Residential home sales are steadily rising. This month, the rate of sales nationwide was up 7.1% from last month and it was 18% over projections.
Now is the best time to get into the construction business. Prices are finally recovering after the market slump ten years ago and it’s been a seller’s market for a while now.
But if you’ve never started a business, you might be wondering what you need to do first. Here’s a quick list of what you need to do in order to start a construction business.
1. Research Your Market
Construction is a broad category. Are you starting a residential construction company, a government contractor company, or a commercial construction company?
What types of homes or buildings are you going to build? This will determine which market you need to research. \
As we said previously, the residential market is booming. But where are you going to make the most money?
Within the residential market, you’ll find a variety of housing options. Single-family might be popular in small towns. In large cities like Portland, OR where they are currently zoning out single-family units, you might need to refocus on duplexes and apartment complexes to make money.
Find where your knowledge-base on construction will be most profitable and build a business there.
2. Draft a Business Plan To Get Funded
You can’t just march into a lending office and demand construction financing. They’ll laugh at your angry sunburnt face.
If you have the money already, you don’t necessarily need a business plan. But it might help you build a roadmap for your business. This way, when you come to a barrier in your path, you know where you’re headed.
A business plan includes:
- Your target market
- Your predicted employee count
- Your marketing strategy
- Competition Research
- Six-month cost prediction
- A service synopsis
- A management and structural chart
3. Business Registration
The government is especially involved in the construction business in the United States. If you’re wondering why, just Google “collapsed buildings.” You’ll quickly realize that inspections are a good thing.
But even before you dig your first pit, you’ll need to tell the government you’re starting a business.
Why? Because of liability. You want to register your business as an LLC so that if your business fails, it doesn’t bankrupt you or your investors.
Limited liability means that lenders can’t come after your personal assets if your company fails. Only the company assets are subject to seizure or liquidation. It also means that debt collectors can’t go after your investor’s assets either.
This will put anyone wanting to invest in your company at ease.
Cover Your Butt and Get To Work
The last question you need to answer is how are you going to pay your employees and how are you going to pay yourself? You’d think it was as easy as dipping into your funds, but it’s more complicated than that.
Surety bonds are the best way to ensure you can pay your employees when things get delayed. Most states even require this.
Once you’ve got all your dump trucks in a row. It’s time to get started. Go out there and make some serious cash.