While construction business
is one of the top flourishing industries, it also has the highest rates of failures. As per the reports, 63.6% of construction companies close their doors within the first five years. It is because they lack business knowledge, planning, experience, and finances.
That’s why it’s crucial to get the initial steps right to ensure you have a strong foundation to build and grow your company. Okay, so what next? Where to start?
Most students draft a proper work plan for an assignment to help them go about the task without getting lost in the process. Similarly, you should follow a few vital steps to get started.
- Extensive research is mandatory:
All students know the importance of research for drafting a flawless building and construction law assignment. It helps students gain an in-depth idea of the laws associated with the construction business. Likewise, analyse whether your assignment helpbusiness is a viable option in the first place.
The majority of your potential customers already have a company of their choice. It can become a challenge to get a foothold in the industry. So dig deep with your research. Start by listing:
- The number of construction businesses operating in your area
- What they specialise in
- How much they charge for so and so services
- Their customer base and market reputation
Like your competitors, you need to have a similar idea about your potential customers as well. The best way to collect information about your potential customer base is to speak to them directly. It’s up to you whether you want to reach out through networks or paid market survey. Whatever it may be, make sure to make a note of:
- The number of customers
- Their age, interests, and requirements
- How frequently they hire contractors
- The challenges they face with their current contractors
- What they look for while hiring a contractor
All these information will give you a competitive advantage and help you to develop a better business plan business.
- Create a detailed business plan:
Once you have the details of your local customer base and competitors, you should start drafting a solid business plan. It will help to keep track of your business activities and source funding. A standard business plan includes the following:
- How you will manage the business
- What kind of services your business will provide
- What kinds of jobs you will bid on
- Your target market
- The number of employees you’ll have starting.
- The marketing strategy for your business
- The initial estimated budget for maintaining the business
- Your expectation for the first year and other important KPIs
Don’t let the idea of creating a business plan intimidate you. If you lack formal experience, hire someone professional to help you with the job.
- Register your business and get the licenses and permits:
Registering your business is vital to make a legal entity and for additional benefits like personal liability protection and tax benefits. However, in some states, registering your business is not as simple as your registering your company’s name. You may be required to list your company on the federal level for a national tax ID or an Employer Identification Number (EIN).
Licenses and permits often depend on the location, size, and type of the construction company. Visit the local council office and gather the necessary legal papers to get your licenses. If you are applying online, choose the location carefully as the requirements vary from place to place.
- Insurance cover for you and your employees:
Going by the dangerous nature of the construction jobs, as a business owner, you should make sure that you have proper insurance schemes in case of an injury. Consider all the possible liabilities associated with the job. Even if you are ready to provide a complete contingency plan, you should look at it from the business point of view.
Most construction companies provide compensation insurance to their workers. But there are other insurance policies related to the construction industry that are equally important like the builder’s risk insurance, general liability insurance, and professional liability insurance.
- Get enough funding for your business:
Like any other business, you cannot take off your construction business with insufficient funding. If you don’t have your saving, you should secure funding from other channels like – bank loans, credit unions, government funding policies, private lenders, and the like.
While planning the finances, you should think about the cash flow as well. Construction projects take time to complete which means the cash receipts may take a while to come. That’s why it’s wise to ask for the money for the project upfront and bill proactively as the project progresses.
- Prioritise your customers to grow your business:
Customers are the ultimate business asset who determines the longevity of a company. As an owner, you should aim to complete a project on good terms. Be honest and communicative right from the start to avoid confusions. Keep them informed whenever an issue arises. Everything you discuss with your client about the project, scope of work, and the budget should be in writing.
In the construction business, you need to start strong and stay that way. So, team up with professionals who know their job. In the end, it’s doing your job right with the right team and getting paid for your work.