If you’ve ever considered yourself as a construction employee looking to strike out on your own you would not be alone. About 90% of construction companies flop in the first year or two, and while we don’t want to scare you off with that statistic, it’s important to understand why. Most of the time, contractors are excellent at construction. You will always find an excellent trades person out there. But that doesn’t mean they know anything about running a business.
They know how to build and they know how to construct, but they don’t necessarily understand how to get more leads for their projects, or basic construction management tips. They may not have a good idea about people management, either, such as using buildops field service management software to make sure they got the right people in the right place. If this sounds like you, don’t panic. Understanding what you need so that you have what it takes to be successful in your construction options is smart. This is where research comes in with articles such as this one. Some of the strategies below will be able to help you when it comes to building that good foundation and having that potential in place to scale the business and make it grow. So, here’s what you need to know before you start your own construction business.
Figure out what you want to specialize in. If you tell people what you do for a living, do you just say construction or are you more specific than that? Are you a roofing subcontractor or are you looking to be a general contractor instead? What is it that you are good at? The decision you make for what you specialize in is really going to depend on your experience as much as your overall goal. What would be most profitable for you? Subcontractors often make around 20 to 30% on their profit margins, but these often come in smaller contracts. General contractors make less such as a 10% profit, but their contracts are often much larger because they manage different trades on the same job. Of course, there are pros and cons to doing both but you really do need to think about what you want and what would be right for you. If you’re going to strike out on your own then setting your specialty in the beginning is important.
Start looking around for potential project options. This is where most construction entrepreneurs get stuck. Growing your new business does take time, but how are you supposed to grow it and get your name out there if you can’t find a project in the first place? You can submit bids and gain contracts online, but the key here is lead generation and to be able to gain that you need to create a system of leads that you will always be bidding on projects to land new jobs. You can hire somebody to help you with bid writing, but the most important thing that you need to know is that the more jobs you bid for the more chances you have of winning those jobs. You need your name and your business name coming up over and over again so that you are an authority in what you do. Even if you are brand new to doing it on your own, that doesn’t mean you can’t show off your skills.
Start sending bids and writing estimates. One of the biggest things you need to know about construction businesses is that estimation is the lifeblood. If you want to grow and ensure your success along the way, you have to invest in several bids per month and you have to do this consistently. If you do have the budget, make sure that you have an in-house estimator and set up an office for them so that you can focus on just running your business and meeting new clients. This gives you time to be able to talk yourself up and talk up what you can do. A big part of gaining those bids is to showcase what you are able to do so you can show what you can offer. The best thing that you can do is have an in-house estimator and set up an office for them. Of course, you can outsource this and it’s probably a smart idea to do that because then you don’t have to train anybody. You simply discuss your business needs with the outsourced estimation service and allow them to go ahead and bid for you. As a new entrepreneur your biggest challenge is going to be time constraints, so outsourcing to bid estimators is a smart decision. You may not have all the time in the world to sit around and right bids and sort out estimates, but you want to get out there and get your name seen and heard. Having somebody do it for you and perform your estimates while you’re out winning more construction bids is smart. It means you can hit both sides of the coin and know that you are going with every angle correctly so that your business can stand out.
Get to know what software you need. Becoming more efficient with your business can be much easier when you invest in the right technology. Software that helps you to manage all of your contractors on the field should you choose to hire people, and software to help you with your bids, estimates and your budget is important. You want to be productive and you want to be fast when it comes to responding to clients. With the right technology and software, you’ll be able to do this with ease. Do your research into the software that you could need and start buying into it with your funding that you get from the bank or from an Angel investor. You want your business to be seen, which means that you need to make sure that you understand what efficiency looks like on the outside.
Get your insurance and any licenses set up. Once you get your business going, you’ll see those leads coming in. You want to be able to estimate the jobs and you want to make sure that you have every piece of insurance paperwork and licensing paperwork necessary. You might not think it’s as important as everything else that we’ve already listed, but just because it’s 4th or miss list doesn’t mean that you should wait. It’s important to have this set up before you start going out on jobs and it shouldn’t take you six months to do that before you get a project. Once you have licenses in the different states you plan to work in, you can ensure that you are offering the best to your customers. You can call a commercial insurance agent for their help because they’ll be able to set you up with all of the insurances that your new business needs. If you’re going to be going after a specialty, then you might need to pass some tests or make sure that you are qualified before you submit any applications.
Don’t forget to follow up. The most important part of the bid process as a new contractor is to make sure that you are staying in contact and communicating with people. You want to ensure that you are following up on every single inquiry so that you can get the business that you need. A lot of people don’t do this because it’s so time consuming, but you have to consider what it will mean to other people if you are communicating as a business owner. You want them to see that you care about the business that you’ve got, and you want them to see that you care about the job bids that you’ve put in.
Get some good advice. This may be the first business you ever start up, and you shouldn’t be doing it entirely by yourself. In fact, having a mentor in the same industry is really going to help you to be successful. They will be able to guide you through the process of starting up your business and they’ll be able to give you some good Connexions. Networking is always important when it comes to your business, and if you can build your Connexions and your network by making sure that you stay in contact with others, you’re going to be able to benefit from the advice you are given. It’s a challenging task to start a construction company, but with the right mentorship you’re going to be able to watch your business grow.
Don’t be afraid to say yes to starting out as a construction contractor. In fact, you should loudly say yes as soon as you have the opportunity to do something different and strike out on your own.
Leave a Reply