The construction business is booming once more.
In fact, the residential building construction industry was the number one fastest-growth industries for small businesses in recent years (source: Sageworks) thanks an increase in housing demand, lending activity and real estate values.
In addition, six of the 10 fastest-growing industries among small businesses are tied to construction – including contractors, real estate agents and architects.
The commercial construction market is also experiencing a rebound. IBISWorld predicts that the next five years with see a period of robust growth for commercial construction companies. Demand for more business office space and the resurge of disposable incomes will also raise the demand for retail buildings.
If you’re interested in making the move into the construction, now is the time. Here are eight considerations and resources that Peter W Smith Construction has helped compiled that can help you get started.
Steps to starting (any) business
Start by familiarizing yourself with the basic steps involved in planning and forming any kind of business, including planning your business strategy, incorporating and registering with the right government agencies. These 10 Steps to Starting a Business should cover all you need to know.
Get help and be mentored
You don’t have to go it alone; small business assistance programs such as SCORE Mentors or your local Small Business Development Center or Women’s Business Centers can help you understand the ins and outs of the planning process and offer tips for getting started. SCORE can even pair you with a mentor from the construction industry, at no cost. If you are a veteran, contact your local Veterans Business Outreach Center. They offer workshops, mentorship and financing advice.
If you don’t have savings or access to a traditional bank loan, you might want to consider an SBA loan program. Other financing options for small businesses include credit unions, community banks or a business line of credit.
Get licensed, bonded and insured
Protect yourself, your business and your clients by ensuring you have the right licenses and permits, business insurance and surety bonds. Here are three reasons why and information on how to obtain them:
- Business Licenses and Permits – In addition to a general business license, most construction or contracting businesses need specific licenses to operate. For example, a tradesman license is required for electrical, plumbing, HVAC, gas fitting and other construction trades. Check with your state business license office for information about what you’ll need. If you headquarter your business out of your home, you’ll also need to obtain a home business permit from your city or county.
- Surety Bonds – Typically, construction businesses need construction bonds in order to operate legally. You arrange for a surety bond from a third party who promises to pay your client if you do not fulfill your work obligations under a contract. Learn more about surety bonds from the Surety & Fidelity Association of America and take a look at their bonding resources for small and emerging contractors. Bond regulations vary by state, so research your state’s requirements or speak to a reputable surety bond agent. If you are unable to secure a bond through a commercial channel, SBA offers its own Surety Bond Guarantee program.
- Insurance – Depending on the nature of your work and whether you employ workers directly, you will need several types of business insurance – general liability, vehicle and property insurance. Individual states also require businesses to carry specific insurance, such as workers’ compensation insurance, unemployment and state disability insurance. For a better understanding read: What Kind of Business Insurance Do You Need?
Familiarize yourself with construction industry regulations
From energy efficiency standards to workplace safety regulations, the construction industry is heavily regulated. Read SBA.gov’s Construction Industry Guide for more information.
Develop an occupational health and safety plan
The Occupational Safety and Health Act (OSHA) requires that construction workers are provided a safe workplace free from recognized hazards. Take a look at SBA’s Workplace Safety and Health guide for information about resources that can help you establish a safe and compliant workplace.
Finding and hiring labor
The construction industry generally secures labor from four sources – subcontractors, hired employees, labor brokers or independent contractors. To get you started read these steps to hiring your first employee and then check out the particular laws and tax ramifications of hiring independent contractors.
Take advantage of industry tools and resources online
There are many online resources that can help small construction companies and contractors who can’t afford the headcount or infrastructure that larger companies enjoy. Here are just a few:
- Construction Office Online – Includes free downloadable templates and documents such as schedules, estimating, budgets, timesheets, invoicing and billing and more
- Compare Construction Business Software – Looking for the right construction management solution? This guide lists the “Top 10 Most Reviewed Construction Systems”
- Construction Marketing Association Blog – Tips and insights on how to market your business like a pro
- Overcoming Obstacles: Best Practices for Subcontractors, General Contractors, and Public Agencies For more information about some general issues with doing business in the construction industry such as cash flow, communication between contractors, change order processing, contract negotiations and more, check out this whitepaper from Washington state’s Small Business Growth Opportunity Council
Article publié pour la première fois le 17/09/2015