Launching a Construction Business | A Step-by-Step Guide for Contractors
the purpose of this guide is to cover the basic essentials of launching your very own construction business including the nine step process licenses financing legal information marketing and more [Music] who is this guide for the guide was designed for contractors construction business owners and entrepreneurs in industries like general contracting concrete paving landscaping hvac painting roofing plumbing just to name a few put simply this guides for any construction entrepreneur who's serious about creating a legitimate profitable construction business of their own before we start we want to mention this guide was created with the help of heavy ape home of build your own one million dollar plus construction business online course we can only cover so much information in one video so we highly recommend that you take their course and learn about each topic in great detail right now the heavy ape course is on sale for a limited time so be sure you check the link in the description below as soon as possible and one more thing congratulations on starting your own construction business [Music] why do construction businesses fail we believe many of you possess the skill drive and grit to build a successful construction business we know you work hard which is essential and if not the most important factor needed to persevere in this industry the hard truth is that many construction businesses fail within the first year according to data from the sba or small business administration twenty percent of all startups fail in the first year and fifty percent are out of business by year five so what are you going to do about it well for starters you can arm yourself with as much knowledge as possible because when it comes to launching a construction business knowledge is power that being said here's what we believe are the top 10 reasons why construction businesses fail number one you guessed it not working hard enough number two not enough capital number three trying to do it all by yourself number four bad hiring decisions number five is poor planning or no planning number six not having agreements in writing number seven is poor estimating or under bidding number eight is underestimating competition number nine is not understanding the market number 10 poor project management what problem will your construction business solve when it comes to creating your own business and the services or products you plan to offer the number one most important question to ask is what problem will my business solve because at the end of the day clients aren't hiring you or purchasing a product for kicks and giggles they have a problem that needs solving and it's usually a problem that's causing them a lot of stress and it needs to be fixed as soon as possible and that's where you come in if you can identify the client's problem and correct it 110 then you're in business and you do that over and over over a long period of time for as many clients as possible you're going to make money no doubt about it some of you already know exactly what type of construction business you're going to create but for those of you who are still looking for ideas or just curious here's our list of the favorite 20 low-cost ideas for a construction business number one construction equipment sales and leasing number two construction estimation services number three landscaping number four junk removal number five handyman number six drywall contracting number seven fencing number eight blended and engineered soils number nine concrete work number 10 spray foam insulation number 11 welding and metal fabrication number 12 home remodeling and renovation number 13 construction photography and videography number 14 sprinkler system installation and repairs number 15 drain cleaning number 16 painting number 17 construction cleaning service number 18 is logging number 19 hauling and number 20 roof maintenance and repair here's 11 questions you should ask yourself before starting a construction business whether you're starting up from scratch or building off the success of someone before you here's the 11 questions you should ask yourself before you start number one which type of construction will i focus on number two who is my target market number three should i draft a business plan number four do i need an office number five what kind of licensing and permitting is required number six what are the health and safety requirements number seven what kind of equipment will i need number eight do i need insurance number nine who's going to be on my team number 10 is how will i finance my construction business and number 11 is their room to grow there's a nine step process to launching your construction business creating a construction business takes time money patience and most of all lest we say it again hard work of course each business has its own story its own process as to how it got started but we think it's important to learn the rules before you go out and break them so here's the nine fundamental steps in order to get your business off the ground first research the local market second write a business plan third have someone review your business plan fourth register your construction business fifth get necessary permits and licenses six secure your insurance seven get funded eight understand tax liabilities and nine grow and maintain your construction business just remember that once your construction business is up and running the hard work has just begun again we recommend taking heavy apes course to learn more about this nine step process to launching a construction business the link is in the description below let's talk about creating a solid business plan for your construction business why does a business plan matter well consider factors such as whether you'll be serving residential or commercial clients that makes a difference when it comes to what you charge when you purchase equipment or