Do you dream of building amenity-filled homes, or designing luxury hotel rooms? If you’re an expert DIYer, a construction worker, or you’re otherwise familiar with the industry, it may be time to start a general contracting business.
Contracting has a lot of growth potential, according to IBIS World, who reports that growth is expected to surge until 2016. The intelligence company is “predicting a steady rise in the value of the construction industry over the next five years – 12.5 percent annually for residential construction and 13 percent for private non-residential construction.” In our current economy, it’s numbers, such as these, that make a small business a worthwhile venture.
So, how does one go about starting a business, specifically a contracting business? The first step is to familiarize yourself with the inner workings. If possible, shadow an industry professional, or ask for a meeting. During this meeting, ask questions about the hands-on aspects of the business, marketing, and financials. This should give you a better idea of the business as a whole, and tell you whether or not you can handle the work load.
If you determine that contracting is the right small business for you, you’ll need to set about creating a business plan, as well as a timetable for getting licensed, bonded, and insured. The U.S. Small Business Administration recommends that you “Protect yourself, your business, and your clients by ensuring you have the right licenses and permits, business insurance, and surety bonds.”
- Business Licenses and Permits
The type of licenses and permits you’ll need will ultimately depend on the type of contracting you’re planning to do. For instance, if you plan to include plumbing in your services, you’ll need a tradesmen license for plumbing. Additionally, licenses and permits vary depending on whether you’ll be performing residential or commercial contracting.
As a contractor, you’re going to need all sorts of insurance. If you forgo insurance, you’re not only breaking the law, you’re making yourself liable for any accident that could occur, and accidents do occur frequently on job sites. One of the most important types of insurance you will need is contractors insurance. Additionally, you may want to get your equipment insured as well.
- Surety Bonds
A surety bond, or contractor’s bond, is a necessary component to the contracting business. Many contractors overlook the need for surety bonds, and find themselves put out of business by government agencies. In order to operate legally, you’ll need to arrange for a surety bond from a third-party company. Luckily, most contractor’s insurance companies also offer these bonds.
Once you’ve become fully licensed, permitted, insured, and bonded, you’ll be ready to develop a health and safety plan, and then hire employees or subcontractors.
“The Occupational Safety and Health Act (OSHA) requires that construction workers are provided a safe workplace free from recognized hazards,” warns the Small Business Administration. Luckily, information regarding these requirements can easily be found online, including tools for implementing OSHA’s strict standards at your job sites. Remember: OSHA will make random inspections at your job site, and they do have the power to shut you down and fine you.
You’ve familiarized yourself with the country’s standards for safety, and you’re ready to begin hiring labor. You may prefer to utilize subcontractors, as opposed to finding and hiring permanent workers. It’s important that all subcontractors are licensed, bonded, and insured, as you’ll be liable for them otherwise. Once you’ve hired your labor, your business is fully established, and it’s time to begin marketing yourself as a contracting business, and acquiring work. Congratulations!