There’s never been a better time to start a general contractor business. According to the U.S. Chamber of Commerce, there is an average backlog of general contractors of just over nine months. The U.S. Chamber of Commerce reports that the average backlog of general contractor projects is over 9 months. The demand for general contractors is growing with construction spending exceeding $1 trillion annually. There is no reason for the construction industry to slow down due to rising housing demand.
This is a great way for you to earn a living, and it allows you to use your construction and management skills. These skills can be used to your advantage and you can increase your chances for success by learning more about the business side. This includes developing a business plan, obtaining the required permits and business licenses, and building a team of reliable subcontractors.
As most business owners acknowledge, it is not easy to start your business. Entrepreneurship requires investing your time, energy, and effort in your contractor company. Follow our guide and you’ll be able get your business off the ground in no time.
This guide will help you understand the steps to build a strong foundation for your business. This guide also provides links to useful resources to help you learn how to enter the general contractor market.
This page can be saved to easily follow the steps when you start your general contractor company. This guide will help you get your business started quickly. It covers everything from creating your website to setting up your basic business structure.
What are the pros and cons to starting a business?
General contractors oversee all aspects of a project. The property owner usually hires them. You will need to understand everything about construction from start to finish. You will need to hire subcontractors to finish the job. It is important to network and make new connections.
Start a General Contracting in Highland Park to leverage your skills and experience. You can also choose your work hours and projects. You also have additional responsibilities. Management is essential for your business, reputation, and workload.
These 5 essential requirements are necessary to be a successful general contractor if you want to venture out independently.
- You’re passionate about starting your own business.
- You’re familiar with the industry and the responsibilities of a general contractor.
- You will need to have strong managerial skills. You can manage many moving parts.
- Either you have the equipment or the capital to buy professional-quality equipment,
- Understanding the risks associated with starting a business is crucial.
If you answered yes to any of these questions, starting a general contractor company is smart.
Create a Business Plan
A business plan is an essential step in any venture.
General contractors are no different. You will understand your long-term goals better if you have a well-crafted business plan. This will serve as proof-of-concept for your future success.
This is an important step many people forget. Don’t do it! It’s easy to make a business plan. This will be your guideline for your business and will detail each step in your journey.
Do your research before applying for small business loans. Most financial institutions and investors will require that your business plan be reviewed before they grant you capital or loans.
What information is important for business planning?
Your guide to profitability is your business plan. Sometimes, your business plan can be used to help you spot potential problems or areas that need improvement in your current venture. These elements should be part of your business plan.
- Your business’s structure/management
- Strategy, description and concept of a business
- Services you’ll provide
- What kind of work are you planning to do?
- Information about your target market
- How many employees do you expect to have?
- Startup expenses include equipment and business licenses.
- Financial projections (How much profit are you planning to make in the first five, sixth, and seventh years?
Choose the services that you provide.
Contractors might specialize in one area or offer limited scope work to give them an edge. Many contractors offer full-service bidding on a broad range of projects.
Before you begin planning your startup expenses, it is important to understand what services your company offers. This will help you evaluate your competition and find local businesses offering similar services.
Follow your passion, not the money. You will be motivated to succeed even in tough times if you are focusing on your passions. These help you to stand out from your competition. They are more likely to be confident in your ability to do a great job and build a client base.
How much does it cost to start a general contractor business?
Starting your own general contractor business can be expensive. The initial investment will depend on your existing assets, plans for future projects, and employees. You can build your business slowly and start small, so that projects can generate steady profits.
General contractors need professional quality equipment and tools to complete their work. If you plan to transport materials between locations, reliable transportation is essential. There will be legal expenses, startup costs and insurance. If you are a contractor, it is important to set aside funds for advertising your services and marketing.
To start your general contractor business, you will need $15,000 to $20,000.
You might consider outside investment to help fund startup costs. Each method of capital raising is different. This is something you should keep in mind when planning your startup.
If you intend to work with investors, it is important that your business structure be prepared in advance. You will need to incorporate your company as an LLC.