the materials needed not to mention the financing you'll need a business plan serves as a guide while building and expanding your new construction business and it's crucial if you plan on raising any sort of financing generally your business plan includes an executive summary a company overview market analysis a business structure products and services marketing and sales financial plan and projections appendix how to properly structure your construction business so you're ready to launch your business but first how will it be structured are you going to be a sole proprietorship a partnership a corporation maybe an llc you think it doesn't matter you just want to skip right over this and start making money no no no bad idea because there's two very important words you need to know taxes and liability what about the types of legal entities and we know what you're thinking taxes liability i want to start raking in the cash man we understand but this guide is about creating the most profitable construction business possible and we want to show you how to launch and manage your construction business properly without a doubt failing to structure your business would prohibit you from making millions and not to mention it could get you in lots of legal trouble so for that reason we'll walk through the different ways you can structure your startup business as well as some of the pros and cons of each now it's important to note that your specific circumstance may dictate that one type of structure might work better for someone else but not for you so it's important to consult with the appropriate legal and tax professional before you decide which path to take sole proprietorship a sole proprietorship is an unincorporated construction business that has just one owner who pays personal income tax on profit earned from the business in this scenario it's typical for the sole proprietor to do business under their own name because creating a business name isn't necessary due to minimal government regulation a sole proprietorship is one of the easiest types of business to create for that reason sole proprietorships are popular among small construction business owners and contractors that being said one of the disadvantages of a sole proprietorship is that they don't have government protection they're not registered that means all liability lies with the owner not the business and what about taxes sole proprietors report their income and expense on their personal tax return they pay income and self-employment taxes on their profits if your construction business begins to grow can you transition to a limited liability entity or a corporation of course you can also a doing business as or dba would allow you to manage your construction business as a sole proprietorship under a fictitious name in other words not your own name in this case you would need to register the dba and ensure it's not already used by someone else partnerships a partnership is a construction business that's shared by multiple owners it's not a legal business entity and most partnerships don't have to be registered with the state though those rules can vary from state to state in other words if you choose to go into business with another person without filing any state paperwork you're automatically in a partnership and keep in mind that a partnership like a sole proprietorship is legally and financially inseparable from the owners profits and losses as well as debts and liabilities are passed through the owner's personal income for tax purpose in addition partnerships provide the advantage of pass-through taxation which typically results in lower taxes than other business structures like a corporation there are four types of partnerships general partnership gp limited partnership or lp limited liability partnership or llp and limited liability limited partnership lllp first let's touch on the llc limited liability company a limited liability company is a business structure that protects the owners from personal responsibility for debts and liability because limited liability companies provide protection for an owner's personal assets like construction equipment for example there a very popular choice among construction contractors of course there's exceptions when it comes to being protected for example committing a crime like fraud leaves your house and other personal assets vulnerable to seizure when it comes to taxes llcs do not pay taxes on their profit directly instead their profit losses are passed through to members who report them on their individual tax return although there are significant advantages to structuring your construction business as an llc there's disadvantages as well for example depending on state law an llc may be required to dissolve upon the death or bankruptcy of one of the members next up is a corporation a corporation is a legal entity that's separate and distinct from its owners under law corporations have most of the same rights and responsibilities as an individual corporations may enter into contracts loan and borrow money sue and be sued hire employees pay taxes and own assets a notable part of a corporation is limited liability meaning that shareholders are not personally responsible for the company debts however similar to a limited liability company there's exceptions to that protection a corporation can be created by a single individual or a group of people with a shared objective some final thoughts about structuring your new construction business generally speaking a limited liability company or llc is the ideal choice for construction contractors for these reasons the llc protects an owner's personal assets like vehicles and equipment the llc offers tax benefits and other options and there's almost no restrictions when it comes to who may own an llc but in the end it's always best consult with the appropriate professionals especially when it comes to structuring your construction business and filing taxes we're not attorneys