The construction industry is booming, which creates an outstanding opportunity for anyone starting a new construction business. However, there are some types of construction businesses that will thrive more than others. Here’s how to determine if you should consider opening a new contracting business in your area.
Do the Research
The first step in determining if a new construction business is likely to succeed in a given area is researching the local markets. In some areas, specific construction specialties are already plentiful, which means a new business would face stiff competition from existing companies. However, if there are no other welding companies in the area, the startup costs will be less than in some circumstances. Your most significant investment would be purchasing welding equipment and obtaining shop space.
In some cases, analyzing the local conditions will take more effort. For example, even if a market appears saturated, there is room for competition if the existing companies are providing sub-par services or charging exorbitant rates.
Develop a Solid Business Plan
Once the research is completed, take the time to formulate a comprehensive business plan. Doing so provides an insight into what’s involved in the startup and how you’ll proceed once the doors open.
Lenders will require a business plan before approving any needed financing, so this step is critical. While business plan templates are readily available, working closely with a financial advisor familiar with similar businesses to write the plan is strongly recommended.
Take Care of the Formalities
Now is the time when having an attorney on board is essential. A legal advisor will help you determine how to structure your business. If you’ll be working alone, a sole proprietorship is appropriate. However, if you anticipate having numerous employees or plan to expand in the future, a limited liability company (LLC) or C Corporation would be more appropriate. Each legal structure includes different requirements, so working with an attorney is crucial to determine which one to use.
In addition, new business owners must register their businesses with the appropriate officials and obtain the right licenses and permits to operate.
Most formalities are relatively straightforward, but many new business owners use attorneys and financial advisors to ensure no steps are omitted.
Lastly, ensure to apply for a Federal Tax ID online to get registration ID for your construction business. Construction businesses in the US need an EIN to identify the business and report employment taxes. And since applying for an EIN is a long and tiring process, it’s advisable to work with a registered agent who expedite the process for you as you deal with other business formalities.
Businesses must also have appropriate bank accounts to function. In addition, establishing a line of credit or obtaining credit cards for the business will also be necessary. The majority of companies don’t see significant profits immediately, so take precautions to ensure you’re able to weather financial storms for the first few months.
Don’t Forget About the Insurance
One issue that plagues business owners is having the correct insurance coverage. Not all businesses require the same types of coverage, which means owners must review their needs with an insurance professional to ensure there are no gaps in protection. Don’t cut corners here, as a single mishap or error that isn’t covered can destroy a company.
Obtain the Necessary Equipment
One of the final steps when setting up a new business is to obtain the necessary equipment. That might mean welding equipment, hand tools, shop tables and cabinets, and office equipment. Once all the required tools and supplies are on the site, it’s time to open.
If you’re unsure which equipment or tools to purchase or lease, contact a supplier for additional information. The supplier will gladly recommend options that would best meet your needs.