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The construction industry holds one of the greatest market shares in the US. You will see various under-construction projects throughout the country.
Construction companies are also investing in construction management software like Bridgit and creating the best paying jobs in homebuilding in a competitive environment.
Although the construction industry is open to fresh minds and businesses, it has one of the highest failure rates. According to a report, over 60% of construction companies fail to survive in the first five years after stepping into the market.
There are various reasons behind that huge failure, like lack of knowledge, poor planning, and mismanagement. This article will help you kick-start your construction business by sharing five fundamental steps.
1. Know The Local Market
Construction projects are similar to any other project you see daily. They have limited resources, scope, workforce, and a deadline. But construction projects are also the most versatile.
Their requirements contain multiple products and services, and you must know about the market value of each offer. For example:
- Equipment – The machinery and tools required for construction like Washington excavators selection.
- Labor – The workforce, like masons and subcontractors, and their wages.
- Technology – Construction management software for efficient resource utilization and project tracking.
Since you will be a new competitor in the industry, you should have the latest market insights to survive. Other construction giants who are already involved in several projects might want to try eating up your market share. However, knowing the local market is the best way to sustain in such a situation.
The local market refers to the region or city where you serve the construction industry. For example, you must have an accurate idea of construction costs in Dallas if you are situated there.
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Tips for Market Research
One way of market research is contacting every supplier and subcontractor in the area and preparing your pricing document. Large-scale companies with a strong research and development (R&D) team research the market.
Their agents stay in the loop of construction suppliers and vendors and keep their companies updated about the local market.
But you might not have enough resources for that. So, it’s better to do your research online by checking the latest construction costs of residential and commercial projects to get an estimate.
2. Create A Business Plan
Your second step must focus on developing a sound business plan. It’s a document that describes your company’s objectives, mission, and vision. The same document also has a roadmap that shows what steps you take to achieve your business goals.
The roadmap usually has the following three factors:
- Marketing – How you will market your construction services to potential clients.
- Financial – Your financial strength, which includes your revenue and partnerships.
- Operational – An activity plan to achieve your company’s milestones and objectives.
Creating a business plan is a lengthy activity and needs an expert’s involvement. Remember that without consulting or hiring an experienced construction business plan, your company can’t have a sound business plan.
There are many business experts available who have spent years in the construction industry. They know the ups and downs of new construction businesses like yours. So, it’s better to consult a veteran business planner rather than relying solely on luck.
That way, you will understand more about the secret ingredients of achieving success in the construction industry.
While working with an expert, you will also realize how to win construction jobs in the fresh years. Many companies struggle to win a job relevant to their expertise. After some time, they give up and shut down their businesses.
However, you can easily market your services and win potential clients with a professional and sound business plan.
Tips for Creating a Construction Business Plan
Here are the seven sections you must include in your business plan:
- Executive summary – An overview of your business, including its history and founders.
- Company Description – Your company’s goals and how you work to achieve those goals.
- Products and services – Your offerings in the construction industry.
- Market analysis – Share market insights according to your research.
- Strategy and implementation – The operational plan, specifically the marketing strategies.
- Organization and management team – Your company’s hierarchical structure includes executives, managers, and a board of directors.
- Financial plan and projections – It’s your company’s financial data which is based on the market analysis by your research team.
3. Register Your Company
You must register your company with the relevant government to avoid getting penalized. First, you must check whether the local business directory serves online.
If yes, you can easily fill out the online registration form and register your company. Otherwise, you must have to visit the office and manually submit each document.
Remember that once your company is registered, you will have privilege over unregistered companies in terms of government regulations. You must also pay annual taxes and enjoy several benefits, like property ownership and investments.
4. Get the Necessary License
Your company must have a construction license and permit to begin working in the industry. The regulatory bodies will penalize you if your company doesn’t have the necessary license for construction.
Remember that the company’s license is different from an individual professional license, like a contractor’s license. You must have all types of licenses to fulfill the legal requirements. Some clients also check whether the construction team is equipped with the right license.
5. Expand Your Business
Lastly, you must focus on expanding your business. You can do that by delivering quality projects and providing incentives to your clients. You must also professionally communicate with the projects and keep them updated throughout the construction.
The most important factor of business expansion is your company’s reputation. When clients begin to rely on your services, you can easily charge more by adding more value for them.
Clients also observe the techniques a company uses throughout the construction project. So, equip yourself with the latest equipment and technology to efficiently fulfill the client’s requirements. That will boost your company’s reputation and ensure long-term success.
Conclusion
Stepping into the construction industry might be challenging. You must have a sound business plan and market research to execute the project. So, smoothly kick-start your construction business and stay ahead of your competitors by following the above five tips.
