8 Steps to Starting a Construction Management Business
Ready to start your own construction business?
If you've been reading our blog for a while as a casual observer but think you have what it takes to start and build your own company, we have some advice for you.
A good plan can often make the difference between success and failure.
Starting a new business off on the right foot may not guarantee success, but it positions you much better for it. With that in mind, let's have a look at the eight most important things to consider when starting a construction management business.
This is important for two reasons: It is a huge part of what lending institutions use to gauge whether they want to help fund your business, and it also helps you clarify in your mind the direction you want to take your business.
Construction management is a broad description. You need to narrow it down. Do you plan to do residential or commercial construction? Will you specialize in new construction, or will you focus on improvements, remodeling, and additions? With the right roadmap comes the right focus.
If you don't know how to write up a business plan, there are numerous training resources out there to help you get started.
Construction companies almost always work from a central headquarters, whether they deal with a specific geographical radius or if they have satellite offices in numerous cities and states.
Decide how to best serve the clients you want to reach. Be accessible. Where you set up shop will determine how well you are able to do that.
We cannot stress enough how important it is to have the money in place to do what you want to do with your business before you even begin advertising or bidding. You will need to secure loans, find investors, or apply for grants to get your business off the ground.
Determine Your Company's Legal Structure
What type of corporation will best suit your business? Are you going it alone at first? Then you might opt for a sole proprietorship. Are you in this with someone else? Consider a partnership. Looking to expand quickly and hire a full staff? You might be better off with an LLC. There are numerous possibilities that a corporate attorney or CPA can help explain.
Register the Name of Your Business (or Your “Doing Business As”)
This one is simple: Just register your business name with the state government where the business is headquartered.
Obtain a Tax ID number and Register with the State
You will need to be registered in the state in which your business is headquartered to obtain unemployment, worker's compensation, and – first and foremost – a Tax ID number.
You can also consult with an attorney or CPA on the Tax ID since there are different types. A good CPA will often have a better grasp on which number you will need to obtain from both the IRS and the state than a lawyer will (and will charge less to set it up).
Find out what licenses and permits you will need. You will need to take care of this on federal, state, and local levels. In construction, there can be a lot of these, so run your list by an attorney and make sure you aren't missing anything.
Understand Your Responsibilities as an Employer
Each state has specific legal steps that you will need to take when dealing with employees. A clear understanding of these procedures will help you avoid legal entanglements down the line, both in terms of whom you hire and, unfortunately, whom you fire.
A Good Foundation
No one understands better the concept of building on a firm foundation than those of us in the construction business. Following these eight steps will give you that foundation and help you build a strong, profitable business on top of it.
Need a few reinforcements? We have a library of construction management software that you can use in the development and management of your business. Let us help you streamline all the processes and liberate more of your time so you can be more present in the running of your business.