Are you interested in starting your own contracting business? Or have you ever wanted to know what exactly one needs to consider when starting such a business? You have clicked on the right link. In this blog post, we’ll let you know everything you need to know about starting a contracting business; its pros and cons. Construction is one of the top industries for startups; however, it also has one of the highest failure rates. According to experts, 63.6% of construction companies close within the first five years. If you’re determined to be in the other 36%, it’s important to do your homework before you begin so you are ready for any challenges that may come your way. This investment of time is the best way to set yourself up for success.
Pros of Starting a Contracting Business
1. Industry Size
Construction will likely always be in demand because of the ever-growing population and aging buildings. According to the Bureau of Labor Statistics, employment in construction and extraction occupations is projected to grow 6 percent from 2020 to 2030, about as fast as the average for all occupations, and gain about 400,000 new jobs. Construction is expected to grow for new and retrofitting work on older buildings, highways, and bridges.
Construction offers the opportunity for specialization. So you can decide to “niche-down” on what you feel like you can do best in. You may offer general-contracting services, specialize in new work, “green” construction, civic building, or residential housing, among others. This allows companies to streamline production.
If you’re interested in helping shape how a community looks, then the contracting business might be for you. Such companies build homes for growing families and create large civic structures, libraries, schools, museums, and hospitals. They also work to keep bridges and roads safe for commuters. You can influence how a community looks.
4. Opportunity to Start Small
You can start a contracting business with a small number of employees. You can start working on smaller projects and expand with time. As a beginner company, you have an advantage because keeping monthly overhead costs low will help you make competitive bids compared to larger businesses, which must rely on higher pricing to support hefty overhead costs.
Cons of Starting a Contracting Business
The cost of construction keeps rising. Buying raw materials, updating tools and construction equipment, maintaining construction vehicles, buying liability insurance, and paying employee salaries can become quite costly. Imagine taking on such costs as a beginner. It could get overwhelming.
The contracting business carries a large amount of risk. Workers labor in sometimes-dangerous situations and can occasionally be involved in accidents. If they don’t take their OSHA courses seriously, they may expose themselves to certain risks. Construction companies can also face litigation due to structural imperfections or customer dissatisfaction with the finished project.
3. Legal Issues
The legal issues involved with starting a construction firm can be complex. Construction companies must maintain a current contractor’s license and other permits. You must ensure you & your team understand local laws governing construction codes. This can be difficult, and mistakes can result in costly repairs or adjustments to meet compliance requirements.
A Few Things To Consider
Starting your own contracting business can be an exciting but overwhelming experience. Learning the basics of managing such a business in the first year is essential. Here are a few things to consider;
1. Gather Research About the Contracting Business
Before pursuing any business, the first thing you must do is research it – the same goes for the contracting business. We offer courses to give you the information you need to build a strong foundation. Doing your research ahead of time may be optional to some, but it will make setting up your contracting business much easier. You must ask whether a construction company is a viable option in your area. You don’t want to set up in a competitive area. It would be best if you also did market research.
2. Write A Business Plan
After you feel you understand your local market well, it’s time to draft a business plan. Every business needs a business plan, not just to help guide you through starting your company, but also to help raise investment funds, get approved for loans, and more.
3. Register Your Contracting Business
Once you’ve completed your business plan, you’ll need to look into the rules, licenses, and registrations required within your business location. It is important to register your business to make it a legal entity, which can provide personal liability protection, legal benefits, and tax benefits. You must decide whether you’re going to register as an LLC or a corporation.
Be sure to check out your state and local laws and regulations to be sure your new company is in compliance and can operate.
If you’re considering going into the contracting business, @HomePrep is here to help. With hundreds of online courses as well as test prep, we are the premier online resource for those working in construction and other labor fields. Be sure to check our website for more information.