When borrowing money from the bank, you should be extra careful. This applies to your cash flow projections as well as financial projections. Discuss why your business is worth investing in and why you think it will succeed. When comparing loan options, such as interest rates or repayment terms, do your research.
What are the ongoing costs of running a contractor business?
Creating a strong foundation for your general contractor business may take time. The majority of your initial earnings will be reinvested back in the business.
Equipment and building material costs will always impact your bottom line. You should focus on building relationships and working with trusted vendors to help you reduce costs wherever possible.
Based on the work you do, sub-contractors may be necessary. These individuals can do specific tasks in construction such as carpenters and electricians.
Budget for operating expenses. You may need to buy equipment and materials in advance to complete a job. You should plan for unexpected equipment repairs or replacements.
It is important to properly market and advertise your business to grow your client base. Although word-of mouth referrals can be helpful, they might not be sufficient to bring in clients. Marketing materials can help you get your name out. These include billboards and advertising brochures, billboards, billboards, and billboards. It is also possible to have commercials air on podcasts and TV shows.
Define your target audience
Clients in your area may be able to afford your services, and may even hire you for a project.
It is crucial to identify early the demand for your services and the areas you want to serve. Combining these two metrics can help you determine the potential customers for your services and estimate your annual earnings.
Find out about your competitors.
Once you have identified your target market, you can now start to look at who is competing for their business. You can make informed business decisions by researching your direct competitors. This will allow you to see which products are working well for your customers.
This will help you to define your value proposition. This is the promise a company makes to customers when they buy their product or service. You need to know what makes your company unique as a general contractor. Do you have a portfolio of work that you can share? Are there any household names that you can share your portfolio of work with? Are you an expert in a specific area? Consider the value that you bring to the table and how it can help you succeed.
Be licensed, bonded and insured.
Your clients, business, and yourself are protected by ensuring you have all necessary licenses, permits, and bonds to operate your business legally.
General contractor business licenses
Each state has its licensing requirements for general contractors. If you fail to meet these requirements, your company could be in serious trouble. Each state in which you intend to do business will require a license. You will need to have the right licenses if you plan on working across state lines.
There are more than 40 types of contractors categories, including general builders, specialty contractors and engineers. Here are some examples:
- Acoustical and Insulation Contractors
- Concrete Contractor
- Drywall Contractor
- Fire Protection Contractors
- Contractors for Flooring & Floor Covering
- Building Moving and Demolition Contractors
- Plumbing Contractors
- Paving Contractors
- Fencing Contractors
- Masonry contractors
- Roofing Contractors
- Structural Steel Contractor
While the process for obtaining your contractor’s license will vary by discipline, you can expect:
- Take a written test to prove your knowledge in specific contracting areas.
- Show that you have the financial resources and ability to finance your business.
- Refers to letters from former employers, clients and colleagues
- Show that you are an expert on the job, even if you have only had a few apprenticeships.
My Corporation’s Business License Compliance Pack makes it easy to fulfill your licensing requirements. It will research, evaluate your business type and location, and provide all forms you need to get the licenses.
Surety Bonds
To be able for business to continue, every general contractor needs construction bonds. If you fail to meet your contractual obligations, your client will be protected. A third party can provide surety bonds, just like any other type insurance. The state regulations that apply to surety bonds must be followed. They may differ from one state to the next. These bonds can be obtained with assistance.
Insurance
Many factors will impact the amount of insurance you need for your company, but most cases will require some coverage. Property insurance and vehicle insurance may be required.
If you plan to hire employees, you will need workers’ comp, state insurance for disabled people, and unemployment insurance.
Choose a business name
Before you open any new business, it is crucial to choose a business name. Potential clients should be able to easily read and remember your business name and the services your general contractor business offers. Avoid confusing names, and choose a professional title that best represents your services.
How do I check if the name I want is available?
It is possible to quickly search Google for similar-named companies and determine if they are taken. It is not reliable. You can also conduct a domain search to determine if your URL is already taken. Although this method is safe, it is not foolproof.
Mike the One Inc.
401 S LaSalle St., Chicago, IL, 60605
(224)-766-6249
