Research & Refine your Business Idea
The joy and the reward you get from owning your own construction company can be immeasurable, the only problem is setting up a profitable and sustainable construction company that you’d be proud of.
There are a lot of things to consider like getting the much-needed start-up capital. There are also important things like how to marketing your company, bidding and completing projects.
All it requires is commitment and adequate planning, you can be rest assured your construction company will be a huge success.
Before starting any business, it is important you have a deep knowledge of the market. The first thing you have to do is investigate how profitable the construction business is in your area.
Simply inquire from consulting industry publications and check out market trends that talk about the industry in your locale.
Additionally, you can also gather information on other companies that offer the same construction services around you. Get to know basic information like what they charge, their reputation etc. Another great way of getting information is by talking to the residents of the community and business owners.
You have to put the demography of your area into consideration. The reason is that you have to provide services needed by residents that they can afford.
All these details should be compiled together and put into a business plan. With the plan, you can set goals for your construction business and steps to achieving each.
With your business plan, you get a deep understanding of how to start and run your construction business, your target market, the kind of services you’ll provide, your competitor analysis etc.
Should the need arise, you can also present this plan to potential lenders. This is the reason why you should pay close attention and put in detailed work when coming up with the plan.
Creating your Business Website
Most construction companies make the mistake of underestimating importance of a website to their business. The reason is not farfetched, why is because word of mouth and positive recommendations is usually the major way people spread the word.
Most manual laborers would testify on how powerful word of mouth referrals are, this is the reason some construction companies don’t see the need for a website or going online.
On the other hand, if you try running a marketing campaign online, the effectiveness and result you’ll get will surprise you.
The internet is so powerful now that older people now use the Internet when they need certain services. Having stated this, it is a MUST that your company should have a website and a visible online presence, this would go a long way in boosting your company’s reputation.
Just like other industries, the competition in the construction industry is quite tough and if you want to have the needed edge above your competitors, you need a website.
Setting up a website isn’t as hard as it may sound, in fact, many hosting providers have tailored their service around small businesses who may not be tech-savvy. We suggest going with BlueHost to host your website, they’re service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.
Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Check out our full guide on the best and easiest way to setup a WordPress blog here.
Marketing Your Business
At this point, you should keep in mind that the marketing of your construction company should rank high on your priority list, as a startup this would determine the success or failure of your business. You have to ensure that the required budget and time for marketing is provided.
Just like we said above, you should have set up a website for your construction company and it is important the website is user-friendly. When queries on construction are searched for in your area, your website should be among the top results.
You should also take advantage of social media. If you have a strong social media presence you are likely to get potential clients or referrals. On your social media channels, ensure you share pictures and videos of your work. Customer reviews are also important, they should be encouraged at all times as this is one of the things your potential clients will go through.
Printing materials like postcards, business cards, and flyers will also help to market your company. Do not try to cut corners by investing in low quality printed materials as it wouldn’t speak well of your company. You only have one chance to make a first impression.
Hire a graphic designer to design a logo for you and ensure it’s the same logo that is displayed on all your materials. Consistency is key to your branding.
Word of mouth advertising should not be underestimated and this is the most essential form of advertisement. You can put up signs right in front of the house you’re currently working on and on your construction vehicles.
Attending trade shows is also a great way of meeting potential customers. Also, If you have the budget for it, you can advertise in newspapers, billboards, radio and television.
Setting Goals and KPI’s
Because you’re just starting out in the construction industry, you’re bound to face a few of challenges along the way. Irrespective of whether you’re offering general repairs or modifications, commercial construction services or new residential construction, you need to set goals and Key performance indicators to measure how well you’re achieving those business goals and objectives.
For lasting profitability, the goals you set are highly important, here are a few of them.
Organization and Structure
Establishing a sustainable and strong internal structure should be the first goal of a construction startup.
How you organize your company is largely dependent on the size and scope of projects you have at hand. Let’s take an example of a construction company that comes up with its projects and then sends proposals to prospective clients who in turn has to set up a project-development team with various members that have varying skill sets.
Another goal you have to set is to hire the exact workers you need. Keep in mind that hiring the wrong workers can spell doom for your company as word of mouth is very powerful in this industry. You also have to define their job description as this is key in setting up the structure of your company.
Establishing relationships with clients
Establishing relationships with your clients is an important goal you have to set when starting your construction company. If you wish to bid on residential construction projects, it is important you let local residential developers know you’re capable of taking on delivering such jobs.
