Starting a Construction Company for Beginners

The construction industry is an essential sector in the U.S. The industry pulls in trillions in revenue every year and is expected to grow considerably in the next few years. If you’re considering starting a business in this sector, here are some essential things you should know.

Research Regarding the Industry

As we have stated earlier, the construction industry is a big one. There are various resources you can use to understand it better:

  • The Small Business has a list of important laws and regulation for construction businesses.
  • If you’re looking for construction statistics, you can visit Data USA’s website. Deloitte, a considerable business conglomerate, funds it, so you know that its statistics are legitimate.
  • When it comes to employment for the construction industry, you can visit the U.S. Bureau of Statistics.

Researching these particular sites can give you the knowledge you need regarding the industry. You can never do too much research when it comes to starting a business.

Building a Business Plan

A business plan is vital for any company. It’s where you will place your company’s goals, services, products, and more. It shouldn’t be that long, maybe two to three pages. It’ll also require you to place your service specialization, which you consider your construction company excels in doing.


There are many specializations to choose from. These specializations may be in constructing a particular part of a house like a kitchen or a bathroom. It can also be about building unique rooms. For instance, some builders specialize in sunrooms. This is a kind of room that uses light from the sun to light the place naturally. It uses a sliding window or an open window kind of design.

This is not usually found in modern homes, and it usually requires an experienced contractor to do it. This is why specialization in the construction industry is important. It’ll give you access to construction jobs that you won’t otherwise have. Once you’ve determined your specialization, you can apply for a Specialty Contractors’ License once you’ve registered your business.

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Executive Summary

The executive summary of your business plan will include the goals of your business, its biographical information, objectives of the company, and its eventual successes in the future. This will be updated yearly.

These are the main parts of your business plan right now for your construction business. This will change over time. You might have to change it yearly depending on your goals and successes.


Every business must be registered in a particular state before it can start operating. Business registration fees cost between $200 to $500, depending on your state. You’ll have to renew your registration every year so make sure you don’t miss out on that.

Equipment and Overhead Costs

The next thing you’ll have to consider is the equipment you need and your overhead cost. Specialization is important when it comes to identifying equipment. If you specialize primarily in renovations and contractual work, you only need basic construction equipment. However, if you’re planning to be working with a real estate developer building homes and buildings, you’re going to need heavy-duty equipment.

Overhead costs include your rent, utilities, equipment depreciation, and cost, and more. In the construction industry, the starting overhead cost can be between $50,000 to $1,000,000. This depends on the scope of your business and whether if you want to rent an office space or not. The average overhead cost of construction companies, especially those that function every month, is $50,000. We suggest that you have this amount of money before starting your business.

Loans and Insurance

Ultimately, you can’t plan on sustaining your business with your personal funds alone, especially if you’re a sole proprietor. Loans are essential funds when running a business, and you’re going to need one if you want your construction company to survive. The Small Business Administration offers low-interest loans so that you can start there. You can also ask your local bank regarding their commercial loans and compare them with other sources. You can also ask for loans from your personal contacts such as family, friends, and acquaintances. You can give them a share of your company or tell them you can pay them back with interest shortly.

Lastly, you’re going to need insurance. There are various insurance policies you can apply for as a construction company. Remember, this is a high-risk industry, and there are various uncontrollable events that you can’t blame if your company fails. So you can ensure that you don’t end up bankrupt if the worse does happen through commercial insurance. Other insurance policies you should consider getting are general liability insurance, property insurance, vehicle insurance, and workers compensation insurance.

These are the essential things you’re going to need when starting your construction company. Problems in the future will depend on your operations and how you handle your business. We also suggest that you visit a consultant or an expert in the industry to gain more knowledge about the unique problems. They might have some specific insights that may help solve your problems.

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