Essential Steps to Start Your Own Construction Company
The 20th and the 21st century have seen widespread growth of infrastructure seemingly after the industrial revolution followed by globalization and tech revolution. As the economy of nations grew stronger they invested billions of dollars in infrastructure. People became wealthy and thus invested in building their dream homes.
Infra development lead to the rise of construction business that became a major source of employment as well as income. Big companies who took contract of building roads, government owned buildings, etc. are now valued in billions of dollars. Some prime construction companies brought revolution in the means of construction and now they use latest technology and equipment for construction purpose.
Now construction is not limited only to land but has expanded into waterways. Bridges, under water tunnels, laying of cable fibers, etc. has now gave room to innovated methods of infra layout and construction activities.
Keeping this aside, the traditional and most common construction method is still popular and has huge market in all over the world especially in countries that are growing economies along with those who are already developed. For a startup company with decent investment the most favorable option is construction of roads, houses and offices along with tunnels, etc.
Many of the countries permit only certified and experienced company with major budget to construct valuable infra like bridges, flyovers, expressways, and sophisticated modern buildings.
So if you aim to start your own construction company then your focus should be on basics. This article has everything necessary for you to know if you are starting your own construction company.
Sufficient information is necessary if you aim to start your own construction company. Start reading articles on construction business, the market size, how things work at your place, competition, profit margin, etc. Also, start to network with people who are already in the business. They will give you real insights which online blogs or articles may not provide. Ground realities are almost different from what you read online.
Every place has different situations and thus a chit chat with those who are in this business will give you a perspective about this field. Construction business isn’t any easy business and has lots of challenges and setbacks. A fine understanding of it will help you in moving forward.
Feasibility Analysis of the Construction Business:
Hire a company that specializes in feasibility analysis. Feasibility analysis is a systematic method of research based on various parameters on specific topics that will give you an outline over a topic with various inputs that will help you in shaping your perspective and will also help you in understanding technical and important aspects of that topic.
Feasibility analysis report is a must as it will help you in understanding things which normally is ignored or can’t be seen. Various parameters are used to draw results answering some important queries related to investment, return on investment, major areas of investment, market, latest trends, etc.
The Grand Business Plan:
A grand business plan is necessary in order to start your business from scratch. A business plan is not only essential for documental formalities but it also helps you in securing loan and getting licenses for your work apart from working as a guiding factor to guide you about the progress you have made. Hire an expert who can document your business plan taking inputs from the feasibility analysis report.
Your business plan will contain all the necessary details related to your construction business, what you have to do and what not to do, investment, profit margin, resources required, your competition, market realities, etc. Take help from the plan to move further.
Types of construction activities you will pursue:
Make your mind in the initial stage about the construction activities you will pursue. There are some common construction activities like road construction, construction of sewage tunnel, housing infra, offices, pillars, bridges, rail tracks, and many other sophisticated buildings.
Your choice will depend upon your capability both in terms of resources and skills. Lastly, it will also depend on your expertise and budget. Sophisticated modern infra requires extremely advanced machines which requires huge investment. So make a vise choice by taking advice from your advisers.
Hire an expert who will be your guide:
Get an expert who knows A to Z of construction business near your locality. He will be the guiding factor for your startup since you may not be much aware about small details and technicalities. Though he may charge a decent amount from you but his help will reduce the unneeded trouble you have to face while incorporating your business.
He will be helping you in dealing with documental formalities, permissions and licenses, registering your business, hiring employees, technicians and labors, managing finance and expenses and also in getting your clients. A good expert will prove to be an X factor towards your success.
First Step: Gathering Documents
As your business plan suggests, gather all the relevant documents that are necessary to register your business. Some general documents include your identity card, bank account, registered deed of your business office, details of business, investment details, no objection certificate from relevant authorities, etc. Such jobs can easily be managed by your expert adviser or consultant.
Second Step: Register your Business
Make your construction business a reality by registering your business along with all the needed documents. Generally it doesn’t takes much time to register your business in many countries but in some countries it may take a longer time. Choose a name and logo for your business which should be unique as it will help in building a brand for your business. Follow the required procedure to ensure that your business gets registered successfully without any trouble.