Developing your body of work
Because you’re a startup, your goals may change from time to time, it could change to developing your body of work or building a good reputation with your clientele.
Setting and achieving this particular goal is extremely vital because it goes beyond just starting the business, it actually lays the foundation for more work in the future. As new construction startup, you could invest in various packages or model homes that you can showcase to clients, this will give them a clearer picture of what they want or what you can offer if they pay for your services.
Plan your Finances
An important aspect of setting up a construction company is planning and financing one. After all, construction is quite costly when you consider overhead costs. Things like rent, supplies, renting or buying equipment, tools maintenance, and running a fleet of vehicles can be overwhelming. But with adequate planning, you should have it all covered.
Luckily, there are various types of loans for small businesses loan that you can access. Some of them come with features like the business line of credit while the others can give you a large sum at once, like the SBA (Small Business Administration) loans. Whatever your financial need is, there’s an equivalent loan to help your business out.
SBA loans are one of the loans most small construction businesses go for. Due to their low-interest rates, flexible terms, and their loan amounts are quite extensive. The only problem is that is loan is sometimes hard to access. Your credit score has to be very good, and you must have extraordinary patience. If approved, it’s worth the stress.
For borrowers find it hard to access SBA loans, equipment financing is another viable option they can access. This kind of loan is given with the aim of helping construction startups buy the required machinery their company needs. The cost of the equipment determines the loan amount and must be used strictly to buy the exact equipment stated.
Business Term Loans
This kind of loan is great for people that require a large sum and have being in business for a while. It can be used to finance your construction business so long your credit score is good, both business and personal, and you meet all their criteria. The interest rate, terms of repayment and amount of money given may vary.
Adopt an Entrepreneurial Mindset
A huge problem most entrepreneurs face is changing from an employee to entrepreneur, this is the major issue most people face when creating their startup.
For you to make this change, your mindset has to change first from that of an employee to an entrepreneurial mindset.
Starting a company as an employee doesn’t guarantee you’ll become a successful entrepreneur, you must change your thinking pattern and style to that of an entrepreneur for you to survive in the harsh world of business.
Becoming an entrepreneur changes the ball game as you’re responsible for the entire company, the buck falls on you for all decisions taken. This is something that doesn’t happen as an employee as you’re only responsible for your tasks.
Entrepreneurs make things happen. If you want to be successful, you have to understand the windows of opportunities close very fast, hence you have to be fast and in the right position to grab them as they come.
As an entrepreneur, you should be detail-oriented and at the same time, set your eyes on the big picture without confusing them or mixing them up. You should be able to spot both traps, potential pitfalls, and opportunities that are strewn along your path.
Learning for an entrepreneur does not end as you have to keep acquiring new information and skills that can help your startup move forward. This is essential in situations where you’re facing fund constraints which happen to most startups. You have to read loads of books, listen to podcasts and various news sources to keep up to date.
Other things to consider when starting your Construction company
For people to see that you’re a professional and for potential customers to have confidence in your business, you have to show that not only are you efficient and organized, you’re totally compliant with all laws, standards, and regulation pertaining to the construction industry.
When it comes to this, do not cut corners, you have to personally make sure that all the required permits, registrations, licenses, and certifications that are compulsory for your business are gotten. These vary largely by locality, city and state. To be on the safe side, you can either hire a lawyer or a consulting company that would take care of everything for you.
First things first, you have to register your company before you consider collecting jobs, make you’re your company name is unique, easy to remember, and is available on the internet and social media. The next is for you to pay the applicable fees and then you choose the best business structure.
You have to select the best business structure if you want to take advantage of the various tax breaks and liability protection each structure has to offer. Most construction companies usually go for sole proprietorships or sometimes partnerships because of the tax benefits attached to it.
Accounting & Bookkeeping:
There are various resources, apps, and software that can help construction company startups, here are a few:
Construction Office Online: provides templates and documents that can be downloaded for free like budgets, invoicing and billing timesheets, estimating schedules, and lots more
Compare Construction Business Software – if you’re searching for the perfect solution to construction. This is the go-to guide as it lists the “Top 10 Most Reviewed Construction Systems”
Construction Marketing Association Blog – It provides tips for marketing your business like a professional.
As a startup the jobs may not come in steady, as first you can hire independent subcontractors and contractors so you don’t have to keep them on your payroll during a dry run. When you start getting a steady stream of work, then you can hire your personal team. It all depends on you, you could hire them part time or full time.