A construction business is a great way to make a living, particularly if you like to work with your hands. There’s nothing that beats the satisfaction of completing a project and seeing the contented smiles of your customers. But like any business, there are a few things you should know before getting started. Here are three things you should know about the construction business.
It’s a Competitive Business
Construction in both the commercial and residential sectors is extremely competitive, especially in certain markets. When you’re starting a business in construction, you need to be aware of the competition that surrounds you so you have a fighting chance to earn bids.
Carefully evaluate the market before determining a city to open for business. It’s worth considering relocation to make sure you’re in an industry poised for growth.
According to 2018 forecasts, some of the best places to open a construction business include Oklahoma City and Tulsa in Oklahoma, Las Vegas, Houston, San Antonio, Richmond, among many others. In cities not on this list, it might be difficult for construction to take off as there is a high labor shortage. Finding a city where construction laborers are in vast supply will prevent you from going out of business early.
There’s also a lack of digitalization that slows down companies and makes it difficult for them to compete with the more modern construction companies. You must say goodbye to plain paper practices and adopt the digital scene to remain competitive.
Construction needs will continue, despite the existing inventory. However, some areas have a greater need for construction than others. Examining the market, using competitive practices, and setting up business where it’s in high demand will help you find success in your business.
Take Care of the Business Side of Things
Running a successful construction business is about more than just building beautiful buildings on time. There are several legal aspects to consider about the business. Here are a few considerations to keep in mind.
Keep a few attorneys on retainer. Construction is a complex business that requires legal finesse. You can’t navigate the legalities on your own, so have a few attorneys on retainer. You’ll want a business attorney first and foremost, but it’s also good to know a criminal attorney in case things go sour.
Apply for a business license. Most construction businesses fall under the LLC category, but it’s not the only option. Discuss your options with your business lawyer.
Obtain proper permits and licenses. Construction owners cannot operate within a city without the right permits and licenses. These will differ depending on your location and the job you’re doing. Be thorough and prepared to avoid running into problems on the job.
Write a comprehensive contract for each client. Although every contract will differ, create a template so that you don’t have to start from scratch each time. Have your business attorney check it over before letting the client sign it.
Set your pricing and estimates process. Your customers will expect consistency, so set your prices and processes for giving estimates early on.
Designate Your Suppliers and Subcontractors
The labor is only half the job. You also need quality supplies to set yourself apart from the competition. Creating agreements with your suppliers early on will help you develop the consistency of high-quality products that your clients will expect from you.
First and foremost, you’ll need suppliers for your materials. Look for suppliers of building materials, flooring, paint and texture, siding, and more. You’ll also need a list of good subcontractors if you don’t plan on doing the landscaping and roofing yourself.
Have suppliers lined up for your heavy equipment, as well. You’ll need cranes, excavators, backhoes, bulldozers, loaders, motor graders, trenchers, and more. Along with dealerships carrying this inventory, you’ll need suppliers for your maintenance needs and repairs. A fresh supply of undercarriage parts, belts, tires, hydraulics, and other supplies will keep your equipment running without a hitch.
Construction is a fantastic business, but it requires adequate preparation. Put your timbers all lined in a row so that you can set yourself up for success.