So, you want to start your own construction business. Before you jump in you should make sure that you’re ready, and the one tool that ensures that you’ve thought everything through is your business plan. You’re now thinking “I don’t want to write a big document outlining every detail of my business – it’s a construction company! We build stuff!” You are 100% correct. That level of detail is ridiculous for most companies (even ones who make great construction software) – and especially so for trades. But unfortunately “Build something. Get paid.” isn’t really going to do it. What about contracts? Change orders? Billing? Payment terms? You need to at least THINK about these things in advance, and ideally write them down. Writing them down buys you two things:
- Putting it all into words will clarify in your mind what your plan is. You start thinking about something – let’s say change orders for example – and questions start to pop up. Am I going to charge for every change order? Get a signature confirming what is to be done? Store that data where? These things get clarified quickly and easily.
- You can refer to them on occasion to be sure you are still on track, and modify as necessary. Not only does it keep you organized, but in addition – and trust us on this one – it’s very satisfying to look at a simple business plan a year after you have written it, and see that very little has changed. Give you great confidence.
You’ll also need to decide which type of business best suits your needs. These options range from a sole proprietorship to a limited liability company, to a full fledged corporation. They all have their pros and cons so make sure to do your research and to consult an attorney or accountant. The cost of getting professional advice is well worth it at this stage of the game.
Starting your own construction company requires help
Another thing you’ll need to have to start your business is capital. There are many ways to obtain this start up cash, including personal savings, loans, and credit cards. Be sure you budget properly and are realistic in your financial needs. The last thing you want to do is run out of money before you get the company on its feet. What’s more, once your construction business is up and running you’ll need to have enough cash on hand to float you until your billings are paid. As you probably know, in the construction industry bills are not necessarily paid on time, so you may need extra capital on hand to make sure that you don’t default on your payments.
Once you complete your business plan, map out your company goals, decide on corporate structure, and secure financing, you are ready to become the owner of your own construction company. And with a little hard work you can fulfill that most elusive of dreams — becoming your own boss. Good luck!