how to start a construction company

How to Start a Construction Company: Tips Before You Get Started

After many years of honing your craft and working for someone else, the entrepreneurial bug bites and you are ready to start your own construction company. Where do you begin in how to start a construction company? Beyond passion for your craft, what else do you need to know in order to start, grow, and sustain a profitable construction company?

Tips To Start a Construction Company

  1. Write a Business Plan – The business plan serves as the guide for your construction company. Thinking through the elements of this plan will help to differentiate yourself from your competition. More importantly, the business plan helps to ensure that you have properly thought through different aspects of running your business. Business plans include executive summary, company description, business structure, products and services, marketing and sales plan, and financial projections.
  1. Secure Licenses and Permits – While all states require their contractors to obtain appropriate licenses to their trade, the licensing laws differ from state to state. Contractors should check with their state licensing board on the exact requirements. Additionally, you will need to register your business with the appropriate federal and state entities because your business and employees will need to file taxes accordingly.
  1. Bonding and Insurance – Many construction projects require their contractors to possess adequate bonding and insurance. The bond helps investors and owners protect themselves in the event of your failure to perform. It is a form of insurance that you will complete your work as specified. On the other side, you will need to obtain appropriate insurance for your business as well. There are several different types of business insurance to cover your work completed, business assets, and employees.
  1. Business Name – In William Shakespeare’s Romeo and Juliet, Juliet exclaimed, “what in a name?” Contrary to fair Juliet, a name is very important to your construction company. Similar to your own name, your business name is your identifying mark. It is how others will reference you. The most important thing about your business name is to ensure that another company is not using it.
  1. Lean and Mean – As a business that is just starting out, you will want to cut out any excess or unnecessary expenses in the beginning. You will need to be scrappy and do many things on your own before you can start buying and hiring. Draw a fine line between resources that you need now and those that can wait.

Tips to Grow Your Construction Company

  1. Leverage Templates – Why recreate the wheel every time? Having standardized templates for bids, contracts, and other construction documents ensures consistency while saving time. Additionally, you can utilize templates for other aspects of your business. Many great websites can be built from pre-made templates to serve as a great marketing vehicle.
  1. Pick your niche – By now you have probably worked on a few projects and determined what hits your sweet spot. Perhaps you enjoy working on residential projects. Maybe you have found that restaurant work is more profitable. The beauty of working for yourself is determining which projects you want to work on.
  1. Building your Team – The more projects you take on, the more you will need to grow your team. You cannot be everything to everyone so you will need to start hiring more people. Your employees, whether in the field and the office, should be competent so you can delegate tasks accordingly. Additionally, they are a direct reflection of your work. Therefore, it is important to select individuals that will represent you well.
  1. Exceed Expectations – Getting the job done is one thing. However, doing exceptional work and providing stellar customer service will give you the keys to the kingdom. When customers are ecstatic about the work you provide, they will turn to you for repeat business. Even better is when customers can refer others to your business. Follow Walt Disney’s mantra, “Do what you do so well that they will want to see it again and bring their friends.”
  1. Network, network, network – Whether you attend industry events or utilize social media, networking is an excellent way to grow your construction company. Subcontractors can network with those in other trades, general contractors, or even owners to grow their professional network. While someone may not have any opportunities for you now, it helps to develop those professional relationships so that you will be top of mind when the right opportunity arises.

Tips to Take Your Construction Company to the Next Level

  1. Always be learning – In every industry, there is constantly going to be something new. There are new products or new methods. It is important that your company take on the culture to “Always Be Learning.” This helps ensure that you and your teams stay ahead of the trends to remain competitive. As the saying goes, “any form of complacency is the kiss of death for the professional.” You should always be finding ways to challenge the norm and address your weaknesses to make your team more efficient and your projects more profitable.
  1. Invest in technology – Technology is one of the ways you can make your team more efficient, and thereby your company more profitable. With the advancements in mobile technology and cloud-based solutions, technology is more readily available to empower your team to adopt more automated, digital processes. Technology adoption does not have to be expensive. It is best to start small on either one project or one thing and then expand to other areas.

For example, perhaps time cards are a manual process that is taking your team hours to process each week. First implement a time solution. Then when you are ready, you can digitize daily reports, then RFIs and so on. It is important to look for a vendor like eSUB who has an integrated set of point solutions that can partner with you for the long term. The last thing you want to do is adopt different point solutions from many different vendors that can integrate.

  1. Invest in people – In the current construction labor shortage, skilled labor is in short supply. It is important to invest in people and create a strong culture to keep your employees. Studies show that employees stay loyal to companies when they have appropriate job satisfaction in terms of compensation and environment. While adequate market compensation and benefits are important to employees, a main source of job satisfaction does not co-relate to finances. Giving your employees appropriate recognition for a job well done or even empowerment and responsibility to make own decisions goes a long way in job satisfaction.


US Small Business Administration