How Easy Is It to Start a Construction Business?

By: | September 18th, 2023

Photo by Josh Olalde on Unsplash

If you’re in the construction industry, you’ll know how in-demand construction workers are. Very few business owners have to worry about having enough work lined up to take care of their employees and make a profit. 

With that in mind, you might be eager to transition from the role of an employee to an employer. Establishing a construction business might seem daunting, but it could be more straightforward than you thought. Most business owners take the following actions to get started:   

Research the Market

Even though construction businesses are in demand, it doesn’t hurt to research the market to ensure it’s a viable option. When you do, you can learn everything from how to form an LLC in New Jersey and other states to whether there is demand for construction services in your area. It also doesn’t hurt to look at your possible competitors. The more you know about construction in your area, the more confident you might be in your decision to start your own business

Write a Construction Business Plan

It can be hard to secure funding for a new business venture of any kind without a business plan. Business plans can also be your road map for future success. Start writing your plan to fully understand your venture’s potential. You can download a template from the U.S. Small Business Administration’s website. Otherwise, create one from scratch and ensure it has the following information: 

  • The business structure and management
  • The services you’ll provide
  • The job types you’ll bid on
  • Your target market
  • How many employees you’ll have
  • Your marketing strategies
  • Estimated startup costs
  • Important KPIs 

Register Your Business

Registering your business is an essential step toward becoming an official construction business. Once registered, you have a legal entity for tax purposes and liability protection. It can also be a good idea to register at a federal level to obtain your federal tax ID. With this ID, you can trademark your business name and logo. 

Obtain Your Licenses and Permits

Many tasks within the construction industry require licenses and permits. Now is an excellent time to research what you’ll need. For example, if your construction company will be moving oversized building materials, you’ll likely need permits to do this task legally. 

What you’ll need can vary from state to state. Some states require contractors to have contractor licenses, while others don’t. Licenses might also vary depending on whether you work on residential or commercial properties. 

Purchase Insurance

The construction industry is dangerous. According to the Bureau of Labor Statistics, nearly one in five workplace deaths occur in the construction industry. With that in mind, purchasing insurance can be one of the first tasks on your to-do list when setting up a new construction business. 

Contact insurance providers to learn about the most appropriate policies for your needs, such as liability insurance and workers’ compensation insurance. Builder’s risk insurance and auto insurance can also be important. 

Starting your own construction business can provide a great deal of freedom. You can now be your own boss and make your own decisions. However, if the logistics are a stumbling block to getting started, use the information above as a basic guide. These steps are a few of the most important to take before your new venture begins. 


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