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How to Start a Construction Business

ByChristiana Antiga

Jun 12, 2021

Construction is among some of the most popular industries for new businesses, but it simultaneously has one of the worst failure percentages.  63.6 percent of construction firms fail during the first five years, either because of a lack of business understanding and expertise financial constraints, or poor planning. You should not be one of them.

Exploring your industry, writing a detailed plan as to how you’ll manage your organization, and seeking assistance can all help you build a solid base on which to grow your company! This can assist you in avoiding the difficulties that most other startup construction firms face. Now, the question is, where should you begin?

Do Your Research

The first step is of course to do your research about the current Market, and the current trends. Find out whether a construction business is really a possibility in your locality. For instance, if the construction business is extremely crowded and buyers are satisfied with existing local businesses, it may be difficult to break into the market, never mind building a successful firm.

Therefore, first and foremost, analyze the market. You should determine how many other construction firms are already in business in the neighbourhood, what their focus is, what they bill, who their industrial equipment supplier is, and how well-known their business is. You should have an equivalent awareness of your prospective client base, such as the number of people, their average age and class, their preferences, and so on.

Understanding such issues will benefit with the preparation of a smarter business strategy and provide you with a competitive advantage when you eventually start your business.

Communicate with the Target Clientele 

Engaging firsthand with your target customer base is among the quickest methods to measure their interest. Use polls, or forms focus group discussions, or solo chats to gather genuine client feedback.  This could take up some time and sometimes be a little costly, it all relies on your technique and relationships. You should have a strong concept of things you need to question prior to starting, irrespective of who you are approaching, someone in your circle or conducting paid market research. 

Consider the following questions:

  • How frequently they employ people in your line of work.
  • Their most significant issues with the current contractors.
  • When it comes to employing a contractor, find out what is the most vital to them.

Their responses might give you a lot of information that could help you when it comes to building your business strategy.

Draft a Business Plan

Once you think you have understood how the local market works, start drafting a plan for your business. A business plan is essential for keeping your business on the path to success. Your business strategy is what will help you get the funding you will need, so make sure to put all the market research you have done to good use and make the plan a detailed and descriptive one.

The first step you need to take will be to figure out how you will manage the business and what kind of services you will be providing. You will need to establish who your target customer base is and how you are planning to market your business to them. You need to determine the estimated costs that will be needed for starting and maintaining the business initially. 

There are some other things to consider if you are making a business plan, like how much you expect to make in the first year, how many employees you will hire initially, and how the billing would work, if you are starting out as a contractor.

Make Your Business Legitimate

After you have successfully made your business plan, it’s time to make it legitimate by registering it. Registration will provide your business with legal benefits as well as tax benefits. This will also mean that your business will have personal liability protection. It is a simple procedure where all you have to do is register your company’s name with the government. Although not all provide them on their own, taking the extra step of getting your company registered federally, this way you will be able to trademark the name and logo of your business as well as get a federal tax ID.

Get Your Licenses and Permits

Once you have managed to register your business, you need to work on getting your licenses and permits. Licenses and permits wary depending on which state you are in and what the manner and size of your business is. Every business needs some kind of license or permit to be legal. You need to get both state and federal level licensing. 

Both the State and Federal Law have their own requirements that they need to meet. Federal law requires special permits for huge vehicles, drilling and mining practices. With state law the most important thing is the location to get the required license and permit. After having finalized your location get the licenses and permits you need from the state. Getting your licenses and permits is necessary as without them you could end up facing tax penalties or even closure.


Thinking ahead when you are planning a business is extremely important, start considering your insurance options, for both yourself and your employees. Since construction is a dangerous work place covering any and all employees in case of an emergency is important. 


Once you have figured all that out it’s time to get the funding you need to finance your business. You can get funding in a number of ways if you don’t have any savings of your own, like private lenders, bank or government loans etc. 

Try and think ahead about how you will finance the projects that you will be taking on. 

Build a Good Reputation

For your business to succeed it is extremely important that your clients leave completely satisfied with the work they entrusted you with. Be upfront with your customers listen to their requirements and tell them from the start how long you expect the project to take. When your clients walk away they should only have good things to say about your firm, this way they are more likely to work with you again.

Christiana Antiga
Author: Christiana Antiga

My name is Christiana Antiga, and I work as a Content Creator and marketing specialist