One of the first things to consider before starting your own construction company is financing. If you do not have available funds to purchase materials, tools, and labor, you will need to arrange financing for the start up of your company. You also need to make sure you have a contractor’s license and bonding insurance to protect you.
The amount of financing you need will vary greatly depending on the size of the construction projects you intend to start out with. If you are performing small jobs such as remodels, additions, or decks, you might be able to purchase materials and tools on credit. Remember that interest eats away at profit, so be sure that you can meet a completion date and collect your fees from your clients in a timely manner.
It is extremely important to have an understanding of cost estimation when you bid a project. Underbidding yourself to get jobs will soon eat away at your profits and eventually doom your success. However, if you bid too high, your more established competitors will beat you out. If you do not know how to bid competitively, you should either develop the skill or hire someone who is knowledgeable about construction estimation.
With funds available for purchasing materials, insurance to cover potential accidents, and clients, you will have to turn your attention to your craft force. If you plan to be on site at all times overseeing the construction process, you can easily manage your craft force. If you intend to work hands off, you’ll need to hire someone experienced at leading a crew of workers to make sure the job is done right and according to schedule.
Start with small jobs and advertise by word of mouth. Do a good job for your initial clients, and they will spread the word. Ask to place temporary signs at a completed site for advertising purposes as well. Make sure you have someone available to provide estimates for potential clients without holding up current construction projects. As your company grows, you can hire additional personnel to assist with certain jobs.Be sure to develop a good relationship with building inspectors in your area and to have both a business attorney and an accountant at your disposal should you need their services. Careful planning and attention to detail will ensure that your construction company stays afloat during the roughest first two years of operation. With a qualified craft force and a desire to succeed, you can grow a solid small to mid-sized construction company within five years.