General contractors are an absolute necessity, and this makes them one of the primary contributors to our economy. Without general contractors, we’d live in a world of chaos, since there’d be no one to construct or maintain our buildings.
With that said, starting a general contracting business is very lucrative. This industry is well known for its limitless customers and scope of work. When starting this business, you can place yourself strategically by putting in place the right business structures, systems, and entities. And, there’s no better time to start a general contracting business in the world than today because projections show a positive growth rate in the industry.
However, it’s important to note that starting a new business is not easy. There are many factors to consider that most people are not aware of—even experienced entrepreneurs. So, if you are planning to start a general contracting business the following tips will help you lay the foundation of your business.
Determine the benefits and drawbacks of becoming a general contractor
When you become a general contractor, you will be responsible for planning and implementing construction projects. Thus, you must know all the different stages of construction, from the start to finish. Besides, you will be responsible for hiring the subcontractors required in different construction projects, and this makes networking an essential skill.
Starting a general contractor business allows you to use your experience and skills, in addition to the freedom of setting your working hours, as well as choosing the projects that you are interested in. While most people would like this kind of flexibility, it’s important to note that it comes with extra responsibilities. You must know how to manage a business, workloads, and your reputation.
So, if you are interested in starting a general contractor business, make sure that you have the following basic requirements:
- The passion and determination needed to start a new business
- Good understanding of the ins and outs of the construction industry, as well as what it means to become a general contractor
- Good managerial skills—please note that you will be supervising many things often as a general contractor
- The equipment required to start and run your business or the means to raise the funds needed to acquire quality equipment
- Understand the risks of starting a general contractor business
Now, if you can answer these questions, it’s time to proceed to the next step, which is;
Draft your business plan
The tenant build-outs experts from AFS General say that a comprehensive business plan will help you establish the long-term goals of your business. Besides, it demonstrates the feasibility of your business. When drafting your business plan, make sure it has comprehensive plans for all the stages of starting your business, as well as the capital required to start the business.
Make sure that it captures everything you believe will lead to a smooth operation of the business. A good business plan should be comprehensive because you must give copies of the plan to different financial institutions if you need to borrow money.
Generally, a good business plan should capture the following components:
- The business name, structure, and management
- Business description, strategy, and concept
- The services you want to offer
- Type of world you plan to do
- Details of your target market
- The number of employees to need to start the business
- The estimated cost of starting the business—make sure you capture the costs of acquiring the needed equipment, business permits, and insurance, among others.
- Financial projections—that is, the profit you aim to make in the first year, the second year, and so on
Get the required legal papers in order
When starting a general contractor business, you must prove that you are efficient, organized, and compliant with the relevant construction laws, regulations, and standards. Therefore, make sure that you know all the licenses, certifications, registrations, and permits required to start and run the business. Once you do that, make sure that you get them from the relevant authorities. However, you should note that these documents differ from one state to another—and this shows the importance of doing your homework. If possible, hire a construction attorney to assist you with this process.
Understand your insurance responsibilities
Take your time to consult with your insurance agent, and discuss with them the insurance coverage needed for your general contracting business. Please note that insurance protects your business assets, as well as your staff, and personal liabilities in case of damage to the client’s property. Both the business and business owner must be fully covered.
Secure financing
Before starting your business, you will need to rent, lease, or purchase tools, equipment, and vehicles. Also, you will be required to pay some bills, advertise your business, and pay your staff. That means you must secure funds before you start bidding for contracts. Therefore, you should start sourcing funds early to avoid unwanted drawbacks down the line.
Determine the kind of workforce you need
Here, you will need to decide whether you need to hire full-time staff or hire contractors whenever needed. Hiring contractors comes with lower costs and greater flexibility because you don’t need to pay allowances and benefits, or continue paying salaries even if they are not working. However, you must consider having some full-time employees, who you can train to manage your business in case you are not available. Clients also like hearing the voice they are used to when they contact your business.
