You’ve Laid the Groundwork
You have the education. Maybe you even earned a degree. You’ve taken your licensing exams, both business law and local contractor’s law. You probably have a couple of certifications as a supplement. You’ve put in a few years working for reputable companies and received positive feedback on your work.
Lately, you’ve been feeling restless. There must be more than having someone else tell you what projects you’re going to work on and what time you’re going to work. You’ve probably put some time in as the Foreman and even a Supervisor. Where do you go from here?
It’s likely at this point that you’re considering getting licensed and opening your own business as a construction contractor. You’ve shown you have the passion and the self-discipline required to get started. At this point, if you’re not much of a risk-taker, you may want to reconsider. A lot of businesses open every year.
What Causes Businesses to Fail?
Most new businesses don’t survive past their fifth year. Depending on what niche you elect to enter, styles go in and out of fashion. Markets fluctuate, causing a drain on your capital. Or perhaps a trusted subordinate mismanages a project, causing loss through having to rework a project.
What Kinds of Personnel Problems to Expect
Expect personnel problems as a part of doing business. An employee you thought was reliable runs off with money or simply never completes a project. Now you’ll have to do the work, in addition to whatever project you were already working on. It can require great persistence to keep a business going.
As far as your workers go, you’ll need to carry worker’s compensation insurance at a minimum. You’ll also need to make decisions about whether and what kinds of medical and dental insurance to offer.
What Kinds of Personnel Will You Need?
Along with these decisions will be deciding who to hire to be your general workers and your foremen. How many people do you want on staff and will you have enough work to keep them busy?
You’ll need to set aside funds to hire basic office personnel. This might include someone to be in the office during regular business hours to answer phones and greet walk-ins. A bookkeeper will maintain your ledger entries for you, allowing you to track the health of your business on a daily basis. This also allows you to monitor your expenditures on materials, personnel, and so on. But at tax time you may wish to hire an outside accountant to handle the depreciation and other calculations you’ll be providing to the IRS.
Interacting with the Public
Part of establishing your business is also having to admit that there will be areas of expertise you don’t have. You might find it helpful to take a business management class or even a class in public speaking. You don’t necessarily need to know how to give a speech. But being able to speak clearly will improve the first impression you make on potential customers.
If you’re just not that good at interacting with the public, consider hiring someone who is. You could make this person the one your customers contact to get information on how their project is progressing, and update them in case of unforeseen difficulties.
How Much Computer Knowledge Will You Need?
Knowledge of spreadsheets will assist in maintaining a schedule to be sure projects get completed in a timely manner. You’ll want a spreadsheet to track vendor and supplier information. This will also assist in tracking fluctuations in the cost of materials.
Making Decisions About What Materials To Use
Another aspect of the construction business to consider is the quality of materials you’ll be using. Do you want to be a “middle of the road” contractor for the average consumer with a limited budget? Or do you want to be a high-end contractor, catering to wealthier clients who aren’t as worried about the cost of a project? In both cases, you’ll need to be able to set costs, write up an estimate and be able to delineate the pros and cons of using particular materials.
Running your own business carries great responsibility, but can also be rewarding. There’s something to be said for being able to take pride in a well-run business with a good reputation in the community. Take the time to sit down with an experienced contractor who can lead you through the steps necessary to get established.
Dumpsters are an important material to most contracting work. Make sure to have reliable access to dumpster rental services that keep your cleanup efforts in budget.
