Coach's Corner Business Tips
How to Start Your Construction Business
Passion for the construction industry is typically what steers someone to start their own business. But passion has to wait until all the research, reporting, and paperwork gets done. Hiring a construction business consultant to help you wade through the process is a brilliant early step.
Hiring a consultant allows you to learn the basics of setting up and managing a business. Using them to assist you in developing a plan for your business early on is a great way to set yourself up for success.
A great construction business consultant can help you conduct market research to determine if there is a demand in your market for a new construction business. They will use customer demographics and specific data related to your services. The coach will also help you determine if there is enough demand in your demographic to allow your company to grow.
Part of the research process is determining what percentage of potential customers you can capture compared to your competitors. This information will help you estimate a pricing plan that is both profitable and competitive.
You will also need to research your competitors to determine their strengths and weaknesses, which will help you develop the best business strategy. Leave that work to a good consultant.
Draft a Business Plan and Identify Your Products and Services
Work with a construction business coach to lay out how you plan to reach potential customers and turn them into clients. Determine why your customer needs your services and why your offer is better than what your competitor offers, then come up with a plan to find and reach your target customers.
Map out a marketing and advertising strategy and define how that strategy can convert prospects into clients under contract. Devise a detailed overview of your company’s finances and how you can grow those finances in the future. If this is your first business, use projected finances based on market research and analysis to make the best forecasts.
You will need:
- Balance sheets or projected balance statements
- Cash flow statements or forecasts
- Income statements or projected income
- To know your debt obligations, including investments made in the company, equipment loans, mortgages, etc.
Outline the funding you will need and how you plan to raise those funds. Also, include in your business plan any research, notes, charts, and other relevant information. Use an appendix if this list is too long.
Before completing your business plan, make sure that it includes information on:
- Permits and licenses
- Past project details
- A detailed market analysis
- Company organizational chart
Time to Register Your Business
The steps for registering a business are pretty straightforward.
- Once you choose your company name, it is time to decide whether you will register it as an LLC or a corporation.
- Get your federal tax ID, or EIN – Employer Identification Number. Use this number to pay your taxes, apply for business licenses, and open a company bank account.
- LLCs are state entities, while corporations must file with the federal government.
- Some states require businesses to register on paper, while others allow companies to file online. Find out what your state requires by visiting the Small Business Administration’s state lookup database. If your business operates in more than one state, register with each state government.
- Do not fail to register with local agencies, as well. Each local government will have a website with the requirements for registering a business.
Deciding how to structure your company is another step a construction business consultant can assist you in completing. There are four prominent business structures to choose from and each has its own strengths and weaknesses.
- S Corporation
- C Corporation
- Limited Liability Company
- Sole Proprietor
For other permits, licenses, certifications, and insurance, check with your local government and consult your state’s Contractors’ Board since these issues vary from one state to another.
There are many obvious reasons to hire a great construction business consultant to assist you as you set up and register your business. Cotney Attorneys & Consultants is available to help guide you through this tedious process so that you can establish your construction business.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.