How to Start a Construction Company



how to start a construction company

The construction industry is a big part of the American economy. You can become one of the over 700,000 employers nationally. But you’ll need to piece one of these small businesses together using the following suggestions.

How Much Does it Cost to Start a Construction Business?

Potential owners need to have the funds to get started. Most construction companies average startup costs are $37, 390.

How Profitable is a Construction Company?

The American construction industry was worth $1.36 trillion in 2020. The overall spend declined. But private construction grew.

Starting a Construction Company in 19 Simple Steps

Starting your own construction outfit requires planning and hard work. Following are the steps for a new construction company.

1. Research Nearby Construction Companies

Market research is necessary to get a handle on the competition. Local industry publications are good. Don’t forget to look to publications from the government and trade associations. Search engine results are great.

2. Stand Out from Your Competitors

Narrowing your focus to a specific target market is one way to be successful. Niche is important. Begin by choosing between commercial or residential work .



3. Create a Business Name and Brand

Every general contractor needs a brand. Be consistent. Your website and company vehicles should have the same logo. Engage prospects and customers on social media. Watch your enterprise grow.

4. Write a Construction Company Business Plan

A solid business plan does several things. It provides an overall business strategy so you can check milestones. And it can help secure funding plus specifics like equipment loans. Here’s a template and some tips for these small business owners.

  • For the financial section. Labor expenses are big . Include projections for salaried and subcontracted employees. Try to add some labor statistics.
  • For the industry analysis. Add in key stats like new home sales if you can.
  • For the marketing plan. One area to highlight is networking with the likes of home improvement stores. And local real estate companies.

Construction services also need to highlight milestones in the operations section of their business plan.

5. Choose a Location

Choosing a location is easy if you’re opting for a home based shop for your own construction business. Otherwise, here are some ideas.



  • Does the site need to be modified? Who will pay for that? Are there changes required to meet energy efficiency standards for equipment?
  • Make concessions for future growth. When you start a construction company, scale is important.
  • Are you renting? Check out any tax benefits for a construction startup.

Finally, make a must have list to stay on budget.

6. Form a Business Entity and Register

Any new enterprise needs to become a legal entity. There’s several to choose from. Personal liability is one of the big concerns for a business owner.

  • A sole proprietor can find issues with liability.
  • Partnerships need to define everything in writing.
  • Corporations offer good protection.

Find out if you even need to register your new business.

7. Open a Business Bank Account

You need an Employer Identification Number (EIN) and a copy of your general contractor’s license. The EIN acts as federal Tax ID.



8. Look into Small Business Loans

Small Business Administration (SBA loans) are a great place to look for funding.

Other options include:

  • traditional banks and credit unions. Look for the best interest rates.
  • A business cash advance.
  • A line of credit

Factoring is another way to purchase materials and have a cash flow. Sell invoices to third parties.

9. Purchase the Necessary Construction Equipment

You need equipment to open even home based businesses. Check this starter list out.



  • Most construction work needs excavators. These come on wheels or tracks.
  • Independent contractors need at least one backhoe. These lift materials and dig trenches.
  • Bulldozers knock down the topsoil to a certain depth.

Other must haves include ladders, saws and drills for small operations.

10. Create Your Own Construction Company Website

To start a construction outfit today, you need a website to attract potential customers. Many home inspection businesses provide good examples.

They include a separate page for each service. And testimonials.

11. Make Sure You Have the Licenses Required in Your State

State and local governments require different business licenses. Here are some general business license requirements by state. these cover specific licenses.



Each state is different. Insurance is important too and a reputable surety bond agent provides coverage for financial damages.

12. Get Your Taxes in Order

Paying business taxes is part of your new operation. A home inspector pays the following:

  • tax to the feds as independent business operators.
  • that means a self employment tax.

It’s important to keep all of your documentation because there are both federal and state payments.

13. Purchase Business Insurance

A construction enterprise needs to buy insurance. Here is a list of the insurance policies needed.



  • General Liability Insurance. Covers claims for property and bodily injury.
  • Vehicle Insurance: Prevent company closure. This covers vehicles used for work and employees who drive them.
  • Workers Compensation Insurance. Occupational safety is important. These policies cover workers injured on the job. Mandatory in every state except Texas. Get more info on health administration here.
  • State Disability Insurance: Another insurance that replaces lost wages. The contributions are tax deductible.
  • Unemployment Insurance. These programs are managed at the state level. There’s federal oversight.
  • Property Insurance. Protects company property against theft and damage.

14. Sort Out Your Accounting Systems and Construction Software

Small business administration in construction needs to do several things. Accounting and software should work hand in hand. Look for billing reports, payroll and project budgets in one spot.

15. Hire Employees

Companies need an EIN before they start looking for workers. Putting together your own team means posting jobs in the right places like social media. Offering apprenticeships helps. Look in construction industry publications for advice on trends.

16. Market Your Business

A physical business card was the way to market years ago. Those still apply. But today’s marketing strategy for small businesses in construction needs to be digital too.

Brand image needs to be the same on your website and social media accounts. The same logo applies to your trucks and front yard signs as well. Sharpen up your digital marketing skills with courses.



Remember, whatever strategy you choose, keep your target customers in mind. Your business plan should have some details.

17. Network

Building inspectors and construction owners need to network. There are good opportunities at trade shows and industry associations and companies such as ConstructReach.

The back of a business card is a good place to add some personal assets like updated contact info.

18. Bid for Contracts

Government contracts are golden for construction startups. Start here.



Submitting a document covering the design and construction phases is an early step.

19. Grow Your Construction Company

Now you’ve got the formula for a successful business in construction. Go out and make money. And an impact on your community.

Image: Depositphotos


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Rob Starr Rob Starr is a staff writer for Small Business Trends. Rob is a freelance journalist and content strategist/manager with three decades of experience in both print and online writing. He currently works in New York City as a copywriter and all across North America for a variety of editing and writing enterprises.

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