If you’re considering the launch of a new construction company, then you’ve certainly chosen a good time. Both residential and nonresidential construction have seen growth in 2019, and 2020 looks set to be another financially rewarding period for established and new construction firms. Of course, it’s going to take a lot of work and preparation before launch day. Running a construction company means wearing a lot of hats, so there are some essential basics that you’re going to need before you sign your first customer contract. If the idea of making your next fortune in the construction sector sounds appealing, then here’s what you need to know.
The Business Plan
Just as with any other business model you’re going to need a business plan. For construction companies, the standard business plan template will be sufficient, although it’s worth remembering to add in some industry-specific sections. These should include:
- The construction services that you will be offering, with prices included
- Competitor research
- The costs and distances of your suppliers
- Lists of your essential equipment
- The number of employees you will need from day one
Remember the more thorough your business plan is, the more chance you have for success.
This will depend on where you are planning to operate from. Check your local business laws and make sure that you know all of the rules, have all of the licenses and are registered as a business entity. You should consider forming an LLC or S-Corp at this stage, as this will keep your personal assets safer should your construction company face difficulties.as this will keep your personal assets safer should your construction company face difficulties. Most construction firms will be more than a one-person operation, and that means that you’re going to need construction insurance. Not only will this protect you, but it will also mean that new clients will know that you take the creation of their living and working spaces as seriously as you take safety.
Financing a Construction Company
There are a lot of overheads to consider when it comes to setting up a construction company. If you’re wary of using your own cash, then you’re going to need to start looking at your financing options. The costly nature of construction isn’t as much of a limitation as you might suspect though. There are many options to consider when it comes to sourcing the money that you need to buy the supplies, tools, and cover your initial wage costs. Consider:
- SBA Loans: Low-interest rates make SBA loans a great option, but they are notoriously difficult to get, and it can take months to get loan approval.
- Angel Investors: Of course, you can expect to find many investors with an interest in investing in construction. The high-profit margins of the construction sector are going to attract those that want to make money without the work! Angel investors are a good option, but remember that you may lose total control of your business in some cases.
- Equipment Financing: An excellent option to consider, equipment loans are one of the better choices for construction companies. The cost of the equipment that you need can be prohibitive, so it’s worth looking a little closer about how this type of loan can make it easier to get the tools you need to get the job done.
As with any business model, the more you plan the more chance that you will be successful. With the construction sector set to continue growing well into 2020, it might be time to don your hard hat, get your boots on, and launch the construction company that will only benefit your bank balance.