Starting a Construction Business

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Starting a Construction Business

Starting your own construction company can be an extremely rewarding endeavor if you are willing to put the time and effort into it. Those who own construction companies have the opportunity to bid on any jobs that they choose, and once these jobs start coming in, the income opportunities are endless.

At the same time, you will have to put in some long hours, especially when you are just starting out, if you wish to get to this level. Before going out on your own, make sure you are aware of everything you will need to succeed in this competitive industry. Here are a few tips to get you started.

Insurance, Licenses and Bonds

Before you can begin pursuing clients, you will need to complete the necessary paperwork. You will have to start with your license, as this gives you the ability to operate legally. This starts with a general business license, which every business needs, and moves into tradesman licenses, which are necessary to perform certain types of work.

You will also need insurance, which covers general liability, your vehicles and your property. If you run into any claims for property damage or personal injury, this insurance could save your business. Some states might also require you to have workers’ compensation insurance, state disability insurance and unemployment insurance.

Finally, you must be bonded, which means a third party agrees to pay your customers if you do not finish your contractual obligations. Of course, you must pay a fee to gain surety bonds, and they are a necessity in the construction industry in most states. Make sure you are aware of the exact requirements in your area, as you will not earn any contracts unless you follow your state’s regulatory guidelines.

Develop a Business Plan

Of course, your business will only be as successful as your plan, as countless businesses fail every year because the owners have not planned carefully enough. You should also speak with an attorney about the basic business structures and find out which one suits your business. Depending on your goals, you can create a corporation or a limited liability company. If you have other investors, you can also turn it into a partnership.

Come up with Capital

Perhaps the most difficult part of starting your own construction business will be coming up with the money to make it happen. Most banks are highly unlikely to loan you the money because your business will not have an established credit history.

While you can apply for a personal loan, this would put all of the risk on you personally and could cost you everything if the business fails. Some business owners line up clients before they begin and charge everything to a credit card. Others seek business partners for investors before they go into business. Carefully weigh your options, because a lack of capital is one surefire way to have your business fail.

Find Laborers

Unless you plan to do all the work yourself, you will have to find some workers to come on board and help you. When doing so, you can bring on independent contractors, subcontractors, employees or labor brokers, depending on your business structure.

Remember that hiring employees might save you money if you have plenty of work available, but it also puts more work on your table, as you must comply with employment laws. This is another situation where it is smart to speak with an attorney, just to ensure you are doing everything legally.

Buy Used Equipment

One mistake many construction companies make is putting too much money into their construction machinery. No one is going to see this equipment, so it does not matter if it is a little beat up, and there is nothing wrong with buying it used.

After a few weeks on the jobsite, any piece of new machinery will look old anyway, so save yourself some money and buy some used goods. As long as the equipment has been well maintained, you should not have any problems with it.

So Get Started!

This should give you a good idea of what you need to do in your startup. Get a solid plan laid down, and you’ll be good to go! It’s a lot of work and planning, but you’ll reap the benefits if you do it right.


Leah Rutherford, a resident of Chicago, is a freelance writer specializing in career development and small business startup. She also writes about resumes, interviewing, and job search, which you can read on her blog, JetFeeds.