The U.S. Chamber of Commerce estimates that the average backlog of construction projects for general contractors is just over nine months. With the industry valued at well over $2 trillion and a boom in the housing market, the demand for general contracting services is steadily increasing.
If you have the skills, passion, and expertise for this sort of work, there is no better time than now to start your own company. While the road to running a successful contracting business is long and tiring, it's also financially rewarding. A general contractor website design plan can help maximize profits.
This guide will go over the ins and outs of starting your own general contracting company. It'll cover the major hurdles and the steps involved in running a successful business. Contact Blue Collar Websites for questions about how to start a concrete business.
The Challenges General Contractor Businesses Face in the United States
The competitive landscape of the construction industry in the United States is one of the greatest challenges aspiring entrepreneurs must navigate. It can close down businesses and even create barriers for new enterprises. If you analyze your target audience properly and understand their requirements, you may be able to compete with the existing players.
Besides a highly competitive landscape, there are other challenges that new contractor business owners may face, including fluctuating demand and compliance with state and federal regulations. Overcoming these hurdles will require commitment, strategic planning, and quality workmanship.
The Cost of Starting a Contracting Business
Unlike some businesses with little to no startup costs, starting a contracting company requires capital. You may need $15,000 or more, depending on the tools and equipment you require.
In addition to that, you must pay for general liability insurance, licenses, permits, and even workers' compensation coverage.
Once you start running your business, marketing will account for a significant portion of your operational costs. You'll also need to cover salaries, utility bills, and other day-to-day expenses. Always monitor your spending and prioritize investments in essentials.
If you don't have the money to start a general contracting company, there are many sources of finance you can tap into, such as your friends and family, bank loans, and investors. This also can be useful if looking for guidance on how to start a tree service business.
How to Start a General Contracting Business in Nine Simple Steps
There are many different categories of work under contracting. However, not all of them offer lucrative opportunities for aspiring general contractors.
According to Statista, the buildings and transportation segments accounted for 56.5% and 15% of the total revenue generated by the construction industry in 2021, making these two highly profitable areas to pursue.
Once you've figured out the category, here are the steps that you should follow to start your very own general contractor business:
1. Determine the Services You Plan on Providing
Before you even set up a construction business, it's essential to plan carefully. What services do you plan on providing? Do you intend to work with salaried individuals or strictly businesses?
Thinking about these things can help you draft a business plan, which is the next step in starting a general contracting business. Begin your entrepreneur journey by doing thorough market research.
Learn more about the companies in the construction industry and those offering services near your preferred location. Spend some time gaining valuable information about these businesses. Find out what they're offering, their pricing, payment terms, and so on.
The more you know about your competitors, the better your chances of surviving in this competitive industry. Plus, this information will help you determine your unique selling point, which will make you stand out from the rest of the general contracting companies.
2. Draft a Business Plan
While thinking about the services you plan to offer is a great way to fuel your motivation, the first actual step to starting your general contracting company is to draft a detailed business plan. This document highlights your firm's goals and the methods for achieving them.
Drafting a business plan may sound scary, but there's nothing to fear. Even if you've never created this document before, there are ways to go about it. Most aspiring entrepreneurs either learn more about it from the internet or work with a financial advisor.
A business plan lays the foundation for a new enterprise. It serves as a proof of concept and contains all the information needed to get your company running.
While this document is essential for securing funding, it is also a great way to stay focused on your goals. Research reveals that companies that plan properly grow 30% quicker than those that don't.
Typically, a business plan contains the following details:
Executive summary, business description, and concept
Description of the products and services you plan on offering
Industry, market, and competitor analysis
Details about your target market
Marketing strategies, including details about advertising campaigns
Financial plans and projections
A key thing to remember is that a business plan is not a surefire recipe for success. Your competitor may introduce a revolutionary product, or the economic policies may change. All of this can affect your general contractor company's bottom line.
