Business plans vary slightly, but they should include:
General Contractors’ License:
Most states will require you to submit an application for a general contractors’ license through the state’s board of contractors. The application typically involves showing proof of a surety bond and workers compensation insurance (more on that below). You’ll also need to submit a fee, pass an exam and agree to a background check.
General Liability Insurance:
Perhaps the most important card in your insurance deck, general liability insurance protects you in case there are any accidents or injuries on the job.
Workers’ Compensation Insurance:
While general liability insurance covers the immediate costs of a worker getting hurt, their injury may result in longer-term financial needs. This could include lost wages or ongoing medical treatment. This is what workers’ compensation insurance is for.
If you have a physical office, you’ll want property insurance to protect your grounds in case of property damage, theft or if a client is injured while on the premises.
Contractor’s Tools and Equipment Insurance:
As the owner of a new construction company, you’ll want to make sure the tools and equipment you invest in are protected from damage or theft. Contractor’s tools and equipment insurance typically covers anything less than five years old.
Builder’s Risk Insurance:
Many clients may require your business to have builder’s risk insurance before working together. Also called “course of construction insurance,” It covers the building from damage while it’s under construction so projects stay on track.
SBA 7(a) Loan:
This loan offers up to $5 million to be used for increasing your working capital, refinancing existing loans or renovating your offices. The payoff term is typically seven years.
This is ideal if you need less than $50,000. You’ll have up to six years to pay it off.
SBA CDC/504 Loan:
This loan offers up to $5.5 million to be used for the purchase of large assets such as heavy machinery. They can be paid off over a 10- to 20-year period.
Renew Permits and Licenses
Your business may need to renew its licenses, permits and other regulations every year.
Search for Potential Projects
Begin searching for potential projects by using lead generation tools like Home Advisor, Dodge or Building Connected. You’ll want a steady stream of leads coming in so you’ll always have projects to bid on.
You can also sign up for government construction projects by registering as a government contractor.
Send Estimates and Bids
Once you have a steady stream of leads in the pipeline, it’s time to send estimates and bids. The more bids you send, the more chances you have of winning new business.
Since many new contractors have trouble creating estimates, consider hiring an in-house estimator to run the numbers while you focus on meeting new clients and winning future business.
Follow Up with Clients
Building trust and solid relationships with your clients will be key to building a construction business that stands the test of time. Follow up on your bids to ensure you’re staying competitive, and check in with your project managers and estimators regularly.
Market Your Construction Company
While maintaining your current client relationships is important, you’ll also want to put effort into growing your client base. Here are just a few marketing strategies new construction companies should consider:
- Run ads on Facebook (for residential)
- Run ads on Linkedin (for commercial)
- Ask for referrals and positive Google reviews
- Create an authoritative website and focus on local SEO
- Create a lead magnet like an ebook or video course to collect email addresses
- Send sales pitches via email and set up sequencing
Additional Resources for Starting a Construction Company
Continue leveling up your construction game by connecting with networks and associations and staying on top of the latest industry news. Here’s a list of vital resources to get you started.