Because of the continued demand for housing, and an increase in lending activity and real estate values, the residential construction industry has been a growth area for small businesses in recent years. There are a number of jobs that are attached to construction, which include architects, contractors and real estate agents, so it may be that you have a background in one of these jobs in particular.
Having a good business strategy, which will include some of the following areas, can help you when starting a construction company.
So, you have the idea and the inclination, and you like the idea of the autonomy and freedom that establishing your own business facilitates, but what’s needed to start a construction company?
Starting a construction business means becoming familiar with everything from registering with the right agencies to knowing where to get the best on-going support, but one of the first places to begin is to make a plan. The first step is obviously to do your research. Is there demand for your business in your particular geographical area or region? Begin by exploring industry publications to research markets.
Your research will also help you to discover whether there are competitors in your local area, and the possibilities of either competing with them or perhaps setting up further afield. Engaging with local residents and business owners can give you valuable insights into the requirements of the community, what’s affordable and appropriate to their needs.
Every new business needs a business plan so you can work out how best to structure and manage your business. It will need to be fairly robust so as to attract any potential lenders, should you require them. You will need to have a fairly well developed shape to your business, detailing everything from the number of prospective employees, to other running costs, plus anticipated earnings. You can find a great deal of free advice available online that can help you with the particulars of developing a business plan. Someone who has successfully been in business already can act as a good mentor to you, so build connections to take advantage of a wealth of existing knowledge and insight that’s available.
If you’re happy with your business plan then the next step is to bring your idea into reality and access financing. Your costs will vary somewhat depending upon the nature of your company, where you intend to operate and the breath or uniqueness of services that you will provide. It’s likely that there will be significant overheads early on associated with buying or leasing vehicles, tools and equipment. Doubtless you’ll need to market your business (a marketing plan is a good thing to have in place before you begin too), which costs, and then there’s the payment of staff to consider.
In general you might approach a bank for a business start up loan, or you could engage a business angel - an investor that has faith enough in your prospects as a young business to consider it a good investment option. It’s worth checking for government grants and small business initiatives too.
You’ll need a business name, which you’ll register with the appropriate bodies, such as HMRC, and possibly Companies House if you’ve decided to set up a limited company, but there are other business structures you can choose from, such as a partnership. Explore which structure is best for your business model. In construction you will want to consider liability so you are protected against personal liability should anything go wrong?
If you’re employing staff then you’ll need to take out Employer’s Liability Insurance , which in the UK is a legal requirement. You must also have public liability insurance to cover you if a member of the public is injured or their property damaged in the course of your business.
Become intimate with the regulations within your industry. In construction these can be vast, with the most important regulations relating to health and safety.
It may be that you are the sole employee when you start out, but as you grow you may want to employ additional skilled and reliable workers. Your employees may be people who work on site, or those you employ on a freelance basis, such as a bookkeeper, accountant or someone who takes care of creating your promotional material or marketing. You may decide that a self-employed team is the way to go in an industry in which projects regularly change in scope and scale.
One of the best ways to help your business to thrive is to network. Through networking you can build new contacts, promote your business and hear about new projects. Develop relationships with suppliers, subcontractors and developers too as these are the people who help you deliver your projects - they might also have their ear to the ground on new business.
Companies that need construction work completed will often put work out to tender, which means you can bid for it. In general suppliers need to complete projects in good time, so be sure not to overpromise on delivery. Prices must account for materials and labour, and fixed price quotes are generally preferable. Keep in mind your desired profit but aim to be competitive. It may be that you hire someone who has experience in bidding for work, so it’s worth investigating who could handle the contracts, invoicing and payments.
Going through the process of starting a construction company can be exciting and rewarding, and building your own business can be as fulfilling as the construction work itself. The energy, time and effort involved in setting up and running your own business is significant. So it’s important to look after your business by ensuring you have the right level of business insurance . Find out more about getting your business covered today.