this video lesson can only take you so far and there's plenty more to learn about structuring your construction business so it's imperative that you do your due diligence do you like what you're seeing so far do us a favor crush that like button subscribe to the channel and that way you're notified every time we release new contractor guides we appreciate your support how to get your general contractor license in most cases like typical handyman work a general contractor license isn't required but for most jobs and those of you planning to build a business that generates over a million a year it's likely you're going to need a general contractor license state by state the first thing you should know about obtaining that license is that the requirements will vary state by state there's a general guide to getting a license so if and when you decide to get your license be sure you research your state requirements before taking any action [Music] at the current moment the following states do not require you to have a license colorado florida indiana kansas louisiana missouri new hampshire new york ohio pennsylvania and wyoming construction licenses registration and certification like we said the work you're doing may not require a license but that doesn't mean you don't need a registration or certification what's the difference between the three options well here are your definitions of each license license is a way to prove you have the skill and business acumen to handle construction projects most states that require a general contractor license have a written exam in two parts one part covers construction related technical topics like electrical wiring the other part is related to business law showing that you understand standard business practices rules and regulations registration registration is typically nothing more than filing paperwork and paying a fee but it lets the state know you're conducting business of a certain type in their area certification certification shows that some agency or company has cleared you to do certain types of work for example a manufacturer of a certain type of insulation would train you in installing their product and provide you with a certification at a governmental level certification might be required to do that work related to health and safety such as mold removal types of state contractor licenses most states have three types of licenses general subcontractor and reciprocal a general contractor license in most states the gc license is the most prestigious sought after license available this allows you to work on most trades and construction projects and for what trades it doesn't cover it allows the contractor to sub that work out legally and for profit to a licensed subcontractor subcontractor license when it comes to a subcontractor license these requirements vary even more state by state than the requirements for a general contractor license it's common across many states to require electricians plumbers and hvac subcontractors to hold a license in some states they require a license based on the cost of the work for example in alabama subcontractors need a license when working for a general contractor if the work is over fifty thousand dollars reciprocal contractor license some states do reciprocate with others in other words your license in florida might allow you to work in texas typically states that reciprocate with one another only waive a part of the requirement such as not requiring all or part of the written exam but whatever the case may be be sure to check your state guidelines before you do any work in any other state next we'll talk about financing your new construction business your new construction business is going to need some things before you start doing jobs and sending out invoices maybe you need to buy some new equipment like a skid steer a concrete pump maybe a work truck or maybe you're going to need material like timber lumber or steel sheet piling or concrete and don't forget maybe you've got to pay employees whatever the case may be these costs will rack up quick and before you know it you're out of money and your exciting new venture has stalled out everyone's financial situation is different some of you you may plan on bootstrapping it using as few resources as possible to get things going and that's great go crush it and let us know how it goes but for some of you this is not the case some businesses require significant financing to get off the ground and it can be challenging but if you do your homework and you're persistent you'll make it happen here's 12 different types of financing that's available to your new construction business first it's investors second a business credit card third a business line of credit four a business loan term five commercial mortgage six heavy equipment financing seven equipment leasing eight construction loans nine invoice factoring ten merchant cash advance eleven purchase order financing and twelve sba loans marketing 101 for your construction business marketing is everything that you do to attract customers and motivate them to buy your product or service there's many different ways to market your construction business and that should be your marketing mix this marketing mix is based on product price place and promotion known as the four ps and these four p's are the essence of marketing product what products and services you're going to offer to who and why price figuring out the price level that will attract customers and still provide a good profit place this is related to the distribution of your product or service for example you could be selling online or maybe you need a brick and mortar store or maybe both it's also about product placement within the store or in digital media like when you see your favorite actor drinking a particular brand of soda in a movie promotion here you decide what you'll need to do in order to promote your products or services maybe it's tv advertising social media promotion