How Do I Start a New Construction Company When I’m on a Budget?
By the end of 2021, the United States’ construction industry was worth a staggering $7.28 trillion and will likely hit $14.41 trillion by 2030.
You don’t need to be a genius to tell that things are looking up for the construction industry, so if you’ve been planning on starting a new construction company, the perfect time to do so is now.
Like all businesses, starting a new construction business requires capital, a lot of it. Unfortunately, most people lack the financial muscle to finance a construction business. However, a lack of investment capital shouldn’t discourage you from venturing into the construction business.
In today’s post, we’ll be showing you how you can start your own construction company with a limited budget.
It All Starts With a Business Plan
Like any other venture, the first step in starting your construction company is drafting a concrete business plan. However, this is easier said than done, especially if it’s your first jab at starting a business. How can you create a proper business plan for your new construction company?
The best way to create a business plan is by finding and downloading a business plan template. The internet is swamped with tons of business plan templates that you can download for free. Find a template that aligns with your business model and go with it.
Once you have a rough draft of your business plan, show it to your mentors or colleagues with businesses. They should offer crucial insights into how you can refine your plan for success. Once you have a proper business plan, you can move to the next step.
Do Some Market Research
Next, you’ll want to do a bit of research about your local market. This research will help you determine whether a construction business is viable in your region. It’ll also help you decide between residential construction and commercial construction.
You can start your research by visiting the Small Business Administration (SBA) website. The site contains tons of resources that will be invaluable for your research. For instance, it contains information on the demographics and consumer patterns of your particular region.
What’s more, you can find a lot of helpful figures like sales statistics and housing prices. This information will help you make a more informed decision on whether to venture into the construction business.
Do Your Own Homework
Proper market research will give you a rough idea of your local market and whether your construction business will thrive. However, you’ll have to do a little bit of homework to draw more conclusive inferences.
Here are a few questions to guide your research
- How popular are local construction companies in your region?
- What matters most to the local population when hiring contractors?
- What issues do locals have with contractors?
These few questions will give you valuable information about your target audience. They’ll also help you understand the local competition.
Register Your Construction Business
Registering your business is the first step in formalizing your construction company and making it a legal entity. There’s nothing complicated about registering your company, but it involves a lot of back and forth. Some states might also have more than a few questions for you before they register your business.
Once you’re done with the state, you should also consider registering your business at the federal level. This might not make sense when starting a small construction company, but you shouldn’t undermine your company’s potential to grow and capture a national client base.
Get the Right Licenses and Permits
Once you’ve registered your new construction company, the next step is to get all the necessary licenses and permits. The type of licenses and permits you need will largely depend on your state. It also depends on the type of construction work you plan on carrying out and the size of your projects.
Keep in mind that any construction company working without a valid license is doing so illegally. Also, note that an expired license or permit is automatically invalid.
You’ll likely need a permit for your oversize and overweight vehicles. You’ll also need another for any large-scale drilling or excavating activities. Check the SBA website to find out what permits you need for your construction business.
Remember to pay keen attention to local zoning ordinances. Some zoning ordinances restrict specific types of businesses from operating in certain areas. Check these ordinances to ensure you’re not running a prohibited business in your area.
Get the Funding You Need
Earlier, we talked about starting your construction business without having too much in the bank. The best thing about starting a construction business is that you don’t need a ton of money to do so. There are plenty of ways to finance your construction business for a successful venture.
Our best advice for funding is to pick a financing option from the multiple government funding options. Visit USA.gov and explore the list of websites that offer loans and grants for businesses like yours. If those don’t work, you can get funding from credit unions, banks, or private lenders.
Before borrowing any money, it’s important to know whether the construction work you do is enough to pay back the loans you took. That’s why we recommend using software for hard dollar estimating to get accurate estimates of construction costs.
Grow and Thrive
By now, you’ll have gotten your construction business off the ground. It’s now up to you to grow your construction business and take it to the next level. You want to be the best construction company in your city, don’t you?
Start Your New Construction Company Today
With the information above, starting your new construction company should be a cakewalk. Remember, it takes hard work and commitment to run a successful construction business. Roll up your sleeves and get to work.
For more informative content, please check out the other posts on the site.
June Potter wrote this article on behalf of FreeUp. FreeUp is the fastest-growing freelance marketplace in the US. FreeUp only accepts the top 1% of freelance applicants. Click here to get access to the top freelancers in the world.
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