When creating a business plan, having realistic assumptions and projections is key. In addition to that, you should constantly update this document so you can pivot to a new course if needed.
3. Choose a Business Name
Your general contracting business needs a catchy name that aligns with the brand you plan on building. The right name can help you connect with your target audience and potential clients.
Here are a few tips to help you choose a name for your general contractor business:
Be descriptive but not too vague when choosing a name. Make sure it's something that people can easily remember.
Avoid complicated names, as they can be boring and hard to pronounce.
Make sure to choose an original name, as copying your competitors may not be good for your brand image.
Avoid using your own name, as it may not communicate anything about your general contractor business.
Choose a name with an available ".com" domain, as reserved ones can cost a lot of money.
4. Register Your Business
After you've completed your business plan, it's time to register your company. There are many different business structures to choose from, and some of the most common ones include the following:
Sole Proprietorship
Does the idea of running your own general contractor business without taking orders from others appeal to you? If so, a sole proprietorship might be the perfect option. It is one of the easiest structures to set up, as it's an unincorporated business with a single owner.
A sole proprietorship offers many advantages, including full autonomy, greater flexibility, low startup costs, simplified taxes, and less paperwork. It is a popular choice among small business owners.
However, there are some drawbacks to this type of company structure, such as fewer lender approvals and expensive employee benefits.
While a sole proprietorship is one of the most common business structures, it suffers from the concept of "unlimited liability." This means that the owner will be responsible for the legal and financial issues of their general contracting company.
Partnership
If you like the idea of setting up your own business with a friend or contractor, a partnership may be a good option to consider. General contracting can be challenging, and having someone you can rely on can take a lot of stress off your shoulders.
A partnership requires two or more owners. While it has a lot of similarities with sole proprietorship, it doesn't share the same drawbacks. In fact, it offers greater benefits, including access to capital, more business opportunities, and equal responsibility.
That said, partnerships also have certain drawbacks, and these include the following:
Shared liability
Lack of stability
Loss of autonomy
Exit strategy complications
Potential conflicts between partners
Corporation
When establishing a legal structure, small business owners can choose to register their company as a corporation, which is a legal entity that is separate from its owner. It's a great option to consider, as entrepreneurs do not need to worry about their personal assets being taken in case of bankruptcy.
There are several advantages to forming a corporation, such as personal liability protection, business security and perpetuity, and tax benefits. However, it has a few drawbacks, including a lengthy and expensive registration process and too many regulations.
Limited Liability Company
If you have a lot of personal assets to your name, you may want to consider forming a limited liability company. It's a popular option among general contractors, as this business structure enjoys several tax benefits.
An LLC offers the advantages of a corporation and partnerships. It will keep your personal assets safe in case the general contracting company goes bankrupt.
However, there are certain drawbacks to forming a limited liability company, including self-employment taxes, difficulty transferring ownership, and confusion about roles.
For a general contractor business, a sole proprietorship or partnership are popular options. If you're still not sure which business structure to choose, work with a reputable lawyer.
A business attorney will assess your situation and guide you on the best way forward.
5. Get the Right Licenses and Insurance
The construction industry is heavily regulated, which means there are a lot of requirements that you must meet before you can set up your general contractor business. You must have the right licenses and insurance to provide services legally.
While you will need a general business license, the licensing requirements vary from one state to another. Head over to the relevant state department's website for more information, as you may also require additional permits depending on the type of services you plan to provide.
Since there are different contractor classifications, the process to apply for a contractor's license may also vary. Generally, the requirements include the following:
A written exam
Proof of financial means
Reference letters from banks, previous employers, and colleagues
Proof of on-job expertise
You'll also need a surety bond to legally operate your general contracting business. It aims to protect your clients from financial losses in case their project doesn't go according to plan. For more information on this, visit the Small Business Administration website.
In addition to surety bonds, you will need general liability insurance with additional coverage for your property, equipment, and company vehicles. Work with a reliable insurer to get the right policy for your contractor business.
