Becoming a skilled tradesperson opens a lot of doors for a person to build their career. While some prefer to use their skills to pursue employment under someone else, many tradespeople prefer to start their own contracting business.
If you've been considering this exciting entrepreneurship opportunity, use these six tips to start a profitable, sustainable contracting company.
Develop A Business Plan
The first step in starting a construction contracting business is to develop a business plan. This plan should outline everything about your business, how it will operate, and who your customers will be. This document should also dive into the financials of your business, from what your start-up costs will include to your pricing strategy for customers.
A business plan will act as the framework for your company. Many banks require a clear business plan before they'll consider approving financing, making this an incredibly valuable first step in starting a contracting business.
Check The Local Licensing And Legalities
As a part of your business plan, you'll start to map out the legalities and licensing requirements for your business. These requirements vary from state to state. For example, if you live in Virginia, you might require a VA class A/B contractor license specialty exam course to get started. Certain states will also have regulations around the type and amount of insurance you're required to carry.
You'll also need to determine the best legal entity for your business. Generally speaking, contractors will benefit from the extra layer of protection offered by becoming a corporation. Again, the type of corporation will vary based on your long-term business plans and area.
Develop A Financial Plan
Next, outline a detailed financial plan. This should outline both your start-up costs and your long-term operational costs. During this phase of the business planning process, you'll also want to open a company bank account and get the proper financing in place.
You'll also need to outline your taxation obligations, both what you're required to pay based on your legal structure and what you're required to collect from customers. Again, this will vary from state to state. Don't hesitate to work with an experienced accountant to get organized — this is a claimable business expense.
Secure Insurance And Permits
Next, secure the insurance coverage and permits you require to operate a construction contracting business in your area. You'll need to have these in place before you can start taking on customers. Again, the requirements will vary based on your type of company and region.
Devote Time To Networking And Branding
Don't wait until you have all your licensing in place to start networking and branding your business. Set up a website and social media profile, and start making connections. This exercise could help you land your first client.
Take the time to reach out to local companies and experts in the construction industry to start fostering connections. Your ability to network and connect with others is almost as important as the quality of work you produce. Start to outline a basic marketing strategy to help you attract customers, build a portfolio, and grow a profitable business over time.
Put SOPs In Place
One of the most significant challenges contractors face when starting a business is managing the actual business. Things like account management, tax preparation, and customer service are separate skill sets that often get neglected as the owner gets busier.
Standard operating procedures (SOPs) outline various business practices in a step-by-step format. Drafting SOPs will help you stay on track with your business responsibilities and make it easier to outsource or hire employees (administrators, etc.) when the time comes.
Contracting Conclusion
With these six smart tips, you can put the foundation in place for a successful construction contracting business. Now it's time to start building!
