{"id":7222,"date":"2021-08-06T00:00:00","date_gmt":"2021-08-06T00:00:00","guid":{"rendered":"https:\/\/bxglobal.wpengine.com\/us\/cost-to-start-construction-company\/"},"modified":"2024-04-16T19:11:20","modified_gmt":"2024-04-16T23:11:20","slug":"cost-to-start-construction-company","status":"publish","type":"post","link":"https:\/\/www.buildxact.com\/us\/blog\/cost-to-start-construction-company\/","title":{"rendered":"How much does it cost to start a construction company?"},"content":{"rendered":"

6 minute read <\/em><\/p>\n

Many of the costs\u00a0incurred when starting a construction company are reoccurring.\u00a0\u00a0If you\u2019re looking to start your own contracting business, we\u2019ll\u00a0do a quick rundown of what you can\u00a0expect to pay<\/a>\u00a0for when starting\u00a0up and breaking into the construction industry.<\/p>\n

Licensing\/Permits\/Incorporation\u00a0<\/strong><\/h3>\n

You\u00a0will\u00a0need to check\u00a0with the\u00a0contractor\u2019s licensing division or board to see what the requirements and costs are\u00a0since most states require contractors\u00a0get licensed before working.\u00a0This is a must for construction businesses, especially if it’s your own construction business. You want to make sure your construction business is set up for success. So set up the business entity, get general liability insurance, set up a business plan and everything else that is required to be a successful business and construction business owner.<\/p>\n

Cities and local jurisdictions may also\u00a0require\u00a0a business license,\u00a0which registers your business with the locality and allows you to\u00a0earn income in the city. As contractors, you may\u00a0also\u00a0have to get business licenses in\u00a0the\u00a0cities your projects are located.<\/p>\n

You might need to pay your state\u2019s Corporation Division or Secretary of State to register your business name, depending on what business structure you choose for your company and what you name it. All small businesses names, other than your birth name, have to be registered in each state you are doing business in.<\/p>\n

Insurance\u00a0<\/strong><\/h3>\n

All contractors should get general liability and workers compensation insurance\u00a0if you\u00a0will have employees, as\u00a0it\u00a0is\u00a0required for licensing. The amount of insurance you need to purchase will depend on the work you\u2019re doing\u00a0and\u00a0the size of\u00a0the\u00a0project. In commercial contracting, customers often have minimum coverage requirements you will have to meet.<\/p>\n

Builders\u2019 risk insurance, which may also be referred to as an installation floater, covers your projects from damages caused by weather, theft, or vandalism while they are in construction. On occasion, this insurance is furnished by the project owner and sometimes by the contractor.\u00a0Umbrella\u00a0insurance is a catchall to increase coverages of all types. When one of your policies is maxed out due to a claim, the umbrella policy\u00a0will\u00a0take over and provide coverage.<\/p>\n

You may\u00a0also\u00a0want to get rental equipment coverage, which protects equipment and trailers\u00a0you rent\u00a0in the course of your business. Instead of having to pay the dealer for liability insurance, you provide your\u00a0coverage. Depending on how much equipment\u00a0you\u00a0rent, getting your own coverage could save\u00a0you\u00a0a substantial amount of money.<\/p>\n

Marketing\u00a0<\/strong><\/h3>\n

Before you\u00a0can get any customers, you\u00a0have to\u00a0let\u00a0them\u00a0know that you are open for business<\/a>. These days\u00a0it pays to\u00a0start with a website<\/a>, even for a small contractor. You\u2019ll\u00a0also need business cards to hand out\u00a0at\u00a0local events and to potential customers. Purchasing advertising,\u00a0both on social media and on the\u00a0internet,\u00a0can be beneficial for companies just starting. You can also purchase advertising in print publications in your area.<\/p>\n

Sponsoring local events or sports teams can be a great way to get your name out to the public. Seek opportunities to help a charity by making a donation or volunteering your time and use that exposure to gain clients.<\/p>\n

Start by putting together a marketing strategy. Make sure you have a list of construction industry publications that you want your business to appear in.<\/p>\n

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Back office\u00a0<\/strong><\/h3>\n

Most contractors start out as one-person companies, but as they grow, they need to add administrative and office support. Start by\u00a0hiring an administrative assistant and\/or bookkeeper<\/a>\u00a0to keep the paperwork and finances in\u00a0line. You may also want to purchase\u00a0accounting software<\/a>\u00a0geared towards\u00a0the construction industry. Industry-specific software makes company set up\u00a0and\u00a0day-to-day processing much easier\u00a0and more efficient.<\/p>\n

As the company grows and you need to complete more estimates quickly, you\u2019ll want to invest in hiring estimators and purchasing\u00a0estimating software<\/a>\u00a0like\u00a0Buildxact.\u00a0Estimating software can increase\u00a0the\u00a0efficiency\u00a0and accuracy\u00a0of\u00a0your\u00a0bids, leading to\u00a0greater\u00a0success and more jobs.<\/p>\n

Equipment\/Tools\/Trucks<\/strong><\/h3>\n

Once\u00a0you get your first job, you\u2019ll need to\u00a0invest in\u00a0the\u00a0equipment and tools\u00a0you need to perform the work. When you\u2019re starting out,\u00a0you can rent equipment and tools to keep costs down. As\u00a0your company\u00a0grows, you may want to invest in trucks to haul equipment and\u00a0workers. Some companies provide vehicles for every employee, while others provide them only for supervisors.<\/p>\n

Field labor<\/strong><\/h3>\n

Expanding\u00a0your company\u00a0and\u00a0taking on more\u00a0work means\u00a0you\u2019ll need to hire more field workers. You\u2019ll need to invest in training them, including\u00a0safety and skills\u00a0training<\/a>.\u00a0Make sure to include fringe benefits, retirement, insurance, vacation, sick time,\u00a0etc\u00a0when you are considering the costs of hiring an employee. You will need to offer enough fringe benefits and high wages to attract skilled workers who will be dedicated to your company and its success.\u00a0Communication<\/p>\n

In\u00a0today\u2019s world,\u00a0most communication occurs electronically, so you\u2019ll need to\u00a0equip\u00a0your\u00a0employees with the proper technology to stay in touch. This may include email addresses, smartphones, computers, laptops, tablets\u00a0and other equipment.<\/p>\n

And as you take on more\u00a0complex\u00a0projects,\u00a0you\u2019ll\u00a0also want to\u00a0invest in\u00a0construction project management software<\/a>\u00a0to help you keep your team\u00a0organized\u00a0and\u00a0on top of issues.<\/p>\n

Bid more to earn more<\/strong><\/h3>\n