state, contact ​​your state Contractors’ Board and your local Department of Labor. 

Note: We recommend you wait to apply for these until after you have formally registered your business, but we’ll get more into those details later in this article.

Other certifications and education

Beyond the basics, there are many certifications and education requirements state or local governments may require you to obtain for compliance. Therefore, it may make sense as you start out to outsource some of the specialty work, while slowly accumulating the licenses you need to bring all the work in-house over time.

Step 2: Perform Market Research

Once you’ve defined your goals and set proper expectations for your construction business, it’s time to see how you compete in the market. In all likelihood, there’s a competitor out there already doing whatever it is you’re looking to do in your area. By understanding how they’ve positioned themselves in the market, you’ll be able to make choices to differentiate yourself from the competition. Below are a few basic considerations.

Define your niche and services

By reviewing the market, you’ll see what other construction businesses are out there. Make note of their specialties and services to see if there’s something you can add or specialize in that makes you more appealing to a segment of your mutual customers.

Remember, competition is a good thing. It shows that there’s significant demand for your services. By reviewing and learning from competitors, you have an opportunity to further refine and specialize your construction business.

Define your target customers

One of the best ways to differentiate yourself from the competition is to decide to specialize in a segment of the market, rather than a skill. If you and a competitor have equal skills, pricing, and experience, your target customers are a great way to differentiate.

If your goal is to build single-family homes, for example, you can choose to specialize in homes for young childless couples. You can cater to this hypothetical target market by, for example, presenting home details that offer their dog a high quality of life, like doggy doors, large outdoor spaces, and under-the-kitchen-island pop-out food bowls. 

If your goal is to build out commercial real estate, you can choose to specialize in lab facilities for STEM companies, warehouse space for breweries, etc.

By defining your target customers and honing in on their goals, you can differentiate yourself from the competition, thus becoming the go-to expert for that niche. As the go-to expert for that niche, you’ll stand above the competition, instead of right next to them, in the eyes of your target customer.

Step 3: Choose Your Business Structure

Once you’ve imagined the construction business of your dreams, it’s time to make it real. You’ll need to register the business with your state and local governments. Before you head down to the state or local offices, determine the business structure that is right for you, as well as any partners, investors, or co-owners you may have. Below are details on business structures you may want to consider.

Corporation

A corporation (S-Corp, C-Corp, B-Corp, etc.) is a completely separate entity from you and/or your partners. It can raise capital, own assets and liabilities, pay taxes, and be held legally liable in a way that is completely separate from its owners.[3]

This is one of the safest business structure choices for business owners in a high-risk industry because it offers the best protection against personal liability. A corporation offers:

• Personal asset protection. In the event your business faces a lawsuit or defaults on its debt, your business will face collections and consequences alone. This serves to protect your personal assets from seizure.
• Continuity. If you decide to leave the company, it can continue on relatively undisturbed.
• Investment. You can more easily raise capital from investors in a corporation structure than any of the other business structures because you can issue and sell stock.

On the downside, here are the drawbacks:

• Cost and maintenance. Setting up and maintaining a corporation of any kind is more expensive and cumbersome than any of the other business structure.
• Double taxation. In some corporation structures, you may face a form of double taxation in which profits are taxed first through the business’s taxes, then again as they’re distributed as a personal income tax.

Limited liability company (LLC)

A limited liability company (LLC) is a popular structure because it allows your business some freedoms from liability (hence the name “limited liability company”) while being cheaper to form and maintain than a corporation.

An LLC can be an appropriate choice for a company of any size, whether it’s just you or investors and partners as well. It offers:

• Personal asset protection. In the event your business faces a lawsuit or defaults on its debt, your business will face collections and consequences alone in most cases. This serves to protect your personal assets from seizure.
• Pass-through taxation. Your business profits (or losses) will typically be taxed as ordinary income, which may offer favorable deductions.
• Simplicity and flexibility. Operating an LLC doesn’t require the mountain of paperwork and the complex organizational structure that a corporation typically requires. It’s much simpler and more flexible to maintain.

On the downside, it is more expensive to set up an LLC than a partnership or sole proprietorship.

