Business

How to open a construction company from scratch

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Construction and finishing works are profitable in any state of the economy. People always need housing and they constantly want to improve it. 

In this article, we will look at all aspects of starting a construction company from scratch. We will start by choosing a field of activity, draw up a business plan , and calculate the costs. We will tell you how to find clients.

Construction firm

How to start a construction business

No one will give a big order to a company without a name and experience, will not risk money, that is, to receive a large order, you will need to significantly lower the price tag of your work so that this order is not given to a company with a name and recommendations. In the construction business, as in many others, in addition to the price list for the work performed, the “word of mouth” factor and “at first you work for a record book …” work very strongly.

1. Choice of direction of activity

70% of all profit revolves around the construction of new facilities, but as mentioned above, without a good name, such an order will be difficult to obtain. The main points that you need to understand for yourself:

  • What is the minimum volume of orders that must be fulfilled for the profitability of the company
  • What skills does your team have?
  • How much work can your team(s) do?
  • Is the necessary equipment and tools available (if not, is there capital to purchase or rent the necessary)

For starters, it is better to open a company for the repair and decoration of premises. This type of activity has a number of advantages:

  • Finishing, unlike construction, is not only seasonal orders
  • The ability to quickly fulfill orders and receive payment
  • As a rule, work is carried out from the customer’s material
  • A repair and decoration firm may not receive SRO approval.

Do not forget that it is much easier for a young company without experience to get an order for finishing than for construction.

Any area of ​​activity can be supplemented and expanded. In addition to the main case, you can:

  • lease unused warehouse space
  • rent tools
  • to train specialists
  • sell or even produce your own building materials

So you will not depend on the state of affairs in one particular industry and avoid downtime. After all, many construction works are seasonal.

2. Registration of a construction business

You have decided on a direction. Now you need to register your business. To do this, decide in what legal status you will work: individual entrepreneur or LLC. There are law firms that help with registration. Contact them for advice. Or you can contact your local tax office directly.

If you choose to work as a Sole Proprietor . Excellent. You only need a notarized copy of your passport. Also, you need to open a checking account.

In the event that you decide to open an LLC  , the following documents are required:

  • Copies of the founders’ passports, certified by a notary.
  • Copies of constituent documents of the partner organization, if it acts as a founder.
  • Certificate of ownership of the premises where your company will be registered. The premises must have the status of non-residential.

3. Joining the SRO (if you decide to play big)

Control over activities related to the safety of facilities, life, health and the environment is carried out by self-regulatory organizations – SROs. For most construction work, you must have an SRO permit .

The list of SROs is available on the Internet. You are free to choose the organization yourself.

In order to obtain a permit from the SRO, you need to perform a number of actions. You can do it yourself, or order a service from specialists who will help at all stages. For example, in Moscow, you can contact the Business Legal Support Center .

You do not need to join the SRO if you are engaged in the installation of doors and windows or repair and finishing work.

How to write a business plan for a construction company

To draw up a business plan, you can contact a special organization. Or you can make your own by downloading a sample from the internet. But any numbers are just numbers, until you have real orders, it makes sense to draw up some kind of plan and make some kind of calculations and forecasts only when you are sure that you will definitely have orders, or even better, when you already have them there is.

How much money do you need to open a construction company

To answer this question, you need to clearly know what expenses you will have, if you are reading this article, then most likely you know that the material base for each type of work has its own. Make a list. The best way to do this is in a spreadsheet. You may need to make some alternative tables. So you can make the right decision based on specific numbers. Calculate costs for at least a quarter.

The cost of creating a company consists of the following items:

  • Registration
  • SRO approval (if we need it)
  • Warehouse rent
  • Buying tools

You can not buy equipment, but rent it or hire workers with their own tools. So you save money at the initial stage.

How much can you earn in a construction company

The average profitability of construction firms is 7-10% . If you reach this level of profitability, then the estimate is correct, and the work is carried out in accordance with the estimate.

At the initial stages, you can provide discounts. You can also set prices for works lower than other organizations. But be careful, at first you should have enough to cover expenses in order to pay wages and not burn out.

