Starting a business
How to start a construction company
Most people who start a construction company already know the work. They've framed, roofed, wired or remodeled for someone else for years. Going out on your own is about the business side: licenses, insurance, estimating, and keeping the next job lined up. This guide covers general contractors and the trades, from roofing to plumbing, electrical and HVAC.
1. Pick your lane
Decide what you'll do: remodeling, new homes, additions, roofing, decks, concrete, or one trade like plumbing, electrical or HVAC. Residential or commercial. A clear focus makes your marketing simpler and your estimates more accurate.
2. Get licensed
Construction is one of the most licensed kinds of work. Many states license general contractors, often above a certain job size, and most require separate licenses for electrical, plumbing and HVAC work. Your city or county may also need its own registration, and most jobs need permits. Call your state contractor licensing board first: some licenses take exams and proof of experience.
3. Set up the business on paper
Many contractors form an LLC to keep business and personal money apart. Get a free EIN from the IRS, open a business bank account, and set up a simple way to track job costs. An accountant who works with contractors is worth the money early.
4. Get insured and bonded
- General liability insurance: almost every client and many licenses require it.
- Workers' compensation: required in most states once you have employees.
- Commercial auto: for your trucks.
- A surety bond: some states and many commercial jobs require one.
5. Estimate and price carefully
Bad estimates sink more new contractors than bad work. Count materials, labor hours, equipment, permits, dump fees and your overhead, then add your profit. Put every quote in writing with what's included, what's not, a payment schedule and how changes are handled. Take a deposit before you start.
6. Look established
Homeowners are trusting you with their biggest investment. A strong logo on your trucks, yard signs at every job, professional estimates and a website that shows your license, insurance and real project photos all say you'll be around to stand behind the work. See what a contractor website should include.
7. Line up your first jobs
- Tell past customers, suppliers and contractors you've worked with that you're on your own now.
- Ask other trades for referrals. A roofer gets asked about gutters, a remodeler about electricians.
- Set up a Google Business Profile with your service area.
- Put a yard sign at every job, and ask every happy client for a review.