Partnership

A partnership is the simplest structure for businesses owned by two or more individuals. There are a few different types of partnership structures, one of which is a hybrid LLC and partnership model called a limited liability partnership (LLP). But for this article, we’ll explore a more general partnership, which offers:

• Affordable setup. It’s a great choice for partners who want to test the water before embracing a more formal business structure.
• Pass-through taxation. Partners (outside of an LLP) are taxed for business profits or losses as ordinary income. They are also expected to pay self-employment tax.

On the downside, a partnership, outside of an LLP, offers no personal asset protection.

Sole proprietorship

The simplest structure is a sole proprietorship. This structure is the default if you start business activities without registering as a different structure. A sole proprietorship allows you to operate but doesn’t set your business up as a separate entity. This means you’re personally responsible for all business assets and liabilities.

A sole proprietorship offers:

• Free setup. It costs nothing to set up a sole proprietorship. In some states, you don’t need to officially register as a business right away.

This is a great choice for a low-risk business, but generally wouldn’t be advised for construction or contracting businesses. In step six, we explore how to officially form your business and register it in your state.

Step 4: Plan Your Budget

Once you’ve decided on your business structure and registered it with your federal, state, and local governments, it’s time to put together your budget. Over the next few sections, we consider places you may acquire any needed funding, as well as how to realistically set a budget for your construction business. 

After we’ve covered costs and funding, we consider how to think through budgeting. A huge mistake new business owners make is failing to plan for taxes and other unexpected expenses. These can create a real problem for your cash flow.

Costs to consider:

Before you consider obtaining grants, investments, or loans for your new construction business, you should determine how much you think you’ll need to get started. 

We already touched on some of the major expenses you need to consider in an earlier section. Now, we continue to build on that list with a few additional expenses that you may or may not have yet added to the total.

1. Business insurance

While business insurance is an expense you may want to avoid, it’s one that your construction business will have been glad to have prioritized in the event it’s needed. It’s a necessary expense you can scale alongside your business risks.

There are many types of insurance that your business in construction will benefit from, such as:

• General liability insurance. This insurance can protect your business in the event of property damage, injuries, and more.
• Property insurance. Property insurance can protect any offices you own and their contents from events like natural disasters, theft, onsite damage, or onsite injuries.
• Disability insurance. If an employee experiences a temporary or permanently debilitating injury, disability insurance can help them financially.
• Workers’ compensation insurance. While your general liability insurance will cover an on-site injury, should that injury cause further damages, like a long-term injury or lost wages, you’ll need workers’ compensation to cover the cost.
• Vehicle and equipment insurance. Whether you rent or own your equipment and vehicles, you want to make sure they’re covered in the event of an accident or breakdown.
• Unemployment insurance. Unemployment insurance is mandatory in many states. It covers your employees in the event they lose their job for reasons beyond their control. This is a public benefit that is paid through unemployment insurance.
• Health insurance. Hiring a team usually comes with the obligation you supply them with, or help them obtain, health insurance. While this is a material expense, it is also an attractive benefit that helps you secure the best talent.

2. Incorporation & licensure fees

The next expense you want to consider is the cost of setting up your construction business and securing the necessary licenses. This cost will vary by state, but in general, the stronger your business structure, the more expensive it will be to establish. Similarly, the more licenses and certifications you need, the more expensive they will be to obtain.

If you’d like to keep the costs down, prioritize the “nice-to-have” licenses and the “need-to-have” licenses accordingly. Plan to chip away at the nice-to-haves over time.

Setting up a corporation or LLC, on the other hand, is not an expense that is scalable over time. You need to consider both the initial cost, and any ongoing or annual fees you’ll pay to maintain your chosen structure.

3. Equipment, tools, and service vehicle costs

The next cost to consider is your equipment, tools, and vehicles. You’ll have costs to obtain them, costs to insure them, and costs to repair them. Those costs vary depending on choices like whether you rent or buy them and how well you maintain them.

Many small businesses run into trouble when they don’t have the budget set aside for necessary repairs. To make sure you aren’t one of them, estimate the annual total for regular maintenance, inspections, tune-ups, and repairs. Break that annualized cost into a monthly amount and set it aside diligently each month, even if you experience no maintenance or repairs for several months. This way, the expense won’t cripple your construction business down the road.