Also, don’t forget the risks. At any time, the price of materials may jump or the number of orders may decrease. So don’t get too carried away with discounts.

You can also make money by renting or selling materials. The more expensive the materials, the higher their profitability.

Recruitment

Most qualified specialists work on a piece-rate system, and believe me, they know the value of their work, therefore, in order for a cool specialist to work for you on an ongoing basis and it would be financially profitable for you, you must at least provide him with a job all the time, otherwise someone else will provide him with a job , construction is a seasonal business, where a month feeds a year, so do not expect that someone will work well (!) for you for a penny

In this article, we have already mentioned that it is not bad to have connections and authority among colleagues in the shop. The same can be said for staffing. Think about your friends and colleagues. Surely among them there are good, proven masters.

You can hire workers with their own tools. This will save you money in the beginning. Many masters themselves will prefer to work on the equipment that is familiar and convenient for them. And you will reduce the estimate for opening a construction company.

Recruit construction college students for summer internships or internships. But be careful. Trainees should be supervised by an experienced foreman. If you have deadlines, do not hire inexperienced workers, otherwise you risk paying twice.

construction staff

Finding clients for a construction organization

To begin with, you should launch contextual advertising, in those areas of construction and repair that are a priority for us, you should not save on advertising, because sometimes 1 order from advertising can pay off the entire advertising campaign.

For example, one click on an advertisement from a search for the key query “construction company” when advertising in the Voronezh region will cost 4 rubles, out of 100 clicks at least 1 click on statistics, this is an order, and on any construction order you can earn much more than 400 rubles spent for advertising.

It also makes sense to consider these points:

  • Place information about your company on all available Internet sites.
  • Place ads in the most popular newspapers and magazines in your area.
  • Make a targeted email campaign
  • Participate in tenders. You may not get a big deal here. But you can count on small orders for the repair of public institutions.
  • Look for builders. They can provide you with a job for years to come.
  • Participate in a subcontracting program. Large construction organizations often give repair work to small organizations.
  • Word of mouth radio. Do the job as well as possible and on time, this will increase the credibility of your construction company.

Advantages of the construction business

The construction business has a number of advantages:

  • Construction work is in demand.
  • Any repair, even from the best and most modern materials, becomes obsolete. And then a new repair is required.
  • Relatively high profitability
  • The opportunity to earn on additional services: the sale of building materials and the rental of equipment, for example.
  • A wide range of work will allow you to avoid downtime. So you can receive a stable income all year round.

Cons of the construction business

Meanwhile, opening a construction company from scratch is associated with certain risks and has a number of disadvantages:

  • There are many competitors in this industry
  • There is a risk of a sharp decrease in the volume of work. This could be due to inflation or a currency surge.
  • Prices for building materials may rise, which may lead to a decrease in profitability. You will also need to raise the salaries of employees, which will also affect profitability.

How to come up with a name for a construction company

There are several principles that will help you come up with a name in any field.

  1. The title must contain a search keyword. If you are engaged in finishing, the words may be present in the title: repair, decoration. If you are engaged in construction, include in the title the words: construction, real estate, apartments, or the roots of these words. For example, ” Build the world”
  2. Some people trust print media more than the internet. Therefore, it is worth choosing names that begin with the first letter of the alphabet: A, B, C. At first glance, it’s funny, but do you yourself often leaf through reference books up to the letter Z?

You can choose a name that represents your service. If a person wants repairs, he will open the directory with the letter “P”. For example “Repairman”.

  1. If you can’t decide for yourself, announce a competition for the best name on a social network or on the labor exchange. You won’t run out of ideas.
  2. Pay attention to the names you like from others. If it bothers you, then do something similar.

If you are opening your construction company from scratch, turn your attention to repair and finishing work. In this direction it is easier to find clients, it requires less financial injections. You will save money on joining the SRO. Repair and finishing works allow us to offer a wide range of services. Thus, you will expand the list of potential customers.

Starting a construction company from scratch is easy. Choose a field of activity and draw up a detailed business plan. Spare no effort on several options, consult with specialists and experts. Make tables. Lots of tables. The clearer the better. Assess your strengths and financial capabilities. Never forget about risks.

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