High barriers to entry into the construction Business that presented by the need to make large investments in the project is do not scare startups. The thing is that if you open a company from scratch and organize all the processes correctly, you can get a high monetary return. Where to start a construction business that could become competitive and highly profitable in the future?
Construction business: buy or organize by yourself?
Buying a ready-made construction business is sometimes more profitable than organizing the same, but from scratch, along with the equipment and trained personnel, the customer base also passes into the ownership of the buyer. And this is precisely the priority, because it is very difficult for beginners to find regular customers. Having decided on such a deal, it is better to hire a qualified lawyer for advice, who will check all the documentation of the acquired company.
It’s more difficult to start your own small construction business, but an entrepreneur can move in any direction, independently choosing an idea that is closer and more understandable to him.
Choosing a promising direction
It is impossible to start a business in the construction market without analyzing it and choosing a promising idea. Many options are possible here, but first you need to decide on the format.
And when choosing what to do exactly, you need to take into account the following third-party factors:
- Demand for a product or service.
- The purchasing power of potential consumers.
- Competition level.
Interesting construction business ideas that can bring high income to an entrepreneur can be represented by the following list:
- Rendering services for the repair and decoration of premises.
- Construction of small structures – garden houses, wells, gazebos. An interesting idea is building houses from containers.
- Provision of services for construction work – digging wells, laying communications.
- Manufacturing of budget building materials – bricks, gas silicate blocks, cinder blocks, facade and decorative tiles of various types.
Your business plan
When developing a business plan, the following standard points should be considered:
- Business structure and management.
- Kind of services that will be provided.
- Types of jobs you’ll bid on.
- Target market.
- The number of employees.
- The initial estimated cost of starting and maintaining the business.
- Important Key Performance Indicators.
Business registration and insurance
Once you’ve drawn up your business plan, it’s important to register your business to make it a legal entity that can provide personal liability protection, legal benefits, and tax breaks. You should take additional steps to register your business at the federal level in order to obtain your federal tax ID or Employer Identification Number (EIN). It will also allow you to register your company name and logo with the US Patent and Trademark Office.
In addition, you need to collect a certain number of documents required for licensing a company. These include:
- engineering license;
- license for the design of structures of various types;
- an official building permit is an important document that is issued by the chief architect of the city and local authorities.
For federal permits and licenses you can select your business activity on the federal licenses and permits page on the Small Business Administration website.
Most states and construction contracts will require you to carry valid workers ’compensation insurance. But you may need types insurances such as general liability insurance, professional liability insurance, auto insurance, and builder’s risk insurance as well.
What kind of staff is needed?
To develop a construction business from scratch as successfully as possible, you need to take care of hiring highly qualified personnel. The most important positions are: director; an architect; procurement manager; foreman; lawyer; personnel inspector; accountant.
This list of personnel may change and expand somewhat depending on the scale and direction of the company. Each of the specialists in the company must necessarily have the appropriate experience and qualifications, be competent in their field. All employees involved in construction work must have at their disposal high-quality equipment and equipment that fully meets all safety requirements.
The most effective methods of attracting clients can be considered:
- Placement of advertisements in specialized publications and on the Internet.
- Recommendations from satisfied clients.
- Collaboration with renowned companies.
- Participation in government and commercial tenders.
Tips for New Entrepreneurs
Many existing companies have been in the construction industry for decades, making it incredibly difficult for a newcomer to break into this market. Such problems are especially relevant in large cities, where the winners of tenders and executors of orders are usually known in advance. In order to find your consumer in such a competitive struggle, you should:
- Plan your actions and pay attention to the development strategy of the enterprise;
- Constantly look for new ideas in the construction business – a company offering a unique and demanded service, from the point of view of the customer, will have undoubted advantages;
- Pay attention to small settlements – companies operating here are often not ready for competition, and therefore inflate prices or use outdated equipment.
Setting up your own construction company is an extremely time-consuming process that requires a constant investment of effort, time and money. To be successful in this area, you need to be proactive, maintain good relationships with clients, and most importantly, maintain high quality standards regardless of the project budget.