An Engineer’s Guide to Starting a Construction Company in 2020
If you’re tired of working a 9-to-5 job, then maybe it’s time that you struck out on your own. Especially if you’re an engineer with a decent amount of work experience, starting your own construction business may not be nearly as difficult as you think. And if the company is successful, then the rewards are tremendous.
Starting a construction company, however, just isn’t the most straightforward thing in the world. In this article, we’ll help to shed some light on the process. We’ll give you a quick guide that you can use on building a construction company from the ground up.
1. Research the Construction Industry
The first thing that you need to do in order to start any successful business is to research. You should have a very solid understanding of all the fundamentals of the industry. This is probably by far the most important step, as your knowledge of the industry will have a great impact on shaping your long-term success.
If you’re an engineer with prior construction experience, then you’ll have a much easier time with research given your existing level of expertise. But even if you haven’t done much business in the construction world yet, do not fret.
There are lots of online resources out there that will educate you on the construction industry. One of the most key things to know is that your network is very important as that is almost the sole determinant of whether or not you land lucrative contracts.
In addition, your location can make or break your success. If you operate primarily in real estate markets that are developing rapidly, then you’ll be able to find lots of lucrative contracts with relative ease. In struggling markets, you’ll be more hard-pressed to find a good amount of business.
2. Write a Business Plan
Any company that’s trying to get off the ground needs to have a business plan that will plot the trajectory of the company. Have you never written a business plan before? No worries — we’ll give you a quick highlight of all the important sections that you’ll need to cover.
Start your business out with an analysis of your market. The research you did in the first step should shed some light on the size of the market that your company is entering given your location and the service you provide.
Then, go into an in-depth description of the services your construction company will provide. Will you provide an end-to-end service constructing everything that a building needs, including plumbing, electricals, and the like? Or will you instead focus on just the physical structure?
Also, will you target residential or commercial buildings?
Next up is financial projections. You should have a plan for how your business with acquire funding, either via loans or private investment and what it will do with those funds. You should be able to come up with financial models that project your success in the market.
The last thing that you need to include in your business plan is an executive summary. The executive summary is a short, to-the-point summary of all of the highlights of your business. The executive summary should fit on one page or less.
3. Register Your Business
Now that you have the most fundamental elements of your business squared away, it’s time to register your business as a legal entity. Doing so will allow you to operate your business while also being recognized as a legal organization for tax purposes.
There are a few different business structures that you can choose from. The most commonly chosen structure is an LLC or Limited Liability Company. An LLC gives you the option to have several partners with ownership, but all of the personal assets of the owners are protected even if the business does go belly-up and declare bankruptcy.
4. Purchase Industrial Capital
What does any construction company need to perform its work?
That’s right — industrial capital. You’re going to need all kinds of construction machinery in order for you to build the structures that you promise to deliver to fulfill contracts.
It’s important to keep in mind that industrial capital is extremely expensive, whether it’s a bulldozer, a crane, or an industrial generator. You’ll need to go back to your financial models to figure out how to fund these purchases.
5. Hire Employees
No construction company can get any work done without good employees.
There are a number of different ways to go about hiring employees for your construction business. Probably the most popular way is to create job ads and disseminate them on appropriate job boards.
But another great way is to use a recruiting firm. There are firms in the industry that have contacts with plenty of job-seeking construction workers for the hands-on work, as well as other engineers to take care of the more technical aspects of your contracts.
6. Leverage Your Network for Your First Construction Contract
Once you have your equipment and employees, you’re pretty much ready to go! It’s time to secure your first contract so that you can start earning money.
The way to get your first contract is to leverage your network. Remember that without any prior experience, you’re an unproven entity to the rest of the world. You have to leverage your existing connections — the people you already have some level of credibility with — in order to get a contract that your business can use as a reference to pull in future customers.
7. Grow Your Business
Once you complete your first contract successfully, you can start marketing your company to the wider public. Work hard to get your company in front of as many contractors as possible so that you can be the service of choice for construction needs in your location.
Starting a Construction Company, Made Easy
There you have it! Now that you know the ins and outs of starting a construction company, all that’s left is for you to go out there and begin starting a construction business today!
For more business advice, check out the rest of the website!