How to Start A Profitable Construction Company

Construction is one of the biggest areas of business and development. If you have the skill or interest in the construction industry, you can start your Construction company and earn good money. However, you have to do good planning before starting your Construction business.

The construction company can be a large or a small one. It is up to you to decide on which scale you are going to start your Construction business. You can start the business on a small scale and then gradually scale up the business.

The construction industry operates in three main areas: Buildings which include residential and institutional. Infrastructure includes roads, bridges, dams. And Industrial which includes factories, mills, refineries, and many more. You have to decide on which area your business will work in.

Since Construction Business is a large business, you have to do good planning and thorough research before starting your company.

Construction Company Business Plan Guide for Beginners

Here are some important steps to follow to start a profitable construction business:

1. Do the Market Research

Market Research and Analysis is very important for your construction company. First of all, you have to find out the demand for real estate properties in the area of your business. Do thorough research on the types of construction done in the area and also the profile of the people living there. This is because construction is an expensive operation and people need a good amount of money. Therefore knowing the financial condition is necessary.

You have to get the information about the types of constructions done mostly in the area. Get to know whether the area is dominated by the construction of housing complexes, single houses, industrial construction, or business construction. You can plan your construction business accordingly.

In the Market research part, you have to gather information about the existing Construction Companies in the area. This will give you a good idea about your competitors and the viability of your new company in the market. Also, get to know what the people want from a new construction company.

2. Make a Business Plan for Your Construction Business

After the research and market survey, you have to prepare a detailed business plan for your construction business. Make it a very organized plan and include all the necessary details of the business.

Your Business Plan must include the following points:

  • Setting up the Office (At Home or a rented place)
  • The niche of your construction business
  • Staff to be Employed (Full-time/Part-Time)
  • Equipment, Furniture, and Machinery Required
  • Accounting and Billing Procedure
  • Funds Needed
  • Source of Fund (Own Savings, Bank Loan/Grant, etc)
  • Fixed and Variable Cost
  • Expenditure
  • Projected Profit Margin
  • Marketing & Publicity Plan

You can take the help of Accounting and Financial experts and Industry experts in making your Business Plan. Remember, it has to be well-thought and well-calculated.

3. Choose Your Niche

After the business plan is prepared, you have to choose your area of operation. This means, in which area of construction your company will operate.

However, there is no strict rule in this regard. You change your area of operation according to the changing demand or change in popular priorities.

4. Name Your Construction Company

Choose an Appropriate Name for your construction company. Find a simple but meaningful name.

Book a domain in the name of your business because the website is very important for your construction company. If you cannot get the domain in the chosen name, choose an alternate name. Keep a shortlist of names so that ready alternatives are available.

Check: Catchy Construction Business Name Ideas

5. Register Your Business

After finalizing the name and getting the domain, it is time for you to register your construction company.

For example, in the United States, there are different options like Sole Proprietorship, Partnership, Corporation, or LLC. You can choose an LLC for the convenience of your operation as well as from being sued in case of financial disputes.

One can form an LLC on their own or hire a professional LLC formation service provider by paying some extra cost.

6. License, Permits, and Taxes

Get the necessary license and permits that are required to start and run your construction business. There are different kinds of licenses and permits both at the federal as well as state-level where your construction company will be located.

Get to know the details of these because without the license and permits you will face a lot of difficulties in operating your company.

Register your construction company for the taxes applicable. Get the EIN for this purpose.

7. Open A Business Bank Account

Open a bank account in the name of your construction company and get a business Credit Card to avail the benefits of credit. For accuracy and detailing of finance and accounting, hire an experienced accountant with a background in the construction business.

8. Buy Insurance

Get your construction company insured for the safety and security of the business along with the employees. There are many types of business insurance that you can opt for.

You have to opt for Business Liability Insurance and Employees Compensation Insurance for the protection of the Employees.

9. Tools and Equipment Needed

The first sets of equipment you need for your construction business are office equipment like furniture, computer, printer, telephone, etc.

The building equipment and materials depend on the niche and scale of your operation. However, regarding the building equipment, depending on the local suppliers and for heavy equipment, you can go for rented ones to save cost.

10. What is the Cost to Start a Construction Company?

To start your construction company, you need approximately $10,000-12,000. This includes fixed costs like rent, salaries, taxes, insurance, and other variables like raw materials, miscellaneous expenses, etc.

The expenses of your particular project depend on the nature of the project. For example, the cost of construction of a small residential house is much lesser than the cost of constructing a housing complex or a factory.

11. Profit Margin for Construction Company

Although there is tough competition in the market, a properly planned construction business can be a very profitable venture for new entrants.

In the initial years, you have to reinvest the profit in the growth and development of the Company. On average, the margin of profit for your construction business may vary between 22-25%.

The profit is earned from the payment of bills by the clients, in the beginning, in the middle, and after the project. In each stage, you have the scope for earning profit. You have to charge the clients with good calculation so that it does not appear too high or too low for them.

12. How to Earn More Profits

You have to be very careful and take special initiative to grow your business and earn more profits.

Create a Web Presence for Your Construction Company

Web presence is a must for the growth of your construction company. Professionally design your website and make it user friendly. Keep chatbots for necessary information and the option of free consultancy and online booking and payment.

Read: How to Start a Website & Make Money

Do not forget a create a nice logo for your construction company.

Use Social Media

Use social networking sites for publicity. Create pages in the name of your construction company on social networking sites like Instagram, Twitter, and Facebook, etc. Link your website there. Take the opinions of the viewers on different projects.

Develop a Marketing Team

Employ a good and efficient marketing team to visit different clients and secure orders along with promoting the name of your construction company.

Create Publicity Materials & Advertisement

Make good colorful brochures, flyers, and leaflets in the name of your construction company and distribute them in different offices, residences, and other places. Also, use banners and hoardings at prominent places.

Give advertisements in newspapers, television, and radio so that people get to know about your construction company.

Make Good Relations

Keep good relations and regular touch with the suppliers, business associates, and other contractors. You will be updated with the latest developments in the field of construction and get good references.

It essential to have good relations with your clients also. This will help you to get referral clients and repeat projects.

The construction business is a huge field. However, it is a continuously growing industry and you have a good scope to grow your construction company. You have to work hard and plan properly to achieve success.