How to Start a Construction Business

Construction is big business. In the UK alone, the construction sector contributed to 6% of the country’s overall GDP .

Whether your vision is to position yourself as the next big contractor in your local area or you see yourself tapping into a certain building niche, there’s a lot to consider when it comes to starting a successful construction company. From writing your business plan, getting the right training, through to financing your business, coming up with a name for a construction company and then registering that name, it’s important that everything is in place before you even think about trading. Wondering how to start a construction business? Find out the skills you need, important considerations to keep in mind, and how to legally establish your business.

What Is a Construction Company?

First and foremost, you will need to fully understand the direction that you want to take, the niche you want to tap into and what your target market is. A construction company is not a single entity and can encompass a wide range of services and roles, in both the private and commercial sectors. You will also quickly discover that there are lots of different types of construction companies, including small renovation contractors, general contractors and owner-builders. It’s important that you can recognise the difference and what suits you best.

What Qualifications Do You Need to Start a Construction Business?

There are no mandatory qualifications required to trade as a builder. Most of the skills required are usually acquired through previous experience in the building and construction sector.

Builders carrying out work in the UK under contract to public sector organisations or larger building firms may be required to hold a Construction Skills Certification Scheme (CSCS) card, for which, as a minimum, they must pass a health and safety test and hold — or be working towards — a Level 2 or 3 N/SVQ. In addition to prior experience in the building industry and proficiency in a particular trade, the proprietor of a building firm will benefit from training in project management, estimating and staff supervision. An organised approach, good customer care skills and a reliable attitude are also required.

Conduct Your Own Construction Market Research

Your first question should be whether a construction company is even a viable option in your area. After all, if the construction market is already oversaturated and customers are happy with the current local companies, it might be hard to get a foothold in the industry, let alone create a successful business.

So start with market research. You’ll want to know how many local construction companies are already operating in your area, what they specialise in, how much they charge and what their reputation is. Coupled with this, you should also have a similar understanding of your potential customer base. Consider finding the answers to these important questions:

• How often do they hire contractors in your trade?
• What are their biggest issues with contractors?
• What’s most important to them when hiring a contractor?

Knowing these can help you develop a better business plan and give you a competitive edge for when you finally step out onto the playing field.

How to Start a Construction Business

If you want to create a construction business, you’ll need to create a solid business plan. The importance of a thorough business plan should not be underestimated. A detailed business plan will not only allow you to establish clear business goals and procedures, but it is also widely recognised in the business world as an essential step in getting your idea off the ground.

Here are several aspects to consider when writing your business plan:

• Consider Your Business Costs — If you are thinking of starting your own construction company, it’s highly likely that you’ve already worked in the trade, which means you will have the necessary equipment and maybe even regular clients to get your business off to a good start. Of course, despite the low cost of starting your construction company, you should still plan ahead and cut down on how much you think you will need to borrow.
• Decide How to Price Your Services — You may decide to use different methods of costing for different jobs depending on who the customer is and what type of work you will be doing. It is very important to set your charges carefully. You must make sure when deciding on what to charge that, assuming you get enough work, you will earn enough to cover all of your operating costs, including your drawings.
• Research Insurances and Certifications — Most construction companies need at least one kind of insurance to stay on the right side of the law. General liability insurance is a must, as this protects you against worksite injuries, accidents and other mishaps that could otherwise leave you with hefty bills (or even legal liability issues, depending on your circumstances). You’ll also want to look into vehicle and property insurance policies to make sure your company’s machinery and equipment are covered in case of an unforeseen issue.
• Market Your Business — You’ll want to draw out a plan to advertise your new construction company. Consider marketing in various media outlets that appeal to your customers and attracting new business by offering discounts to your first few customers. It is also a good idea to outline initial plans for a business website and what it should include to be successful and reach your target customers.

Other aspects to consider for your business plan are your business model and legal structure, where you will be offering your services, organising a budget plan and designing your recruitment strategy for hiring employees.

Ready to Form Your Construction Company?

If you are ready to start a construction business, it’s time to form your company. You can form a limited company or go the sole-trader route. Deciding and completing your company formation can be the most challenging part of starting a business, but it’s crucial to your success.

Are you ready to start a construction business? At Mint Formations , we help you form your limited company or self-employed business and take away all the stress that comes with starting a business. We’ll secure your brand name and get your company registered fast so that you can start doing what you love.

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