If you plan to hire employees, you must maintain workers' compensation insurance. This policy protects your workers from financial harm in the event of a workplace accident and shields you from personal injury lawsuits. Be sure to look into this.
Check with the relevant state department about the type of insurance coverage you need. It will help you avoid trouble later on down the road.
6. Open a Business Bank Account
The first payment from your client should fall directly into your business bank account instead of your personal account. There are many benefits to this approach, including the following:
Billing individuals or accepting payments under the business name conveys professionalism and credibility to potential clients.
It helps keep your personal finances separate, protecting your assets in the event of a lawsuit.
Using your business account to conduct transactions to cover your operational costs can help build a credit history.
7. Build an Expert Team
Now that you've set up your very own general contracting business, you need to put together a qualified team. Most contractors choose to hire young professionals to save on costs. However, training them to meet the industry standards can be expensive.
You can hire experienced contractors to work with you on projects, but this can rack up a huge salary expense depending on the number of people you bring on board. Alternatively, consider working with skilled independent contractors.
Whether you plan to hire employees or outsource certain projects to qualified professionals, the decisions you make will have certain tax implications and legal formalities. A business lawyer can help you navigate these intricacies and guide you on the best path to choose.
8. Develop Your Brand
Once you've completed all legal formalities, it's time to focus on your company, create a buzz, and gather clients.
Building a brand is key to running a successful general contracting business, and there are a lot of things to consider, including logo. You don't need to be a designer to do that, as you can hire experts at affordable rates from one of the many freelancing platforms.
If you don't have the budget to work with a graphic specialist, there are many free online tools that you can use to create a simple yet impactful logo. Think about the colors that represent your brand and incorporate them during the design process.
You also need to promote your contracting business. The best way to do that is to reach out to your friends and family to spread the word. Also, make sure to allocate a budget for marketing strategies.
To run a successful general contracting business, you need to consider networking. Join events and seminars aimed at contractors and speak to the other professionals at the venue.
Connect with like-minded individuals on LinkedIn, share ideas, and discuss potential projects. These types of interactions will keep you up-to-date with the construction industry and establish yourself as a leader.
9. Establish an Online Presence
In today's digital world, having an online presence is crucial. People turn to the internet for everything, whether it's buying a product or seeking a service. If you're not on the first page of the search engine results page (SERP), you're going to miss out on a lot of business opportunities.
To ensure a strong online presence, you should set up a website, employ search engine optimization (SEO) strategies, and monitor the key performance indicators. List your business on local directories and Google My Business, and keep the contact information updated so that potential clients can reach out to you.
Here are a few SEO tips to help you get started with creating an online presence:
Pay attention to the comments left online and respond to them in a positive manner.
Regularly maintain your website and keep the information updated.
Publish positive content to deliver valuable information to your target audience.
Share reviews and testimonials on your website to attract potential customers.
Insert strong call-to-action throughout the website.
Focus on keyword research when generating content to improve your website's ranking.
Learn how to effectively use internal and external links, as they can help with online visibility.
Partner with contractor associations and relevant authoritative websites for guest posts.
Consider having an FAQ section to address potential concerns your target audience may have.
While building a positive reputation on the internet may seem complicated, you don't have to do it alone. Specialized marketing companies can help promote your general contractor business and improve visibility.
Let Blue Collar Websites Propel Your General Contractor Business to New Heights!
If you've just started a general contracting company or need help establishing an online presence, Blue Collar Websites has you covered. Our professionals specialize in designing attractive, trade-specific websites and will not only create one for you but also manage it. Additionally, we include on-page SEO with our services.
At Blue Collar Websites, we offer quality workmanship at affordable rates. Best of all, we don't have legally binding contracts.
Work with us and take your general contractor business to the next level. Call us at (740) 729-1010 to schedule a meeting with an expert today!
Commentaires