If you are looking to get into the construction business, now is an excellent time. In this competitive industry, you’ll find yourself connecting with clients and other companies like never before. Whether you’re starting this path with a new business or as an independent contractor, there are tips and tricks you should know to help you get started.
Here are 10 things to keep in mind as you work through your first year in the construction business.
Construction Business Assessments
A good place to start is by assessing your trajectory with your services and looking at other construction businesses. First, study how other contractors run their companies. What are their strengths? What are their weaknesses? What unique approach can you add to your company that will give you an edge?
Then, assess your own business and its strengths and weaknesses. What issues do you foresee? How can you improve upon them to help your company thrive?
As a contractor, you’ll need to obtain various licensing and insurance. Depending on your specialty within the industry, you’ll need licenses to operate and, if you work from home, a home business permit as well.
Construction businesses need multiple types of insurance, too. General liability, property and vehicle policies are among the top requirements. Some states call for additional coverage, too, like workers’ compensation, state disability or unemployment. Surety bonds are also a necessity with construction businesses, allowing your clients to receive payment or a guarantee of a new contractor should your project not come to fruition.
Advisers and Labor
You’ll want to surround yourself with people who can aid your company in taking off. A professional advisory team can help since they have experience in the process of finding the right path. However, new construction companies can manage on their own if they start with a firm vision and focus on attracting the right people.
Your other team will consist of employees, subcontractors, independent contractors and more. They must be ready to commit to the business and have the know-how to help it thrive. When you surround yourself with the right people for the job, you ensure that your company is the best it can be.
It can be challenging to retain construction workers in a competitive labor market. New businesses may have more uncertain futures but invest what you can in training and share your vision for the company’s purpose and success. This will keep workers engaged and help your team avoid road bumps in the face of a skilled labor shortage.
Budgeting is a business need that tends to hinder people the most. With planning, though, you can ease the process. Once you start an undertaking, you can plan your budget accordingly. Be cautious with business credit lines and make smaller purchases with cards that you can pay off monthly. Save the more significant investments for what the revenue brings in.
When it comes to budgeting for specific projects, many companies divide expenses into “soft costs” and “hard costs.” Soft costs include service fees, insurance, and other project management expenses. Hard costs the include tools, labor and building materials needed to complete the construction project. Only experience will help you determine the perfect plan, but a common rule of thumb: soft costs should account for 30 percent of the budget, while hard costs account for 70 percent.
Once expenses are listed, your team can make cost-cutting decisions. This might mean streamlining communication, working to stay on the project timeline and other choices that can effectively reduce soft costs.
You will have a lot of different paperwork, files, data and information to store once you start your business. Keeping it all organized in one place is your best bet. New technology, like a company knowledge base system, can help with this process.
Another part of organization is setting clear long- and short-term goals. These objectives look at the bigger picture of where you want the company to go. You should also write up detailed plans with these goals that break them down into realistic, actionable steps.
Choosing your clients requires careful consideration. As you build your business, you’ll want to be more selective in your choices. Creating an effective niche and putting your team’s energy into fruitful projects will become essential to long-term growth.
A good client can bring in a substantial profit and set your company on the right path. Some clients you’ll even want as part of your portfolio to draw in bigger prospects. Others, however, may not be worth your time and resources if the profit is sub-standard. Know when to say no.
One of the most significant parts of starting any business is marketing. First, you’ll need a website that is professional and user-friendly. This site will be your central location for online traffic. You may want to add a blog portion, too, which can draw in people who are looking for specific information.
Next, choose which forms of marketing are best for you. It could be through your company’s social media pages, online advertising, cold calling and more. This process will help spread word of mouth and bring in new prospects.
Regulations and Plans
The construction industry entails many rules. From the workplace to energy standards, you’ll need to brush up on regulations. OSHA requires strict safety standards in the industry for employees, so make sure everything is up to code.
Developing plans, too, for instances involving safety, emergencies, standard protocols and more, is critical. When workers have everything readily available for procedures, the processes work safely and smoothly.
Focus and Communication
A construction business takes time and investment. You must be patient as you bring your company to its fullest potential. Staying focused on short- and long-term goals will help.
Proper communication is also key. When you communicate properly with those you work with, you create an environment for passionate and dedicated workers. This process will boost productivity and help your company move in the right direction.
Tips for the Future of Your Construction Business
As a backup, know the signs of a failing business and when to cut your losses. To prevent a downward spiral, be sure to maintain realistic expectations, treat workers properly, foster positive leadership abilities and show financial discipline.
When you take proactive steps to lead the business productively and healthily, you help your company to move forward efficiently. As you progress, keep the tips above in mind.