posting informational youtube videos direct mail campaigns and that's just a few examples there's so much to discuss regarding marketing we couldn't possibly include it all in a guide but for that reason that's why we implore you sign up for the heavy ape course and again the link is in the description below in the meantime here is a brief list of some effective marketing methods for your construction business a solid website testimonials business cards referrals search engine optimization social media marketing facebook groups content marketing and email marketing [Music] now let's talk about scaling your construction business growing a business is not necessarily the same thing as scaling a business growth is typically manifested in linear terms a construction business adds new resources like equipment and employees its revenue will increase as a result however scaling is when revenue increases without a significant increase in resources so let me put it bluntly scaling is considered a much more efficient means of managing a successful construction business so let's take a little closer look at scaling scaling your business like we said scaling your construction business means finding ways to make more money with less effort money and other resources another way of looking at scaling is increasing your profit margins an example of scaling is email marketing although some forms of email marketing can grow costly email marketing can be low cost and garner fast results if done properly cold emailing software like quickmail.io allows you to create a template that will send out to a predetermined amount of people per day as long as you keep the cost low to acquire or build a list of email contacts this form of email marketing is an extremely efficient method to scale your construction business scaling can be challenging like we've said already none of our advice works without hard work on your end it's not magic when it comes to scaling your construction business you're going to reap what you sow and that's for sure according to a 2016 article in fortune magazine most of the companies on inc magazine's list of five thousand fastest growing companies either failed shrunk in size or were bought out in a fire sale five to eight years after they made the list so you might be thinking if basic growth is not enough for my construction business and scaling for hyper growth fails 66 percent of the time what do you suggest i do the solution is scalable growth scalable growth is growth that can be scaled and maintained without a negative effect on the quality of your service or product in other words your construction business is scaling at just the right speed using just the right amount of resources so how do you achieve scalable growth achieving scalable growth requires structuring your business to streamline operations and make scalability the top priority let's talk growth opportunities when it comes to new growth opportunities some of these may be organic and some may be planned and consciously executed but whatever the case may be here's some of the most efficient strategies to achieve growth [Music] first is repeat business and we're surprised by how many construction businesses fail to ask for more business once they've already established business with a client in the past part of your marketing efforts should include staying connected with your current and past clients maybe you'll give them a call on a monthly or seasonal basis maybe you need to send out a monthly newsletter whatever method of contact you prefer you must make the effort to stay on their radar so you don't miss out on repeat business upselling and cross-selling now upselling and cross-selling are two extremely beneficial tools in your arsenal when it comes to scaling your construction business upselling is a sales technique where you encourage the customer to do the more expensive the add-on or the upgraded version of the product or service so let's say you're selling landscaping equipment and a customer is trying to buy that cheaper hand operated more you want to upsell that client to a larger writing more it's capable of handling larger jobs and it'll get the current job done faster cross-selling is similar to upselling but there's two different concepts with cross-selling you would encourage the customer to spend more by purchasing a product or service that's related to what they're already buying once again using the landscaping equipment as an example if the customer is planning to purchase some more well you need to sell them some fertilizer for the same lawn they're planning to mow location expansion when the timing's right it might be necessary to have additional locations in order to operate properly keep in mind the key word to focus on here is necessary how will you know when the timing is right to expand locations when you must for those of you who sell product or material it might be necessary to purchase an additional warehouse or a yard for storage for example maybe you're expanding your logging business and you need an additional yard to store timber that's recently been harvested and for those of you who offer contracting services maybe you've covered most of the region where your headquarters is and it's time to get an office in another county for example maybe most of the town you live in is already contracting you for landscaping so it's time to purchase an office in a neighboring region and then from that location you conduct additional business obtaining more landscaping clients conclusion for those of you who hung in there to the very end well done it's clear you have the drive and determination to successfully launch manage and scale a construction business of your own and we want to thank you for your dedication we're going to give you a 25 coupon code for the heavy ape course so to use that just visit heavyape.com and enter e a n d c that's e and c while you're checking out now get out there and crush it [Music]
2022-08-12 14:03
