The top 5 fundamentals for starting a construction business

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I once overheard a successful contractor describe how he started his company with just a pickup truck and his dog. On the exterior, launching a construction company can seem pretty simple. In fact, construction is one of the most common segments for start-ups. But for anybody venturing into this challenging and rewarding business, there are some essentials you need before setting up shop as a construction contractor:

  • Begin with a business plan.

It’s easy to overlook this stage, particularly if you’re more interested in building things than actually managing a business. Your business plan is your roadmap to where you want your construction company to go and displays how you will realize your objectives. It also aids in securing funding. The key mechanisms of a business plan consist of an executive summary, business description, market strategy, operations plan, and financial factors.

  • Find financing.

There are a number of ways to get funding, beginning with looking at your own pocketbook. But if you can’t depend on  your own savings or even a traditional loan, there are other opportunities to explore. The Small Business Administration (SBA), for example, offers a “wizard” to help you find government resources for financing.

  • Obtain licenses.

As a construction contractor you will need more than just a business license. Begin with your local county courthouse to decide what permits and licenses are mandatory for the type of work you will be doing. You will also need to secure particular state licenses. The internet provides a suitable spot to look up state license and permit requirements.

  • Put the right insurance in place.

Most states and construction contracts needs contractors to carry valid workers’ compensation insurance. Other coverage to contemplate includes general liability, auto, builder’s risk, and professional liability (if you are doing any design work). Understanding the insurance landscape can be intimidating.

An insurance provider with established experience working with contractors can show you how to shelter your company from the start.

  • Get bonded.

In many states contractors are required to get a collateral bond in order to be licensed. The amount of this license bond varies by state. Your clients can also need you to obtain further performance and payment bonds for specific projects. While performance and payment bonds are most frequently used on government projects, their use is growing on privately funded projects.


When opening a construction business you don’t have to go it on your own. Locally you’ll find chapters of supportive organizations such as the National Association of Home Builders (NAHB) and other groups that offer great networking opportunities and expert advice particularly to construction. There are also special programs accessible for businesses owned by minorities, women, and veterans. And lastly, it’s always a decent notion to get professional advice from an accountant who focuses on construction to guarantee your business sits on a strong financial foundation

4 thoughts on “The top 5 fundamentals for starting a construction business”

  1. Thanks for sharing this information, it’s always good to learn all this before embarking on the journey of having a construction company

  2. Thanks for pointing out that there are multiple ways to get financing when starting your own construction company. My brother is thinking about starting a construction company because he likes that he could be his own boss, and he likes working with his hands. I will have to tell him to look into his financing options for the construction equipment he will need so he can be smart about it.

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