Is Construction The Right Start-up For You?
A construction start-up might be one of the most exciting industries to launch a company in. There is a lot of preparation in any start-up, but one that can cause serious injury to your team takes extra care. There are also many more rules and regulations to adhere to.
You might consider building singular homes, or you might opt to build commercial properties instead.
Even for the most experienced entrepreneur, property development is a huge undertaking. So if you are considering a construction start-up here are some simple tips to help you make the decision.
Every business will need a solid business plan. Not only is it required when you start applying for finance, but it is going to be the driving force behind you staying on track.
The financial forecast will show what you can expect in terms of revenue. Unlike most businesses though, the finance in play for construction is in the thousands or millions – not hundreds.
Within your business planning, you will be looking to outline some of the contractors and suppliers you will use. Including everything from roofing shingles, prefab steel reinforcement cages, right down to the hardhats and safety wear.
When it comes to borrowing money for your start-up, you need to make sure you have everything calculated right down to the last penny.
Office or home?
The office or home decision actually covers two separate things. One is where you will set up your base for the work. Smaller companies can work from home without an issue, however, if you are opting for a large enterprise then it is better to consider renting an office.
The next choice is – are you building commercial premises or will you be building homes?
For the first, you need to make sure you have enough room for dealing with clients and ensure that the business itself feels legitimate.
Consider the amount of vehicle parking space you’ll need and if your home is legally allowed to have a business running from it.
If you have ever purchased a home, you know that there are reams of paperwork to deal with. When it comes to building itself, there are many more.
No matter what you choose to build, you will need to make sure that you have a legal team available to help.
You will need permits, licenses, certifications, and any registrations that are required for your business.
Most of these are mandatory and are not worth taking the risk to skip. Every city, country and even local authority will have a range of things you will need to adhere to – a lawyer can make sure that you are always above board.
Most businesses need to have insurance, but not all businesses need the extension of insurance that a building company does.
To keep your investment and team protected, you will need to have insurance covering you, your clients, your working team.
It is better to discuss all of your insurance needs with a specialised construction insurance company – and don’t be surprised to find the insurance being relatively high.
Even if you put hundreds of thousands of your cash into it, you will need to apply for financing.
The equipment alone can run into the thousands, and keeping in mind that is even when they are leased, not purchased,
You will need to keep payroll, advertise your building for rentals or buyers, cover all of the contractor bills and more.
Secure financing before the project starts, or you might find money will be the bottleneck. The last thing you need is to have hardworking staff walk off the site because the funds aren’t ready to pay them yet.
Network – hard
You need to have good standing with as many contractors as possible. It’s a big job, and the more houses you build, or the more extensive the commercial property, the more hands you will have on deck. It is often the case that general contractors have many contacts that you can get access to.
Opening a few accounts with multiple suppliers will mean you have already established some credit with them, which will go a long way when booking your project with them.
Architects, designers, building regulation bodies and inspectors are also a few more people you will need to have a good relationship with.
The better your relationships, the more likely you will get the work you need to have done booked in, completed to a high standard and better communication.
And remember what the local community think matters too: How Your Business Can Connect With Your Local Community
Although we have discussed contractors during most of the article, that can be the preferred method for many projects. You might decide that you want to hire the people for the duration of the build.
It is worth considering that contractors are typically cheaper since you aren’t likely to be paying benefits – and they are much more flexible. They know they are there for a short period.
There are a few staff members that you should have on hand at all times, and these should be full-time hires.
The first is an assistant for yourself. They will be able to keep you on track and organised. An assistant will also be able to field calls in the right way. They will be able to understand and adapt to the running of the business and keep it smooth.
The next is a project manager. A project manager can be one of the most valuable people on site. They are experienced in keeping projects on track and will make sure that you are only contacted if you need to know or sign off on.
The project manager will be handling the day to day running of the project and ensure that if there are issues, they are handled with precision.
Yes – before you have even finished the build, you’ll need a budget for marketing and advertising.
If you have one or two homes available, you might find you overwhelmed with interest pretty early on. However, when you have multiple offices for sale or rent, you might need to put the work in earlier to secure contracts.
The bigger the project, the bigger the marketing and advertising budget should be.
Traditional media is often the best option here. Having the available properties in the local newspapers and hire cherry picker to hang a few large banners is typically enough to gather interest. A website will have the opportunity to book viewing, conversations, or at the very least a digital tour.
If you want your project to be as streamlined as possible, adding modern technology will get you there.
It allows the project manager to quickly communicate with you and the team, adjust the plans and more. The data required to make fast decisions will all be available on the software and this can minimise many of the issues that construction companies face.
Be sure to look for one that has budgeting and accounting options – so that you are aware of where the budget stands every step of the way.
Construction is a hugely fulfilling option when it comes to start-ups, the first build will provide some of the most significant business learning curves around, and that is a great thing.
One of the most exciting things is seeing the lights switch on for the first time – when the people who purchased or rented the space finally move in.