How to start a construction business
Usually, the construction business is organized by people who are already familiar with this field. For example, you worked at a construction site or studied at a specialized university. But you don't have to have work experience and education to start such a business.
If there is no experience, a foreman will help to conduct the construction business. He will supervise the construction, monitor the quality of work and help to select building materials. How to look for such a performer, they told in the article. You will also learn how to start a construction business and how to run it legally.
Step 1. Choose a destination
There are many directions in the construction business. For example, among the popular ones at the start, you can choose the following:
- perform individual construction tasks: install fences, roof roofing or pour foundations;
- build non-residential buildings: baths, garages, boiler houses;
- Build residential buildings: modular, frame, timber or aerated concrete.
It is worth starting with one service and gradually expanding the range. For example, if you build frame houses, do not offer customers the option of a house made of aerated concrete. Focus on one machine and service. And when you become a professional in it, you will be able to connect other areas.
To choose the right direction, you need to study what exist in general. And then read about construction technologies in these areas.
"I see two ways to find your niche. The first is to do what you enjoy the most. This option is suitable for experienced builders.
The second is to monitor the market. See what niches there are in the construction business and choose the one that you see an opportunity to start with. For example, you know a foreman from this area or you have enough money to start a business.
But you should not make a choice according to this scheme: you saw that modular houses are in fashion now, and began to build them. Most likely, the plan will not work without knowledge of the technology and an experienced foreman."
Choosing a direction will help you understand what kind of workers to look for, what features may arise with the registration of a business, what equipment you need to buy. Once you've decided on a niche, you'll be able to draw up a rough business plan and calculate the approximate cost of launching.
Step 4. Hire Employees
This is the most difficult stage: it is not easy to find qualified employees, especially if there are no acquaintances from the field. Let's figure out where to look for workers and who you can't do without at the start.
Who is needed at the start. Initially, the following team is enough: a foreman, workers and a manager. First things first.
The foreman is hired first. This is the most important step: it will have a direct impact on the business. The foreman monitors the quality of work, organizes the construction. He can also take on the tasks of other employees. For example, a logistician or a foreman.
As a rule, foremen have one or more formed work teams. It attracts these people to work on your projects. But if you don't have such a team, you will have to hire it or assemble it yourself. The composition of the team depends on what exactly you do.
The team also needs an account manager, who will negotiate with customers. Often, a manager combines several roles: both a salesperson and a marketer. At first, you can take on this responsibility.
There are also employees who can be outsourced at the start. For example, a designer. He develops an accurate construction plan, determines where in the house communications will be, and makes drawings. You need a plan to understand what you are going to build and what result you will get. With it, you will be able to control the foreman and workers and check whether they are following the project. And the plan will also help protect yourself from customer claims: they will immediately know what kind of house you will build for them.
Over time, when the business expands, you will be able to hire other employees: a lawyer, an accountant, a designer.
Where to look for employees. In the construction business, workers are sought in several ways. Here they are, from the most preferable to the least successful:
- through acquaintances;
- on specialized services and forums;
- on online bulletin boards, recruitment sites.
The most reliable way is to look for workers and foremen through acquaintances. For example, if you have already worked with a team, you know that they do not miss deadlines, do not inflate prices, and do the work well. It's great if you have the opportunity to ask for a recommendation from friends or colleagues.
You can also search for employees through specialized forums. For example, the first customers found the director of the Finnish House on the Forumhouse forum.
The most unreliable way is to look for employees for the construction business on the Internet or on sites like HeadHunter. You can't see reviews of their work or explore the projects they've worked on. And their abilities can only be tested in practice.
What kind of education is needed. Specialized education is an advantage, but not the main criterion in the selection of builders. It is more important that the employee knows the construction technology and is responsible for the quality of work.
Step 5. Buy Basic Equipment
If you're looking for a crew, more often than not, they'll have a basic set of tools. It can change depending on what exactly you are building. For example, for the construction of frame houses, you cannot do without nailer. With its help, fasteners are nailed without the use of physical force.
Hand tools are a versatile kit that comes in handy on a construction site. It is used every day, so it is worth buying:
- Saw;
- Hammers;
- hacksaws;
- Planes;
- Hammers;
- Nailers.
But it is better to rent expensive equipment. Otherwise, when it breaks, you will have to pay for its maintenance and repair, it turns out to be unprofitable.
Where to store. Building materials, inventory and equipment can be stored at the construction site or use the services of temporary warehouses. It is not necessary to rent a warehouse at the start. You can do this when there are more projects and the budget increases.
Step 6. Rent an office
This step is optional. But there are customers who refuse to work with the construction business if there is no office.
"It seems to me that an office is needed when the company already has a constant flow of customers and employees who need space. For example, a designer or an accountant.
If the budget allows and you still decide to rent an office from the start, here's what you should consider when choosing one.
Location. You don't have to rent an office in the city center. It's expensive and not always convenient for customers: you can get stuck in a traffic jam during rush hours. Usually, if people want to build a vacation home, they have a car. Therefore, they will be able to reach your office without any problems.
It's important that employees and customers can find you quickly. Therefore, when choosing a room, pay attention to the location so that the navigator can easily find the address.
In order for employees and clients to get to the office without a car, rent a room with a convenient transport interchange. This way, most people will be able to get to you from different parts of the city without transfers. It is important that the public transport stop is as close as possible to the office building. Otherwise, customers may refuse to travel in bad weather or come irritated.
Infrastructure. There should be parking in the building or next to the office so that you don't have to look for a place for a long time or park in the next yard.
It is great if the room has the opportunity to equip a kitchen and a recreation area for employees. But it's also important that they have the opportunity to have a snack outside of work. Therefore, choose premises where there are cafes and canteens nearby.
