How to Start Your Own Small Construction Company

Saturday, April 5, 2014

How to Start Your Own Small Construction Company

According to the U.S. Bureau of Labor Statistics, the construction industry employs more than 8 million people. Although the success of the industry is closely tied to the housing market --- it was hit hard when the credit crisis of 2007 all but halted new building for years --- small builders, especially those who specialize in niche jobs like energy-efficient design, will always be needed. With careful planning, starting your own company can be a profitable venture. Successful Construction Company owners are above all else good businesspeople, so leave no stone unturned when creating your business plan.

Instructions

1.Create a written business plan. Your business plan should detail which services your construction company will offer, how you will market your company and what tools and equipment you need to purchase. A well-written, workable business plan will highlight any gaps in your plans as well as provide you with the information you need to apply for loans or financing

2.Consider setting up your construction company as a limited liability company (LLC) corporation or a limited liability partnership (LLP) in order to protect your personal assets. Each type of company has its pros and cons, so contact your attorney or accountant for advice. Either type of business can be formed at your Secretary of State's office for a fee.

3.Determine your financing needs. You will need to have funds available to purchase tools and materials, lease or buy vehicles and hire laborers. Many small construction company owners get started using their own credit cards or personal savings. Consider applying for a small business loan through the U.S. Small Business Administration (SBA) or your local bank.

4.Obtain any necessary licenses and permits. Make sure you have an up-to-date contractor's license. Check with your city, county and state to determine their requirements for running a construction company. You might need special permits for specific construction jobs depending on the regulations of your region.

5.Get insured. Construction companies typically need bonding insurance, general liability insurance, auto insurance and worker's compensation. Contact a commercial insurance agent for advice on selecting insurance policies for your construction business.

6.Purchase or lease construction equipment and tools. The tools and machinery you need will depend on the services you plan to offer your clients. General contractors should also lease a small office space where they can meet with clients.

7.Make sure you understand cost estimation. You must have a solid understanding of cost estimation before you can effectively bid on projects. Underbidding to win jobs will only make you lose money. Bidding too high, however, will usually cost you the job. Spend some time learning how to determine pricing structures. Hire someone with experience in construction estimation if you don't feel you can bid competitively.

8.Hire experienced construction workers. You will need to get together a crew of carpenters, masons, roofers, electricians, plumbers and other tradesmen who turn out quality work. You will also need a foreman to manage your construction crew. You can oversee your own workforce if you plan to be on-site all the time. Otherwise, hire someone with experience leading work crews and sticking to a schedule.

9.Hire subcontractors. You will need to subcontract any work that your own employees can't do. Only hire subcontractors who are licensed and have a good reputation in your community. Remember that your clients will attribute any bad or good results to your company.

10.Advertise your construction company. Create business cards, flyers and mailers with your construction company's information and current contact numbers. Start a company website and advertise your construction services and general price ranges.

Things You'll Need

Tips and Warnings

Keep a list of the names and telephone numbers of your satisfied clients. Use these individuals for references. Word of mouth is the best advertising for construction companies

Develop a good professional relationship with local building inspectors. These are the people who will have to approve your work.

Make sure you hire carpenters with solid work records and a high level of expertise. Hiring workers with bad reputations can quickly doom any hope of success for your construction company.

Reference

Small Construction Company

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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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Saturday, April 5, 2014