Also get your business registered for payment of taxes. While registering your business you will be required to choose your business type which is generally proprietorship, LLC, Partnership Company, etc. Choose the right business entity which suits your interest. Consult your advisor for the same.
Third Step: Securing Investment
For every business to work capital is the key part of it. Without decent capital incorporating a business is not possible. If you aim to start a decent construction company it is necessary for you to secure a decent budget for your business activities which will require expenditure on business registration, office, staff, labor, technician, equipment, vehicles, heavy machines, and other resources along with a reserved sum which is required during bidding for projects.
It is not possible to manage every expense from your bank balance. The best option is to secure loan for purchasing equipment or leasing them along with your office. You can also go for partnership which can be challenging at time as it puts more responsibility on you.
Fourth Step: Getting your Office
To run your construction business you will require an office from where you will manage your work. A decent office space is where you will accommodate your clients, office documents, and other office employees.
The best option for you is to lease or rent an office for your business especially in the early years of your business and if your budget allows you then you can own one such office. Design and decorate your office well especially in such a way that it showcases your office as that of a construction company. Clients do take notice of such things while visiting your office.
Fifth Step: Arranging Equipment and Tools
In order to initiate construction activities you will require some basic equipment, machines and tools. Excavator machines, concrete mixer machines, tractor, trolley, chisel, hammer, saw, cutter, and many more machines are required. You can get this list easily from anyone who works in the construction field. There are also various machines that are special in nature and are required only for special types of constructions.
If you are managing such constructions then you may need them. The best option for arranging all such equipment and tools is to own them, at least the basic ones which you need on daily basis. Some expensive machines that you require occasionally and for special purpose can be best rented or leased. There are ample number of shops that lease and rent such machines. Network with them and ensure that whenever you need you get such equipment.
Sixth Step: Cargo Vehicles, Tractor and Trolley
Trucks are mostly used to transport construction materials like sand, concrete, bricks along with tractor that uses trolley. You may rent them or lease them and in case you find regular use of them you can even purchase them based on requirements and budget.
Warehouse to Store Equipment, Tools and Vehicles
You will also require a warehouse where you will keep all your equipment, machines, tools and vehicles. This doesn’t necessary needs to be close to your office but can be at a distant place like farmhouse or your owned field of land.
Most contractors do have their own land which is mostly used to keep such equipment and machines. You can lease such land at distant place which will be cheap. If you have good friend circles then you can use the residuary land space of your friend to keep them. It entirely depends on your management skills. At the end of the day the least you spend the better it is.
Hiring Employees, Technicians, Engineers, Manpower:
Your expertise, skills and tech advancement are things that really matters in the present construction world. Hire your employees who are well trained and are expert in their domain. Engineers who are excellent enough to design maps that draws the interest of your clients.
Interior designers, technicians, etc. are also required whom you have to hire. In the initial days of your business hire a small team that offers limited but quality service. Get them well trained if they are fresher. Hiring fresher employees will be a bit cheap, you can train them to work hard in an efficient manner. At the end of the day you will definitely require experienced and talented brains who will make the difference.
Most of the nascent construction companies hire employees with the help of established experts through interviews by going through their CVs. Your advisor will be of help in this case as he knows well about the field. If you have been part of construction business as an employee then your experience will help you a lot in hiring employees since you would have experience and personal contacts in the field as well.
Starting with your Business:
With everything in line time has come to start your business. Construction business is much about practical aspects. You don’t get a client that easily. Lots of lobbying is required. The best option for you is to work for others in your initial days who may award you small projects taking commission from it. Later as you have already dozens of projects in your hand you can move ahead by marketing and advertising your company.
You can also bid for relevant projects of government and private firms. Strong networking and connections are required to secure big projects. Only experience in this field can make get that. The initial years are hardest which will require lots of patience, hard work and persistence. Stay strong and take work how much small it is. As you will prove your mettle you will get big projects that will change your destiny.
It would be advisable for you to spend few years in this field before you start your business. Construction business isn’t that simple and is a market full of strong lobbies. Without lobbing you won’t get anything.
Even if you aim for small projects of house construction, generally nobody hires a contractor with zero experience. You will have to be very strategic and hardworking to become successful. Invest money only if you are confident to get returns within 6 months or a year at max. Grow your business as you start to get returns. Plan accordingly!