Starting your construction is both exciting and intimidating. There’s so much to convey to the public and get done as a business, it can be challenging to set yourself up for success. Nearly 90% of construction companies fail within their first year of business. This isn’t because they don’t have the skills to work in the construction industry, but because running a business consists of a lot more work than most people think it is. With that in mind, here are five tips for starting your own construction company:
Outline Your Construction Company’s Speciality
The first move when starting your own construction company is always to outline what you want your company’s specialty to be. It can be as broad or as narrow as you want, as long as you take the time to identify it. The construction company industry is thought to be divided into three specialty sectors.
The first is industrial projects, which will typically include large manufacturing facilities, mills, chemical plants, or power generators. The second sector is the infrastructure sector. It’s also known as heavy engineering, as the projects typically involve large-scale public work projects, such as roads, bridges, highways, dams, and utility spaces.
Lastly, the building sector can be divided into two parts; the residential building sector, and the non-residential building sector. While it’s not unheard of for construction companies to dabble in multiple sectors, it’s usually after years of focusing on one sector.
Draft A Business Plan
Fortifying your business plan is essential to the early success of your construction company. Business plans typically aim to communicate five pieces of information. They will provide a description of your business, introduce an analysis of the market your business will compete within, detail your marketing plans, highlight your human resources requirements, and review all your key financial information such as budget and funding plans. If you or no one else in your company has no history of writing and formatting professional business plans, you can always look to hire help from businesses that specialize in this practice.
Register Your Construction Company
With a business plan intact, your next step is to register your construction company as a business. This makes it a legal entity that provides numerous legal benefits such as personal liability protections, and tax benefits. It’s fairly simple to register your construction company with your state and local governments. Most only require you to register the name. It’s important to note, however, that some states don’t provide your business’s Employer Identification Number (EIN) or federal tax ID. You’ll need these for tax purposes, of course, but also if you wish to trademark your business’s name and logo. For trademarking you’ll need to reach out to the United States Patent and Trademark office. The cost to trademark your construction company’s name will range between $225 and $600, depending on the trademark class.
Ensure Your Funding Plan is Solid
Securing a healthy amount of funding is essential when starting your own construction company. Construction companies demand a high overhead for labor and supplies. There are numerous ways to apply for funding, you just need to know how and where to do so. SBA loans are a sure-fire way to get funding for your own construction company. It’s usually the first stop for small businesses looking for funding, for good reason, as the program strives to ensure small businesses can get their feet off the ground. SBA loans can take up to 90 days to get approved, so it’s important to be on top of your deadlines and file sooner rather than later.
There are two SBA loans to be aware of when looking into funding for your construction company. The first, the SBA7(a) loan is a program that helps fund operational expenses. Examples of these expenses are purchasing supplies, equipment, or real estate. It also can be used to refinance any existing debt.
The CDC/504 loan is geared toward funding land purchases, improving the business property, or buying long-term equipment. You might consider rental machinery before you dive into a CDC/504 loan and buy your equipment outright. For example, construction crane rentals tend to provide a better ROI when you’re just starting out, and you can use your SBA 7(a) loan or other loans towards rental fees or paying off rental equipment.
Invest in Marketing
A strong marketing strategy is pivotal to getting your construction company up and running. There are numerous forms of marketing your company can look into, but one that you absolutely should include within your marketing strategy is social media marketing. Executed correctly, social media has made it incredibly easy for companies to reach large, local audiences.
Social media marketing is essential to boosting community awareness and sales for your company. Make sure your business is present on multiple social media channels and your profiles are kept up to date with the goings-on and offerings of your construction company. Post photos of finished projects, run promotions and highlight your clients. By doing this, you’ll be sure to grab the attention of folks eager to give your business a shot.
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