4. Uniforms

While not an incredibly significant cost, if you’d like your team to wear uniforms, it’s a cost to consider. Many states do not allow you to take the cost for a uniform (or anything else needed for the job) out of your employee’s paychecks.

Your crew will, in all likelihood, stain, rip, or otherwise wear out your uniforms, so create a budget to initially supply them, as well as to regularly replace them.

5. Other costs

The other costs your construction business may run into will vary more broadly. Consider costs like your: 

• Marketing expenses (more on this later).
• Business or trade association memberships.
• Professional and legal fees.
• Software licenses needed.
• Trade show registrations (if applicable).
• Lodging and transport (if you’re managing jobs across the country).

Grants for small businesses

To find funding, we recommend first looking into small business grants. Grants differ from loans because they are money given to your business that doesn’t need to be paid back. This is why we recommend everyone look into their options for grants before considering a loan. 

There are a number of loans offered by the SBA, as well as some state funds for which you can apply. Do your due diligence to determine if there’s anything you’re eligible to receive. Eligibility for grants varies dramatically by business, but there are grants for businesses owned by veterans, businesses owned by women, and more.

Loans

The next category of funding options is traditional business loans. Traditional loans offer more straightforward eligibility criteria than grants, but will still require a prepared business plan and application. You can obtain loans through your business’s bank, through the federal government, and through your state governments. 

Consider things like interest rates, payment terms, and loan amounts before you sign on the dotted line. Avoid loans that aren’t discharged through bankruptcy. While we never like to consider the possibility that the business fails, it’s important to protect yourself in the event it unfortunately happens.

Budget your money

Once you have obtained your grant, loan, or investment funding, it’s time to get organized. It’s easy, when you have a lump sum of money in your account, to be a little less meticulous about your expenditures, but it’s important to maintain your vigilance.

Ask your bank if you can easily set up sub-accounts within your bank account to divvy up your funds into different buckets. Here are some sub-accounts we recommend you consider:

• Taxes (federal, state, local, sales tax, etc.)
• Equipment repair & replacement
• Future planning

By setting up separate accounts and keeping the excess out of sight and out of mind, you’ll be less tempted to spend the money you should be saving for the future of your construction business.

Budget your time

Your time is everything. We couldn’t complete a proper explanation of how to budget without mentioning your time budget. By planning your time thoroughly and keeping tabs on where it goes, you can also better anticipate your hiring and outsourcing. To budget your time, here are some tips:

• Write down everything you do or expect to do in a day, week, and month. Estimate the amount of time each task realistically takes.
• Log each task on a calendar app.
• As time goes on, take good notes of the actual time that you spent on each activity.
• Prioritize the tasks you need to handle. Considering how to outsource the things you don’t enjoy doing, don’t have time to do, or somehow just keep pushing off.
• Automate where possible. You can do this by creating templates, creating habits, and batching your work together by responding to all emails in a one-hour window in the morning and evening, then turning off notifications in between so you don’t get distracted.

Budgeting your time, if made into a habit, becomes easier as you get more used to it. The idea is not to get it all right immediately. The goal is to constantly optimize so that your time is organized and your processes are efficient.

Taxes, and other expenses

It’s advisable to set aside 20 to 30 percent of your revenue for taxes. Taxes to consider are:

• Business federal income tax (if you set your business up as a corporation).
• Sales tax (if applicable), both the tax you charge customers and the tax you incur from vendors.
• Personal income tax.
• Self-employment taxes (if applicable).
• Employee taxes (where applicable).
• State income tax.
• Local income tax (if applicable).

Step 5: Write Your Business Plan 

You have decided on who your target customers are, what services you’d like to offer them, how you’re going to compete in the market, your business structure, your startup and operational costs, and how you’re going to obtain the money. Now, it’s time to write it all down. Let’s create your business plan!

What is a Business Plan?

A business plan is a formal document that just about every business needs in some form or another. It helps you get organized and stay focused on what’s important. It also helps you to obtain funds by giving the SBA, your investors, and the bank insight into exactly what you plan to do with their funds.

