With over 700,000 companies and 7 million personnel, the construction industry remains a significant contributor to the US economy. Each year, approximately $1.3 trillion in construction is completed. Non-residential construction increased by 4% in 2019 over the previous year. The industry is expanding to meet the increasing demand for non-residential and residential construction work.
If you are excellent with tools and enjoy designing and building, you might consider opening your own interior design business or a general construction company. Starting a construction business is a fantastic way to pursue your passion while earning a good living. However, it is critical that you are completely prepared before beginning the business. With 63% of companies closing before their fifth anniversary, the construction industry is one of the most challenging businesses to run if an appropriate approach is not employed in the first place.
How can you ensure that your company has the best blueprint for success? When starting a business, diligence and proper planning are essential. Follow these 10 tips for starting a construction business and lay a solid foundation for future success.
Research Your Local Market
It would be best to consider whether a construction business is even a feasible alternative in your area. After all, if the spray foam insulation industry is already saturated and customers are satisfied with the existing local businesses, it may be challenging to gain a foothold in the market, let alone build a successful business.
Conducting appropriate construction industry research is not optional, it is required for any ambitious business owner. In fact, prospective business owners should thoroughly research the construction sector before taking action. The research will not only inform business owners about how to conduct themselves in the future, but it will also serve as an essential indicator of whether or not the upcoming venture will likely succeed.
So, first and foremost, conduct market research for your niche. If you are considering being a new window supplier, you’ll want to know how many supply companies are already in your neighbourhood, what they focus on, how much they bill, and how well they’re known. In addition, you should have knowledge of your potential client base, how many of them there are, their average age and status, their expectations, and so on. Knowing these details can help you create a better strategic plan and grant you a competitive advantage when you finally take the field.
Create a Business Plan
Success in the construction industry will not come quickly. It will require countless hours of planning and an inherent level of determination. Many of the countless hours spent developing a strategy should be devoted to developing a business plan. A good business plan will serve as a guide for the period of the company’s existence. More importantly, a genuinely excellent business plan will offer a vital road map for running a successful construction company.
The first step in creating a good business plan is to create an executive summary. As the name implies, this section of the business plan will provide a ‘1,000-foot view’ of the company as a whole. This business plan section mainly provides a brief glimpse of the company’s objectives.
Include a detailed overview of the company’s projected business structure and a clear definition of leadership structure and management. In other words, it is in this section that individual roles will be identified and assigned, starting from the executive to the commercial concrete pourer. To avoid future discrepancies, it is critical to be as precise as possible.
Get Licenses, Certifications, and Insurance
Among the many steps required to understand how to start a construction firm, obtaining the appropriate credentials may be the most crucial. Each state where a construction company operates requires the relevant licenses, certifications, and insurance. Let’s take a closer look at modern construction firms’ credentials to operate.
Again, state requirements vary, but there are typically three licenses needed to operate a construction company:
License for General Contractors: Most states require a construction firm and its employees to acquire a license for general contractors to conduct business. Licenses demonstrate competence when undertaking construction projects and assure clients that contractors are capable of completing the work.
License for Specialty Contractors: Some states require more extensive licensing procedures. For instance, speciality contractors specialize in a specific field, such as steel building construction service. They may be required to obtain an industry-specific license. A specialized license may be required for contractors who focus solely on carpentry, painting, electrical work, roofing, heating, ventilation, and air conditioning (HVAC) units.
However, there is one exception, contractors who wish to work on public contracts must register as government contractors.
Find Suppliers Using Quotes or Bids
The first step in evaluating pricing and quoting procedures is to send requests for quotes on a particular set of materials to as many suppliers as possible. From there, you can evaluate the pros and cons of every supplier and determine the most cost-effective purchase. For instance, after doing this for several projects in a row, you will begin to recognize which masonry supplier offers the lowest prices or best deals on high-quality stones and materials.
Requesting bids is another method for selecting qualified vendors. Bidding enables you to determine whether or not the prices offered by potential vendors are competitive. When searching for suppliers, businesses have several options. They can either contact a company directly or submit a request for proposals. The second option offers numerous benefits, particularly if you’re looking for materials for a specific project. Rather than explaining your goals individually, a request for bids allows you to outline your objectives, timeline, and required materials. Distributors can compete on prices, delivery time and service provision.
