Starting a general contracting business is a good way to earn your living. This can be even better if you are good at managing people and doing manual construction work. Statistics indicate that a general contraction in the US earns an average salary of over $80,000. That means you have the opportunity to earn more money if your business grows.
However, not everyone is well suited to start this job. You’ll need to know the ins-and-outs of the industry, as well as understand how to manage the business. So, if you think you can manage a general construction business, here’s how to start your business.
Create a business plan and marketing strategy
Most people don’t like the idea of having a business plan or marketing strategy because of their complicated nature. However, did you know that a business plan and marketing strategy for your general contracting business doesn’t have to be complicated?
A business plan should be the guide to direct your business from the initial steps to where you need it to be. When writing your business plan and marketing strategy, think about the services that you’d like to offer. Do you want to handle remodels and home additions for people living in middle-class neighborhoods? Or do you have an interest in building luxury homes and apartments?
Now, when you understand the kind of projects you are interested in, think about the owners of those properties. Where do these people work, live, and spend most of their time? Are they on social media—and if so, which platforms do they use the most? Do the property owners participate in charity or community events? Or do they like participating in particular trade shows?
After you determine your ideal customer, you’ll realize that it’s easier for you to write a business plan and marketing strategy. Your business plan will help you get your business started, as well as help you get financing for your business. Your marketing strategy, on the other hand, will assist you to target your preferred customer base.
Don’t forget to identify various ways to source financing for your general contracting business in the business plan.
Get licensed, insured, and bonded
The next thing that you need to do is to protect yourself, your contracting business, as well as your clients. This will happen by making sure that you obtain the relevant permits and licenses, surety bonds, and insurance cover for your business. Here’s some additional information about these three essential things needed for your business:
- Permits and licenses – first, you will need to obtain a general contracting business license for your business to operate. However, you will also need to obtain certain licenses for your business to provide specific services. For instance, you might be needed to get electrical, HVAC, gas fitting, and plumbing licenses for your business to provide these services. The best place to check the kind of permits and licensing required for your business is at your state’s business licensing office. In case you decide to operate your general contracting business outside your home town, you might need to get a home business license from your county or city authorities.
- Insurance – you will need to get different types of insurance covers, depending on the nature of your business, and if you want to employ staff. However, the most common insurance covers that you should get for your business include general liability, property, and vehicle insurance. Certain states will also require a general contracting business to obtain specific insurance, like worker’s compensation insurance, unemployment insurance, as well as state disability insurance.
- Surety bonds – your general contracting business will require construction bonds for it to operate legally. Here, you will be required to make arrangements for surety bonds with a third party. The third party is supposed to compensate your clients in case you fail to do the work stipulated in your contract. However, you must understand that the regulations governing bonds do differ from state to state. Therefore, should research the requirements set by your state, or consult with a professional surety bond agent.
Understand the industry regulations governing your business
When starting a general contracting business, there’s a possibility that you understand the regulations that govern the operations of a construction site. However, do you know the regulations governing the general contracting industry? It’s essential to ensure that you understand the ins and outs of the various regulations governing the industry, as this is the best way to protect yourself and your business.
The experts from the general contracting company, AFS General Contracting advise people to make sure that you are up-to-date with this information by checking the Small Business Administrations (SBA) website. Here, you will find the regulations set for people who operate general contracting businesses.
You can secure labor for your general contracting business from four areas—hired employees, subcontractors, independent contractors, or labor brokers. You will need to identify which option is convenient and works best for your business.
Now, once you find labor, you will need to create an occupational health and safety plan. This plan should follow the Occupational Safety and Health Act (OSHA), which requires employers to provide safe workplaces, without any identifiable hazards.