How to Start a Construction Company

Starting a construction company doesn’t have to be hard even though you may feel overwhelmed by all of the business and financial components. 

If you have the knowledge and expertise when it comes to skilled trades or construction estimating, starting a construction company may seem like the perfect idea. Not to mention, that industry is booming right now in both the residential and commercial fields. 

Just know that by already having the experience, that is half the work. The business and financial side of things won’t take you long to get started. Today we are taking the guesswork out of starting your construction company so that you can hit the ground running. 

Defining Your Construction Company 

Before building out a business plan and going through all of the motions of registering your business and submitting plans for business loans, you need to determine your services. 

When it comes to obtaining insurance, permits, and licenses this varies greatly due to the services you will offer along with different pricing. Also, many people consider skilled trades to fall under this category as well. 

Check with your state to determine the correct licenses you need for each industry.

Here are some examples of construction services: 

  • General Contracting 
  • Builder 
  • Small remodeling company 
  • Electrician 
  • HVAC 
  • Plumber 
  • Commercial Construction

Building Your Construction Business Plan 

Your business plan is your roadmap of how all things will operate in your business. You may not need funding right away, but if you do decide to take out a business loan, lenders will require you to present an extensive business plan. 

What is in a Business Plan?

Here’s a short overview of the components you will need in order to create your plan. There are basically 2 types; traditional and lean startup.

Traditional business plans are more detailed and comprehensive, most of which investors and lenders require. The lean startup is a high-level focus and only contains the most important parts. 

We recommend moving forward with the traditional business plan. Outlined below are the components needed. 

  • Executive summary
    • Overview of what your company is, why it will be successful, your mission statement, the location, number of employees, and financial information. 
  • Company Description 
    • A detailed explanation of how you meet consumers’ needs and who you are planning to serve. Include the advantages you have over others that is going to make your construction company successful
  • Market Analysis 


  • Organization and Management
    • Describe your construction company’s structure, who will run in, and how your team has the experience to be in those positions. An organizational chart is a great idea to visually show this concept.
  • Service/Product Line 
    • Describe in detail your products or services and what your customer gains. 
  • Marketing and Sales 
    • How will you obtain, retain, and continue to attract your customers? Include your marketing strategy and funnel to include how the sale will actually happen. 
  • Funding Requests 
    • Not everyone requests funding, but if you explain your goals and how that funding falls into place.
  • Financial Projections
    • This conveys to the reader of your plan of how your construction company sees its financial success. Provide a projection for at least 5 years, including graphs and statements if possible. 

The SBA is a great resource when getting started with your business. Visit their website to see business plan samples and for other clarifications when writing your plan. 

Getting Your Business Registered

Not all companies need to even register their business locally, but just in case you will want to check with local authorities to see exactly what is needed. Depending on your business entity, they will let you know if you need to file for certain licenses or permits required by your county or city.

Business Entity 

A business entity is basically the structure of your company, which determines taxes and liabilities. This includes sole proprietorship, LLC, partnerships, and corporations. Learn more about how to choose the correct business entity for your construction company. 

Insurance for Your Construction Company 

 Not only do you need business insurance to cover your equipment and your business itself, but you also need workers comp if you are paying your employees as W2s. 

With construction being a somewhat dangerous business due to operating heavy equipment, working on ladders, and being on people’s property you definitely have to have general liability insurance. 

Know what your risk is and find a reputable insurance agency. Don’t forget to shop for different companies so that you can get the most affordable prices, but also the coverage you need. 

The SBA explains the most common types of insurances and the process you need to go through in order to obtain it. 

Funding and Financing 

Depending on the capital you have in order to start your construction company, you may need to apply for a small business loan and financing. Financing would be the most beneficial when it comes to equipment and machinery. 

The SBA offers multiple loan options, but you are not guaranteed to get the loan. If for whatever reason that option falls through, check with credit unions first. They usually have the lowest interest rates when it comes to lenders. 

Just remember that before applying for any financing or loans that you must have a decent credit history as an individual. This doesn’t mean that you cannot go ahead and start your construction business, but rather you begin repairing your credit and opt out of some of the fancier equipment and start with smaller services. 

Check out these other articles for information about small business loans:

4 Mistakes to Avoid with Small Business Loans

Take Control of the 5 C’s of Credit Before You Borrow

Thinking About Applying for a Business Loan?

Business Operations 

In order for your business to be successful, you need to be organized from the beginning. Here are some other things you need to think about before starting your construction company:

  • Website and Facebook Page (marketing)
  • Accounting Software (Wave, Quickbooks, Freshbooks) 
  • Purchasing business cards 
  • Process for contracts, proposals, invoices, and payments 
  • Set up a business bank account 
  • Hiring and onboarding of employees or subcontractors 

You now have the basis for starting your construction company. While there will be more obstacles along the way, these things are the hardest to figure out when your business is new or still an idea! 

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