Opening a general contracting business can be a very profitable venture, but it’s important to understand the steps necessary to make it a success. This article will outline the basic steps needed to open a general contracting business, as well as some important things to keep in mind along the way.
Nine Steps to Launching a New General Contracting Business
1. Choose Your Type of General Contracting Business
The first step in launching a general contracting business is to identify the type of general contracting business you want to launch. You might choose from the following types, among others:
- Residential general contractors
- Commercial general contractors
- Industrial general contractors
2. Name Your General Contracting Business
Give your general contracting business an identity so people will think of it as a well-known and respected brand. You can take the name of your general contracting business from your industry, focus on a geographical location, or use your name, among other options.
The main goal for naming your general contracting business is to make it sound appealing and trustworthy so people will use your services.
3. Choose a Legal Form for Your Business
By incorporating your general contracting business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your general contracting business will determine the amount of taxes you pay and which state or federal tax forms you need to file.
Read our article comparing the most common general contracting business structures.
4. Write a General Contracting Business Plan
All general contracting business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.
Read our article about how to write a general contracting business plan.
5. Apply for the Necessary Permits and Licenses
There may be required licenses and permits you need to obtain before launching your general contracting business.
For example, you may need a contractor’s license, a business license, and a surety bond. The specific permits and licenses required will depend on the type of contracting business you plan to launch and the state or local regulations in your area.
You must also register your general contracting business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website if you plan to hire employees.
Read our article about obtaining the proper general contracting business licenses.
6. Determine Your Budget & Apply for Funding as Needed
In developing your general contracting business plan, you will figure out how much funding you need to start and grow your business.
If you have your own funds to invest in your general contracting business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your general contracting business include traditional bank loans, SBA loans, credit cards, angel investors, and family and friends.
Read our article about the costs associated with starting a general contracting business to help you determine if funding is needed.
Read our article about how to fund your general contracting business.
7. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your general contracting business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues.
You may also want to invest in project management software to help you keep track of deadlines, milestones, and progress reports.
You should also have a website for your general contracting business. Your website can be used to showcase your work, provide information about your services, and generate leads from potential customers
Read our article about the technology and software you need to run a general contracting business.
8. Market Your General Contracting Business to Potential Clients
Before you start selling your services, you have to let the world know you exist. The first step is to create a website so people can learn more about your services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn, and Twitter. Also consider networking with other people in the general contracting industry through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. General contracting businesses should consider the following promotional strategies for which you should start getting prepared:
- Develop a strong branding strategy to make sure your target market remembers your business.
- Generate word-of-mouth marketing by delivering top-notch customer service.
- Participate in trade shows and other events related to the general contracting industry.
- Engage in content marketing by writing blog posts, articles, and white papers that focus on topics related to your business.
Read our article about how to market your general contracting business for more tips.
9. Get New Clients & Grow Your Business
When you promote your services, you’ll start to get interest from potential clients.
Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your general contracting business.
Read our article about how to effectively grow your general contracting business to learn more.
Starting a General Contracting Business FAQs
Starting a general contracting business is a great way to be your boss, make a good income, and help people improve their homes or businesses. The industry outlook is good, as the demand for general contracting services is expected to grow in the coming years.
To start a successful general contracting business, you need to have experience in the industry, a strong marketing strategy, and the right technology and software in place. You also need to be able to generate leads and get new clients.
When starting a general contracting business, it's important to have experience in the industry, a strong marketing strategy, and the right technology and software in place. You also need to focus on generating leads and getting new clients.
Some other tips include:
- Develop a strong branding strategy
- Participate in trade shows and other events related to the general contracting industry
- Engage in content marketing
- Focus on generating leads and getting new clients
A simple checklist to use when starting a general contracting business is as follows:
- Choose Your Type of General Contracting Firm: This should be based on what you are best at and how much experience you have. Remember to keep your interests, skills, and experience in mind at all times.
- Name Your General Contracting Business: This should be done with care, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Write a General Contracting Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations you will be required to apply for a business license and/or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your General Contracting Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your services.
Starting a general contracting business can be a lucrative endeavor, but it takes hard work, dedication, and planning. Following the simple steps provided in this article, entrepreneurs can increase their chances of success. Remember to focus on generating leads, getting new clients, and applying for the necessary permits and licenses before starting operations. With the right tools in place, a general contracting business can be a thriving and profitable enterprise.