The Best Way To Start a Construction Company

You’ve spent years working in construction managing projects and dealing with clients for former bosses. Now you ask yourself: “How do I start a construction business?” Here are 4 steps to get you there!

Step 1: Consider Your Target Construction Client

What kind of construction are you looking to do? Is it residential or commercial? Once you decide on that, what does your ideal client look like? If you’re going into residential construction, are you focusing on single family, condos, larger custom homes, or another niche area? If you are going into commercial, what kinds of businesses are you looking to build for? What size of buildings are you looking to construct? Are you catering to local shopping centers, small office complexes, or are you focusing on building custom commercial projects for Fortune 500 companies?

Write all this down so you have a clear focus of who your ideal client is. Your crews may do projects outside of this niche area, but it’s important to brand yourself towards a specific target client to position yourself as an expert rather than “just another construction company.”

Let’s say you are best suited to deal with building out state of the art local shopping centers so you pick that as your target client and area of marketing focus. You may do mostly shopping centers, but based on your expertise in that specific area, other firms may contact you for projects outside of that scope based on ideas they got from looking at your portfolio.

Keeping this target client in mind helps you clarify everything from your marketing outreach to your client onboarding experience and how you stay in touch with them throughout the project. If you’re in residential construction, you’ll want your communications and marketing outreach centered on the kind of language families speak and may want to co-sponsor opportunities with local businesses or charities to develop good will towards your firm. If you are pivoting more towards commercial construction you’ll want to cater your communications to contractors and larger corporations that will have ongoing projects in your surrounding area.

Step 2: File for your LLC with MyCorporation

At MyCorporation, we make your business filings easy. Our experts offer a full suite of business formation services and will guide you through every step of the process. And we help in all 50 states! So you’re covered no matter where in the US you’re starting your construction company.

We’ll help you figure out which business entity type is the best fit for how you’ll be operating your business whether it be as an LLC, C-Corp, S-Corp, etc. Choosing the best entity for a construction company depends on several factors including how your company’s management structure works, how your company will be taxed, how your company conducts meeting, and whether or not your company plans on issuing stock to raise capital in the future.

Once our experts help you through the business formation process and you get the paperwork you need to set up bank accounts and conduct business, we also have resources to help you run your business and meet your annual business filing requirements. Through our MaintainMyBiz Service, we help you with any of the 4 eligible filings you may need to complete within your first year of starting your business and beyond!

And because we want to make sure you have the custom support you need, you can speak with our experts throughout the process directly. Why wait for email responses days later from a company like LegalZoom, when MyCorporation’s team can help you get the support you need immediately?

Step 3: Purchase Basic Equipment for Operations

Equipment for a construction company startup can be confusing and expensive. To clarify what you need, ask yourself these questions:

  • What kind of projects will you be completing?
  • What will be the kind of job sites your company is working on?
  • What are the conditions your crews will be working in?
  • What size of equipment will you need to get the job done effectively?

Once you’ve answered these questions, it’s time to consider whether you need to purchase the equipment upfront, finance it, or rent it.

Purchasing the equipment upfront means you don’t have to make ongoing payments and depend on inbound work projects to pay it off, but it will obviously cost you a lot more up front and you may have less financial flexibility in the short term because of it.

Financing your equipment will help you keep a lot more cash on hand at the beginning, but it comes with potential large monthly payments on your equipment for years to come depending on the term of your loan.

Renting equipment may be the best option for you in the short term until you develop a more steady stream of business, but you may also be at the mercy of equipment rental companies both in terms of price and equipment availability.

You may want to seek outside advice on what the best decision for supplying your company with equipment will be since it will have an impact on your profitability and reliability in both the short and long term.

Step 4: Identify Potential Projects and Start Closing Contracts!

And finally comes the best part: finding projects that are the best fit for your construction business and securing those contracts! If you haven’t already, make sure to start finding ways to connect with the target construction client you identified in Step 1. That’s why Step 1 is so important because otherwise you won’t be able to direct your focus towards a particular group with any noticeable impact.

Here’s an example: Let’s say the target client/project of yours is local shopping centers. You’ll want to consider connecting with local investor groups that tackle these kinds of projects.

You’ll also want to make sure you’re networking with general contractors in your area. Even though they may be competing with you on certain projects, it will help you get a better understanding of the kinds of projects that are available in your market, how competitive the bidding process may be, and whether or not you might want to hire a dedicated salesperson to do this kind of networking and connection-making on their own so you can focus on running the construction side of the business.

This certainly isn’t an exhaustive list of everything you’ll need to tackle when you’re starting your construction company. But hopefully this gives you a solid framework to focus on what’s most important and build a successful company for years to come!