A full business plan covers a lot of what we’ve discussed so far. As you formalize the structure, a typical business plan consists of the following sections:

• Executive summary.
• Company overview.
• Market analysis.
• Business structure.
• Products, services, and prices.
• Marketing and sales plans.
• Financial plans and projections, including funding.
• Anything else you think is important to your business plan.

Pricing: how much will you charge?

To put your plan together, you’ll need to decide what your prices will be and how you’ll structure pricing. In general, the major difference between a construction business and a contracting business in terms of pricing is:

• Construction businesses tend to work with their customers to put together a budget. They create the scope of work and charge accordingly. Any additional costs are further negotiated and added to the budget or taken from other places and redistributed. Any cost savings go back into the pocket of the customer.
• A contracting business, on the other hand, generally quotes a project price. They then are expected to complete the project within budget. Added costs take away from the margin on the project, while cost savings go into the pocket of the contracting business as additional profit.[4]

How to name your construction business

There’s no shortage of competition in residential and commercial construction. A simple and memorable name that nods to your niche, expertise, and stands out from the crowd helps you gain a foothold in the market. Your name, once established, can be hard to change. It will be noted on your company’s business licenses, contracts, tax registers, marketing materials, and more, so make sure you do the due diligence in picking a good one.

Things to consider when choosing a business name

When choosing a business name, here are a few things to consider:

• Your niche and customers. Is this name something they’ll search for, remember, and trust?
• Your competition. Does your name stand out and differentiate your construction business?
• Your expertise and competitive advantage. Is it clear what makes your construction business special? If not, can you add to the name or tagline to make it clear?
• Simplicity. You want to be memorable. If someone hears your business name, will they be able to remember it, search for it, and find you? (Bonus tip: Avoid misspellings. It can make it hard to find if your company name is shared through word-of-mouth.)
• The domain name and social handles. Is the domain name for your business available? You want to secure a matching domain name to make it simpler to find you. (Note: A domain is the website link.)
• Acronyms and single-line readability. It’s always a bummer when it is painfully clear that a business hasn’t thoroughly thought through its name. Make sure that your name, when shortened into an acronym, doesn’t turn into something vulgar or inappropriate. Similarly, consider how your business name looks when laid out in its (unformatted) domain name. Can it accidentally be read another way?
• Trademarks. Finally, consider running the name through a trademark database to make sure it doesn’t infringe on another business’s property. A quick search can avoid a nasty (and costly) legal battle down the line.

Step 6: Register Your Business and Obtain a License

You now have a formal business plan, an awesome business name, and you’re ready to get your business registered. Registering your business makes it real, both to you and your customers, as well as to the IRS and state tax boards. This step is a big one, so let’s dive in.

Register for taxes

To register for taxes, consider whether or not you need an employer identification number (EIN). Not everyone needs an EIN. Sole proprietors can use their social security number (SSN) instead for tax forms, though you may want an EIN to use for security reasons. Sole proprietors ineligible for a social security number may register for an individual taxpayer identification number (ITIN) instead.

The IRS lists eligibility requirements and applications online. Once you’ve registered with the IRS, check with your state to see if you need a state ID.

Construction regulations to consider

Next, it’s important to consider the regulations to which your construction or contracting business will be subject. According to the global DLA Piper Law Firm, “A construction project may be subject to different laws, depending upon, among other conditions, whether the project is private or public, the jurisdiction in which the project is located, and the nature of the project.”[5]

Consider your structure, target customers, and services to determine where you should build your expertise as it applies to regulation. Here are some examples of regulations to consider:

• General construction law: Consider federal and state common law, statutory law, and regulatory and administrative law.
• License and permit laws: Engineering and architecture licensing and regulation, general contractor licensing and regulation, trade contractors licensing and regulation, etc.
• Health and safety laws: For example, regulations surrounding waste disposal, demolition, explosives and demo, alarms, protective barriers, protective equipment, exposure warnings and monitoring, flooring, walls, and door regulations, emergency planning, gases and fumes, ladders and stairways, scaffolding, signage, ventilation, hazards, etc.
• Environmental laws and assessments: Many federal and state statutes have regulations that protect action that impacts air, water, and waste.

