The requirements for entering the construction industry have changed a lot since the ’70s. There are hurdles that no one could have predicted, with a lot of fresh competition going head to head. Getting into the industry without doing your research will guarantee failure, especially if this is your first time on the block. As the newbie on the block, take these ten steps as a guide before you commit to anything long-term or serious.
10. Have Double The Startup Costs
Running out of funds will bury any business. In the construction industry, it means layoffs for workers. There is nothing more unproductive than a bunch of workers wondering if they will get the axe. Whatever you think you need to allocate to start a construction company, double it. That way when the worst of it comes, you’re prepared. Money in reserve keeps the business moving no matter how bad things get with work.
9. What Is Your Vision?
Do you want to build things? Break things? Whatever your company stands for, put it in writing. This ‘vision’ will be on your website along with relevant information about the company. Anyone searching for a construction company will want to see this. For consumers, price is the first thing they look at. When you are handling work for a larger company, the vision may end up securing the contract. It’s a small but necessary detail that goes into making any business successful.
8. Research The Target Area
There are plenty of areas that could use some construction work but don’t have the capital to fund it. Just because you see a bad street on a block in the neighborhood doesn’t mean the residents or the city will provide the funding. Locate an area where you are most likely to get work and ensure that it lines up with the work your company offers. You should also check the surrounding areas, and be open to the option of doing work away from your comfort zone.
7. Acquire Reliable Financing
Remember, whatever you think the company needs in financing, double that amount. Of course, this complicates things the higher the loan amount is. But the key here is to not panic and go with a shady loan company. Seek out reliable sources of financing and never put your company or workers in jeopardy with loan sharks. If you want your company to fold after it gets off of the ground, then choose a lender with a bad history. It’s a guaranteed bad experience for all involved.
6. Check Your Employees
Gather all the information about your employees before fully committing to them. That means knowing what your max roster is going to look like while also figuring out the minimum number of workers needed. Both of these stats will become helpful at times when work is fluctuating in one direction or the next. Flexibility is important with this aspect, and no two businesses will have the same numbers. For reference, look at similar construction companies in areas where you are most interested.
5. Buy Good Equipment
This is the most important part of the construction business. Your equipment is the lifeblood, and without it, no one will take you seriously as a company. There are a key number of places you can go to get construction equipment. Fortunately, just like other industries, there is the option to get it at a discount. This means there are plenty of things in your price range that would otherwise be out of the ballpark. Invest your time into an auction site to bid today and gain access to an entire inventory. You’ll save money upfront and can use it for other parts of your growing company.
4. Register Your Business
A properly registered construction company is one that has a marketable name, structure and IRS filings. You will also need to pay any associated fees and follow the requirements for the state you’re in. This can be a lengthy process, so don’t make it longer with typos. Double check all of the information before it goes into the system or you will have the worst time possible when changing it.
3. Don’t Buy Cheap Insurance
Accidents are expected, especially in the construction industry. Established businesses have reputable insurance companies backing them. In construction, this is especially important to protect the worker, the company and the client. Some companies will refuse to do business with you based on your current insurance. Regardless of quality, make sure that your current insurance meets the requirements of the state you operate in.
2. An Explanation Of Surety Bonds And Permits
Make an image of these two things in your mind and make it a point to never forget. Surety bonds are a requirement in many states and it guarantees payment if you can’t complete work on time. Without it, there is a lot of legalese in place to prevent you from starting work. Permits are required everywhere, with the trick being that bad research can half an entire project. Make sure your permits are up to date, and always cross-reference the information with their digital counterparts.
1. Workplace Safety Should Be A Top Priority
Workplace safety keeps your workers active, alert and safe. Whether it is a video or extensive manual, a construction company should hammer home the importance of workplace safety. It not only prevents injuries but saves lives. If possible, develop a workplace safety plan before you even consider registering your company. It will prove to potential lenders that you are serious about being a legitimate construction business.
Starting a construction company is completely different from being a construction worker. Your past experience as a worker will only get you so far when starting your own business. And without good equipment, your business is already on the path to failure. Make it a point to secure your business, hardware, employees, and tools in the best way possible.