How to Start a Small Construction Company

Charlotte Miller

Updated on:

how to start a small construction company

Across all sectors, from residential roofing to commercial estimatingthe construction industry becomes more and more competitive every year, and finding your feet as a new small business can be difficult.

Not only are you faced with the difficulty of gaining brand reputation alongside larger, more established construction companies, but you also need to consider your financial setup.

Most small business owners are operating on limited funds at first in the hopes that they will eventually gain higher profits to reinvest in their company. For construction start-ups, having limited funds can make it difficult to secure projects.

Below, we have compiled a list of basic steps that you need to take if you want to set up a small construction business.

But before you do any business deals or formal signings, you will need to register an LLC for your business. There are many reputable companies out there, that can help you in this process. For example, Northwest Registered Agent is one of those professionals that will help your new business. You can read their in-depth review here and decide if they’re worth it or not.

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Create a Business Plan

The creation of a business plan is vital for any business and a construction start-up is no exception. Your business plan should establish your aims and objectives and should contain a detailed breakdown of how you plan to operate in the future.

Other things to include in your business plan are your offerings, budget and financial forecast, and any tools that you plan on using to streamline your daily operations, such as construction project management software like Procore.

Get Up-to-Date With the Legal Side of Construction Work

As a construction business, there are a lot of rules, regulations, and laws that you need to know. You will need the relevant certifications, registrations, and licenses to operate legally as a construction business.

The specific certifications and permits that you need depend on your location, so be sure to do your research. You will also need to be aware of which taxes apply to your construction business and how much you need to pay. If necessary, you can hire an attorney to help you sort out the legalities.

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Organize Insurance

Construction companies also need insurance, so you will need to sign up for a policy with an insurance provider before you can begin any construction work.

Your insurance should cover your business assets, potential damages to your client’s properties, and employee injuries. Make sure you get a policy that covers each of these areas so that you can mitigate liability and protect your company. 

Sort Out Your Finances

As a construction company, you will need to make a large initial investment that will eventually lead to a high ROI. Although investing any amount of money can be scary, proper budgeting and financial forecasting will make the process easier.

Use construction project management software to divide your total budget into multiple areas and determine your construction costs. When you clearly break down your budget and make accurate financial forecasts, you can avoid overspending.

Build a Strong Team

Whether you want to hire full-time staff or hire contractors for each project, finding reliable and hard-working individuals is important for your success.

Consider how much of your budget can be spent on hiring staff and determine salaries before interviewing potential candidates. Your employees should share the same values as your business so that you can all work towards the same goals.