Beyond these, there are additional regulations to which you may be subject on any given job site depending on the job parameters and location.

Step 7: Open a Business Account and Credit Card

Smart management of your finances is crucial for your business’s health and longevity. This is why you should open a business bank account and obtain a business line of credit or a business credit card. 

A business bank account is crucial. Otherwise personal and professional cash flow can mix together, causing a nightmare come tax time. Additionally, it’s easier to pay attention to the cash flowing in and out when personal and business expenses are kept separate.

It’s useful to have an open line of credit to finance projects or equipment, especially in the beginning. You will usually charge your customers a deposit for a project, then bill them the remainder after the project’s completion. In the early days, this may cause a cash flow problem (i.e., needing to hire a crew, rent equipment, or buy raw materials without the cash to do so).

Step 8: Hire Your Team

As we touched on, having a mix of experience ranges can ensure that your liability is reduced on the job site while building the team. Naturally, more experienced team members will cost more in salary than inexperienced team members, but it’s good to consider them as an investment in workplace safety.

You can vary the type of worker you bring onto your team. Some businesses want all full-time loyal employees. This allows them to build a rapport, as well as gives you more control over your brand and their behavior on site. Other companies choose a fully independent team of contractors to swell their business to the needed size by job type. Others choose a hybrid model of a skeleton core crew and outside contractors to bring in when the jobs are bigger. 

Hiring employees vs independent contractors

Here are some of the differences to consider when deciding whether you want a full-time crew, a fully independent crew, or a hybrid of the two.

The risks:

• A full-time crew is expensive during the ebbs and flows of construction. Some months you may be incredibly busy, others may be slower. You’ll have to pay your team regardless. You’ll also be fully responsible for training each person.
• A fully-remote crew is risky for your brand reputation. People who hire your construction business will attach your name to the behavior of anyone on the job site, regardless of the fairness of that judgment. You may still be at least partially responsible for job training depending on the level of experience and diversity of expertise of your contractors.
• A hybrid crew is risky for bigger jobs. You may not always be able to swell or deflate your team on demand. You may run the ship tight-staffed if you’re unable to get enough people on site.

The rewards:

• A full-time crew is best for your reputation. You are in more control of the training, uniforms, and behavior of your crew. There are many additional advantages to having a loyal team that is familiar with your customers, company goals, and job standards.
• A fully-remote crew is great for cost management. The ability to control your costs on a per-job basis can help you manage your expenses.
• A hybrid crew creates a close-knit group. By keeping your full-time crew small, you can create opportunities for leadership within your small crew earlier. You can also keep a better gauge on their individual success, growth, and happiness.

Subcontractors

Subcontractors are specialists who are incredibly skilled and passionate in their field. These are people like electricians, welders, carpenters, concrete specialists, drywall specialists, etc. You will probably need at least one of them on every job site.

To hire a subcontractor, send out a few requests for proposal (RFPs) to get quotes from people in your area. Once they come back in, you need to do some due diligence. Don’t just hire the first or cheapest quote.

Consider the very real possibility that each subcontractor has the potential to delay the job, break a law, and cost you and your client money. You’ll need specialists that are up for the speed and size of the job on which you’re working.

When considering subcontractors and trade contractors, remember that your relationships and reputation are crucial. You want to treat each with the utmost respect. Subcontractors that work well with you and your team are worth bringing from project to project.

Step 9: Get a Simple Payment Software for Contractors

Make sure you can get paid! To start accepting credit cards for payment, you need to get connected with a payment processor. They will create a merchant account for you allowing you to start accepting credit cards and getting paid with them.

Beyond setting up a merchant account, you’ll also need to consider equipment. For some construction businesses, a simple payment gateway (i.e., an online portal that lets customers pay their invoices using a web browser) will do. For others, however, it may be better to utilize a field service management software for easy invoicing (more on this option next).

Regardless, your credit card processor is a partner in getting you paid. Consult with them for information about the best payment software for you.