Find a Suitable Marketing Agency
Don’t just take the company’s word for it. Read what their clients have to say. A good review will highlight any issues regarding the company and their clients, what the business did to resolve them, and the outcome. A successful agency should have no trouble keeping good case studies; you could even contact their team and request. An agency that lacks recent reviews may not be an ideal company for your new business.
Examine the agency’s case studies, the goals of their current clients, and what the agency does to achieve this. Has the marketing agency worked with customers who share your objectives? And, if so, how did they manage it? If you are unsure whether your objectives can be met, set up an appointment with their team. There is no harm in asking. Make an appointment with the Corporate executives or marketing manager to get answers. The agency should have building supplier specific goals and agency values. To build trusting relationships and help your business thrive, a good marketing company should value honesty, accountability and responsibility.
Learn What Services Consumers Needs
You must first identify the client and project targets you want to undertake in order to win more contracts at higher rates against less competition. Then you can go out there and offer what your potential customers want in order to win their business. Customers hire contractors for a variety of reasons. Selling to homeowners may differ from selling to major national corporations, public works entities, design-build general contractors, or real estate developers in your new construction business. To be successful, each requires a different selling and marketing strategy. You can hire a website design service to create a digital platform if you target clients with an online presence.
Determine what you are able and willing to offer based on what they need and how you can serve them to obtain your desired customer targets successfully. Clients with large projects usually hire full-service contractors they can rely on to complete work on time and without disrupting their operations, as well as to keep their property tidy during renovations or construction. Most clients will want to hire contractors who provide a full range of services, design-build and permit processing, don’t require a lot of supervision, are willing to work outside of business hours, and can perform repairs as soon as they are needed.
Hire Competent workers
You’ve identified your organization’s needs, written excellent job descriptions, and positioned your business as an employer of choice to stand out from the crowd. Hiring the right people from the start is critical to your company’s retention strategies. But how do you know if a candidate is culturally and strategically compatible? Do they have the knowledge, skills, and abilities required to assist the company in carrying out its vision and strategy?
Various staffing evaluation tools are available to assist in making accurate hiring decisions. In addition to having structured interviews with questions designed to determine a candidate’s competence and background checks, employers use job knowledge and ability tests, as well as personality assessments, to determine if a candidate is a good fit. When used correctly, behavioral instruments can assist in determining which candidates have the best chance of success in your organization. Furthermore, the assessments may reveal potential areas of concern that require additional investigation.
Grow Your Company
Customer loyalty and track record are two of the most important factors in industry longevity. Your goal is to leave each project and customer on good terms. The best way to accomplish this is to be open and communicative. As much as possible, be honest with your clients about how long a project will take from the start. Keep them updated throughout so they know when problems arise.
Contracts should also include a clear project timeline, as well as contingency time for unforeseen delays due to weather, machinery, and more. You should also have payment terms, a clause for claims for extra work, and an estimate of the scope of the project. Everything discussed with your client should be in writing. There should be no verbal agreements. This is the best way to safeguard yourself, your company, and your client.
Being organized is critical to running a successful business, whether running a sign company or material supply. You’ll want to keep meticulous records to ensure you’re staying within your budget and making profits for your work. This includes keeping track of how much energy and time you need to devote to each type of service you provide. This will keep you from getting overburdened by taking on too many customers or tasks at once. More clients may appear to be every construction business’ dream, but that is only true if it does not require you to compromise the devotion you can give to each one.
Prioritize Customer Service
It is evident that when hiring employees, it is critical to determine whether or not they have acquired the necessary contracting skills. However, ensuring they can offer quality customer service is almost as important. Your clients will recognize the work you did for them and how you treated them throughout the process. Putting together a team of people who treat your clients with respect, patience, and understanding will help you gain repeat customers and valuable referrals.
Some people are born leaders, while others learn it through the experience they gain along the way or study leadership and implement it in their lives. However, the best roofing contractor and construction business owners build great companies by attracting, nurturing, and empowering ordinary others to work for them. Successful construction companies understand that maximizing efficiency and productivity while meeting tight deadlines is critical to a good job site in today’s competitive business environment. It is vital to find qualified professionals, business partners, and marketers to assist you in growing your business.
There are numerous ways to expand a successful construction company. You don’t need an MBA to gain knowledge on how to grow a construction company, and success always awaits those who put in the effort. If you recently opened a construction company, you can take several simple steps to ensure success, growth, and client satisfaction. The tips discussed above will assist you in making sound decisions as you embark on your new business venture.