Appearance. You can get an impression of a business from its office. Therefore, choose a room that is regularly cleaned, renovated and lifted.
"Keep an eye on the details. There is an illustrative example: we rented our first office in a business center. Everything was fine there: the location, the appearance, the comfortable office. But there was a seemingly small problem – the toilet was not repaired.
This detail could spoil the client's impression of the business: a team of professionals, and the office is rented in a room without a proper toilet. And it was uncomfortable for the employees."
Step 7. Attract the first customers
To search for clients, we advise you to use several methods of attraction at once. Let's talk about each of them.
Word of mouth. When you start a business, tell your friends and acquaintances about it. You can write about it on your social networks. Perhaps someone you know just needs such a company, they can contact you.
Social networks. Start a social media page to make yourself known to your audience. You can use it to post examples of your work, construction plans, and business information.
Some construction companies and individual entrepreneurs, in addition to the page on Vkontakte, create a YouTube channel. There they upload videos where they show the construction process, talk about the company, thereby attracting attention to themselves.
As long as there are no real projects, you can publish house plans. Tell clients what you can build and what services you work with.
Targeted advertising. To draw attention to your page on Vkontakte, you can launch targeted advertising. It can be set up so that advertising posts come across people who are interested in construction or are subscribed to competitors.
Again, as long as there are no finished works, you can advertise house plans.
Own website. Most construction companies have their own website. Therefore, it is worth doing it at the start in order to compete on an equal footing with others.
"I believe that we need a full-fledged website, like a kind of virtual office. If you only manage social networks, customer trust in you will be lower.
In the future, you can place a gallery with works on the site and set up contextual advertising to attract customers.
Landing. If you can't create your own website, you can make a landing page in the builder. Experts' opinions on this matter vary: some advise you to limit yourself to a landing page at the start, and some advise you to make your own website right away.
The main advantage of a landing page is that it is made faster and costs less than a full-fledged website. You can make it up yourself in special services.
Personal brand. This method won't help you attract customers quickly, but it works for the long term. A business owner can start running social networks or act as an expert on specialized online forums. If you develop this channel, over time, people will learn more about you and trust you.
How to Reduce Risks When You Launch a Construction Business
There are a lot of risks in the construction business. For example, there are often unaccounted costs, an unqualified team. To solve many such problems, you need money. We have collected expert advice on how to work with money when you start a business.
Create a compensation fund. Businessmen must be prepared to pay compensation to the client. For example, if the object was not commissioned on time or the work was performed poorly, and the customer sent a claim — a complaint.
"I don't know of a single company that hasn't faced a complaint. In this case, they usually act in two ways: turn off the phone and run away from the customer, or try to solve the problem while maintaining the trust and face of the company. If you want to work for a long time, choose the second method.
In order to solve the problem of a complaint, you need to have an internal fund. It needs to be replenished regularly.
For example, at each facility, deductions for the "claims fund" should be included in the final cost. Let it be small, 2$ thousand-3 thousand$. Several objects will collect an amount that may come in handy one day when there is a major complaint."
When you calculate the cost of construction work, include the reclamation costs in it. This is the money that will have to be paid to the client if he finds a defect in the work. Always keep this point in mind. You can open a separate account in the banking application, where you will save money for compensation.
Create a reserve fund. It is needed so that the business can develop and scale. Many businessmen take risks when they think that all the income that they received from the project can be taken as a salary. This mistake is often encountered by beginners.
"I was once given good advice. Even if the owner of the business is an individual entrepreneur and is not registered as an employee, he should assign himself a salary. For example, 100,000 ₽. And it doesn't matter how much you earned from the property, take only the designated amount for yourself.
With the rest of the money, you need to replenish the reserve fund and use it for business development.
Most of the young construction businesses go bankrupt precisely because of the fact that there is a large financial flow of "prepayments" and they begin to spend them on themselves, even before they have earned.
Tight financial control over cash flow will allow you to avoid a situation where your business turns into a "financial pyramid".
It is convenient to keep the reserve fund in a savings account. You can withdraw or transfer money from it at any time. Here's what the reserve fund money can be used for:
- compensation for defects or shortages;
- marketing: targeted advertising, payment for the work of a marketer, outdoor advertising, promotion of your website;
- hiring of employees;
- renting an office and buying various equipment and inventory for it;
- your own equipment, which will always be at your disposal;
- Renting a warehouse so as not to transport materials from the store directly to the construction site and store tools.
Manage money thoughtfully. Don't spend money until you've finished the project. An unpleasant situation can happen.
The businessman calculated that the costs from a certain object would amount to 100,000$, and he took 200,000$ from the client. The project is not over yet, and the entrepreneur has already rented a new office in the city center, bought equipment and expensive furniture for it. As a result, in the process of construction, it turns out that one million is not enough, one and a half is needed. And the businessman has already spent part of the amount on personal expenses.
Such unaccounted expenses often happen in the construction business for both beginners and experienced.
Main points in the article
- A construction business can be organized by people without experience and higher education. The main thing is to find an experienced foreman who will take care of the entire production part.
- You need to start a business by choosing a direction. It is worth focusing on one service, honing your experience and only then expanding.
- It is more profitable to run the construction business as a sole proprietorship: you can take large orders, hire employees, and taxes are small.
- In construction, you don't need a license to do business. You also do not need to join an SRO if you build residential and non-residential facilities no higher than three floors.
- At the start, you need a manager, a foreman and a team of workers.
- You only need to buy hand tools that are needed at the construction site every day. It is better to rent expensive equipment.
- Whether to rent an office or not depends on your budget and preferences. You can meet with clients in a café or in a co-working space.
- You can attract customers with the help of targeted advertising and word of mouth.
- Create a reserve fund where you will save money for business development and complaints. And don't spend money until you've completed the property.
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