Utilize field service management software for easy invoicing

Once you’ve decided on your payment processor, consider utilizing field service management software for easy invoicing. This kind of robust system can help you manage everything from payroll to invoicing while tracking expenses and billable hours on the backend.

It’s a customer relationship management (CRM) software that allows you to maintain customer relationships, create estimates, turn those estimates into jobs and invoices, and process those invoices for an easy payment method on your customer’s end.

Step 10: Market Your Construction Business

You are now open for business and ready for customers, only you just need to go out there and find said customers. The next and final step in our guide to creating your construction business is to start your marketing. Marketing is an expense that you can scale up or down depending on your needs, but it generally isn’t one you can skip.

Let’s examine some of the best ways to market your new construction or contracting business.

Website

A website makes your business real to others. Your website is like a virtual address or office space. It’s somewhere people can get answers to their questions, get more information about your services, or get into contact with you.

In 2022, you really can’t get away with not having at least some sort of web presence. Make sure that it reflects your business’s mission, specialties, and brand.

Social media

Next is social media. You don’t need to be everywhere, but it’s important to be wherever your audience is. If you’re targeting first-time home buyers, you want to have a presence on Instagram. If you’re targeting commercial customers, make sure your company’s LinkedIn profile is up to date. Finally, if Gen Z is your target, you may need to enter the world of TikTok.

Wherever your customers are is where you want to be. Figure out where, on the internet, your audience is and meet them there.

Physical advertising

Another powerful tool for advertising and connecting with your customers is physical media. You can send mailers to companies in your area to assess who may be looking for an upgraded office space. You can drop letters in each mailbox in a single neighborhood or apartment building to see who’s interested in their first (or second) home purchase.

Don’t overlook the power of physical advertising, especially if you can customize or personalize it in some way. Most people like to get mail. Beyond mailers, you can also consider adding flyers and business cards to your strategy.

Flyers

Another powerful form of physical media can be flyers. This is a printed advertisement that’s designed to tell your brand story, offer your contact information, and connect the viewer with your website to get more information.

You can optimize further by adding QR codes. These will allow your audience to scan a code and instantly open forms, invoices, your website, and more.

Business cards

Another way to get your information out there is through business cards. You can:

• Place them strategically throughout town.
• Offer them at social gatherings.
• Give them to friends and family.

Surprisingly, one of the easiest ways to get clients that are willing to trust you is to start with your own network. You never know who is looking for exactly what you offer.

Customer referrals

As you get established, customer referrals are truly the best way to grow. You’ll find that one of the biggest hurdles facing a new construction business is getting the trust you need to take on your first job. Once someone has worked with you and had a great experience, they won’t hesitate to recommend you to their friends, family, and colleagues looking for something similar.

A good word from a customer about your construction business goes a lot further than your word about your business. This is why customer relationship management, reputation management, and connections are so important to successful businesses.

Personal connections

As we touched on briefly, your personal network may be the best place to find your first customer. You truly never know who in your existing network is looking for someone like you. By proudly sharing your construction business, talking about what you do on your personal social media channels, or sending out a phone call, text, email, or social media post to your personal connections, you may find some of your best customers. Don’t be afraid to tap into your existing network to find clientele.

Starting a Construction Business: Final Thoughts

By following these ten simple steps detailing how to start a construction company, you’ll be accepting the payment for your first online invoice in no time. After all, starting a construction company is, in many ways, just like starting any other company. You just need:

• A good business plan.
• Strong team.
• Defined niche.
• Your target customer.
• Adequate funding.
• Budgeting plans.
• A handle on compliance.
• Marketing strategy.
• And a way to get paid.

We hope you enjoyed learning a bit more about how to start a construction company with a solid foundation.

Sources:

1. Small Business Trends. “Small Business Failure Rates by Industry: The Real Numbers“. Accessed February 1, 2022.
2. Camino Financial. “How Much Does it Cost to Run a Construction Company“. Accessed February 2, 2022.
3. U.S. Small Business Administration. “Choose a business structure“. Accessed February 2, 2022.
4. Delphi Construction Inc. “What Is the Difference Between General Contracting and Construction Management“. Accessed February 2, 2022.
5. DLA Piper Real World. “General Constructin Law“. Accessed February 2, 2022.