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A Step by Step Guide to Starting a Construction Business
A Step by Step Guide to Starting a Construction Business

A Step by Step Guide to Starting a Construction Business

One of the things that makes the idea of starting a construction business so great is the fact that this industry has been on a steady growth for the last several thousand years.

As long as there is civilization, construction workers, constructors and civil engineers will be vital components of its growth and expansion.

Even more importantly, this makes the construction industry one of the most reliable and lucrative investments for anyone with enough interest and entrepreneurial spirit.

Nonetheless, starting a construction business takes a lot of work, seeing as how this field is so vast that you will first have to pick a sub-niche, which will further decide on the permits and the equipment you’ll have to purchase or rent.

It also impacts the number of employees you will have to hire, as well as the skill set you will have to incorporate into your hiring policy.

Overall, here is a quick step by step walkthrough of all the things you need to do in order to start a construction business.

Step 1: Pick your sub-niche

Before you even start writing a business plan or gathering the finances (step 2 and step 3), you need to decide on the type of your construction company. You see, a small renovation contractor doesn’t need nearly as many resources as a real estate developer or an owner-builder.

On the other hand, being an owner-builder usually tends to be a significantly more expensive plan than being a sponsor-builder.

For first-timers without any experience in this niche, the most sensible course of action would probably be to start out as general contractors or even small renovation contractors.

These two sub-niches are the most obvious choices, seeing as how they are the least expensive and have a beginner-friendly learning curve.

Step 2: Write a business plan

The thing about writing a business plan is the fact that it isn’t exclusively a construction business-related problem. This means that if you’ve ever managed a business of your own, you already have the necessary experience.

You naturally have to start with a market research, which usually consists of two parts. First, you need to look at surveys coming from reliable organizations or even government institutions.

Second, you should reach out to local construction companies on your own and schedule a meeting. Choosing an area in development is also a solid plan, seeing as how local construction companies will already have too much work on their hands to see you as a competitor.

This can be particularly valuable since they might offer some invaluable advice or even direct assistance. For instance, they could send work they can’t get to in time your way.

After surveying the area, you also need to write down your short- and long-term objectives, your mission and try to identify the key to success. Once you have all of this wrapped up, it is time to move to the next step.

Step 3: Gathering finances

A construction business is not a one-person startup that you can start with under $500 of investment money. The registration is costly, the equipment is expensive and so are the insurances and legal fees.

This is why you need to have a detailed plan of where all of this money will come from long before you actually launch the business. The most logical choice would be to apply for a small business loan but if you can’t qualify for one, you still have more than a few options up your sleeve.

Due to the amount of money necessary for such a project, self-financing is seldom an option, which means that you might feel the need to sell some of the equity in your company.

According to numerous experts, this usually doesn’t end up being the best choice, seeing as how it means giving up having full control over your company. Still, provided that you can find the right partner, this option doesn’t have to be that bad at all.

Step 4: Licenses and insurance

Licenses and permits you will have to apply for usually depend on the type of construction you intend to conduct. For instance, being licensed to do plumbing and electrical works requires some additional certificates, still, this mostly depends on the region you are in, seeing as how every state has its own set of laws and requirements.

At the very beginning, you will have to register a business. Then, you need to start thinking about the insurance and the surety bonds.

The construction business is considered to be a high-risk profession since most of your employees either handle heavy machinery or work at great heights. Even things such as basic home remodeling involve a myriad of sharp tools and hazardous materials, which is why having workers’ compensation insurance is an absolute must.

Of course, it goes without saying that this kind of insurance is vital in any other line of work as well, but nowhere is it as important as in the construction business. Apart from this, your employees will handle expensive machinery, for which you also need to get insurance.

Finally, as a new company, you aren’t likely to get entrusted working on major projects without being able to offer at least some form of guarantee that you will get the job done.

One of the best ways to do so is by getting a surety bond. This way, your clients will be reassured that even if you fail to finish the work in due time, they would get compensated.

Step 5: Hiring labor and acquiring equipment

Once you’ve laid down all the groundwork for your company, it’s time to start hiring the employees. Needless to say, this starts with a plan, seeing as how you first need an employer identification number (EIN), decide whether to hire independent contractors or employees and figure out your payroll system.

In the construction business, hiring independent contractors is usually a more common practice, mostly due to the fact that the next project may require more or less manpower than the current one.

As for the equipment, you need to decide which items you have to buy and which you should hire for the time being. For instance, while you have to buy all the safety gear like harnesses, vests and helmets, purchasing a crane right away may not be cost-effective.

Not only that, but the transportation of the crane across the country can be an incredibly difficult job, too. Therefore, it might be a much better idea to simply hire a crane at your target location. For instance, if you were to work on a project in Victoria, you could look up crane hire options in Melbourne.


At the end of the day, starting a construction business is far from simple, since the job itself is quite dynamic. This means that you will have to find a way to make your business adaptable and scalable above all, so that you don’t have to suffer from setbacks, turnarounds and downtime at a critical moment.

The key to avoiding these issues, of course, lies in proper organization and solid foundations for your company. Needless to say, a step by step process can help you avoid the hazard of skipping or overlooking something vital in the process.

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About StephanJ

Stephan J is the founder of Monetize.info and is making a living exclusively online since 2004. He tried and managed to make good profits on everything from Forex trading, options, website flipping, adsense, affiliate websites.His passions are cycling, fitness and he is spending a small fortune on watches and fine cigars

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