How to Start a General Contracting Firm

This week we’ve chosen to cover a very important sub-sector of the construction industry, general contractors. Now we did previously cover construction companies in an ABCs of Small Business Industry post. And you may be asking yourself if there are any differences between the two – don’t worry, there are. General contracting is a very specialized industry, with its own host of regulations and policies to follow. So how do you start a general contracting firm? 

First, you need to be a licensed general contractor

Contractors are licensed, typically by the state. And without that license, you can’t offer your services as a general contractor. Licensing requirements vary from state-to-state, but most states maintain a database of active licenses, which the public can search through. Most of the companies looking for a general contractor will also want to see some sort of college training. Most contractors actually start out in general construction, wherein they get the training and real-world experience they will later use. The time you spend in the construction industry will also help you build your professional network, which you’ll need when looking for subcontractors and clients.

Get all of your paperwork in order

Just like any other business, there are certain forms you need to file before you can open your doors. You likely need an Employer Identification Number, a ‘Doing Business As’ name, insurance, and a vendor’s license from your the city, county, and/or state authorities. You should also consider forming an LLC or incorporating to limit your liability in case your firm goes under or you’re sued.

Is there a high demand for general contractors?

General contracting goes hand-in-hand with construction. Most construction companies hire general contractors to oversee and direct projects, so as long as construction jobs are coming in, the industry is healthy. And, thankfully, as the economy improves, so does the state of both the construction and general contracting industries. General contracting is also a specialized occupation – you need training, experience, and a license before you can call yourself a general contractor – which certainly limits the amount of competition you will face.