Can I start a construction company with no experience? Let’s dig into the facts.
The construction industry is vast, with lots of potential for new entrants with what it takes. Like any industry, construction knowledge is crucial.
This can make up for the lack of experience. Here, the focus is on how to start a construction company with no experience. Is this possible? Has it been done before?
Read on for answers and more.
Starting a Construction Company Without Experience
In discussing this topic, we’ve covered areas like choosing a niche, researching your preferred construction niche, choosing a company name, and writing a construction business plan.
Licensing and permits, purchase or rent of equipment, choice of a business structure, insurance, having a safety plan, assessing labor needs, and business registration are other aspects of the business covered below.
Choose a Construction Niche
Every construction company serves a market. In other words, choosing a niche is vital to your operations. Now, there are lots of niches when it comes to construction.
A few of these construction business ideas to consider include structural engineering, demolition, civil engineering, residential construction, landscaping, and outdoor construction.
While there are more, these niches give you an idea of the different options. Part of the process of choosing one involves assessing your skill or competence as well as your area of interest.
If you have no idea of the niche to go with, take enough time to research all available niches to know which best fits your needs.
Choose a Company Name
Irrespective of your experience level, one vital thing is the need for a suitable name for your construction company. This gives an identity to your business idea and needs careful selection.
You must be thoughtful about picking a name, as it will influence your branding efforts and how it shows up during simple internet searches.
One tip that must be considered when choosing a name for a construction company is the need to convey an idea of what the business is about. There are so many business names already registered.
Hence, there is a need to perform a name search to determine availability. Again, a lot of research is needed to get the perfect name.
Choose a Business Structure
Business structure or entity must also be determined. Here, you must understand that different structures serve unique purposes and offer varying advantages.
So, you must figure out what structure best serves your business needs. Some construction companies start with a preferred structure but later change to another based on changing needs.
Speaking of business entities, there are several to consider, such as sole proprietorship, partnership, and limited liability companies (LLCs)—other structures to explore include C Corp and S Corp.
You must research each of these to know what benefits accrue to your business. Plus, your choice of a business entity may be influenced by specific needs.
Write a Business Plan
Your business plan is a critical document that guides the setup and operation of your construction company. In a nutshell, your plan will offer vision while helping establish a business strategy.
There are vital sections every business plan must have. These serve as the framework on which the plan is developed. Such sections include the executive summary and company description.
Your construction company business plan must include products and services, market analysis, strategy and implementation, and the organization and management team sections.
The financial plan and projections section is another vital section that must be added to your plan. Developing these gives you a comprehensive plan that helps guide your operations.
Financing your Business
Funding is a critical part of establishing a construction company. Such financing must be sufficient and cover all areas of your operation. In sourcing such funds, there are several places to look.
Such include working capital loans, small business loans, vendor financing, equipment loans, purchase order financing, and several other types.
It’s important to understand that each loan facility has pros and cons. Plus, your preferred construction needs and scale of operations may determine what financing type you go for.
If confused, it’s best to seek or consult a financial expert. You may also discuss this with entrepreneurial friends or acquaintances involved in construction.
Licensing & Permits
Every construction company needs to meet set regulations to be in business. These come in multiple forms, including licensing and permits.
The type of licensing and permits needed for your construction business will be determined by the state you live in, the construction niche or specialty, and the scale of operation.
Starting from your municipality, look up licensing and permit requirements for construction businesses. This should be extended to the state and federal levels.
You can consult your local Department of Labor or the state’s Contractor’s Board when in doubt. Again, it would be best to understand that there’ll always be variations by state.
Get Insured
Insurance is one of the critical requirements for construction companies. Hence, this will be needed despite having no experience.
With insurance, you get to protect your business operations from lawsuits which can cripple a thriving business. Now, there’s general insurance and other specific types you’ll need to know about.
Besides general liability insurance, other types of research include worker’s compensation, vehicle, disability, unemployment, and property insurance. Each of these serves a purpose.
Most construction companies will apply for several of these insurance coverages.
Register your Business
For your construction company to be considered legal, it must be fully registered with your state. Now, each state has its registration requirements for construction companies.
In some states, your experience in construction may be inquired. In such cases, persons without such experience may face a significant challenge.
When starting as a sole proprietorship, business registration may not be needed.
Registration may be required at the local and state levels and covers things like your business name and the federal tax ID number or the employer ID number (also known as the EIN).
Assess your Staffing Needs
Who needs to be hired as part of your workforce? Part of starting a construction company includes hiring the right hands.
These are persons with specific skills needed for your operation, such as surveyors, architects, project managers, engineers, assistants, contractors, accountants or bookkeepers, and general laborers.
The above information will prove helpful in starting a construction company with no experience. These guidelines improve the chances of your business succeeding.
It’s also vital to carry out in-depth research before launching out.