Construction companies are involved in the construction of building or engineering projects. They are also engaged in the preparation of sites for new construction. Inputs for the construction process are purchased from both domestic and international suppliers. Key suppliers include other construction operators in this sector, manufacturers, and wholesale trade operators. Markets for goods produced by this sector include residential, non-residential, and engineering avenues.

Available data shows that the construction sector revenue has grown in recent years, rising at an annualized rate of 2.4% to $2.4 trillion over the five years to 2021, including a projected increase of 2.6% in 2021 alone as the economy begins to recover from the COVID-19 (corona-virus) pandemic.

Demand for construction services has been bolstered during most of the period by favorable macroeconomic conditions, including rising disposable income, relatively low-interest rates, and increased access to credit.

Steps on How to Start a Construction Business With No Experience

1. Conduct Market Research

The first step in the market research process for a construction business is to develop market-based research questions in line with your overall business goal and objective. In this regard, you should source information that will help you maximize your business, information that will help you know what your potential market is looking for, and that will help you operate your construction business with less stress.

a. Who is the Target Market of a Construction Business?
  1. Families
  2. Organized private sector (Corporate organizations)
  3. Land Owners
  4. Businessmen and Businesswomen
  5. University Campuses
  6. Foreign investors who are interested in owning properties in the United States of America
  7. The government of the United States of America (Government contracts)
  8. The governments of other nations of the world
b. Is Construction Company a Profitable Business?

Yes, the construction company business is a profitable business and statistics show that the industry generates an average of $2 trillion annually in the United States of America.

c. Are There Existing Niches in the Industry?

Yes, there are existing niche ideas when it comes to the construction business and they are;

  1. Building (residential and commercial facility) construction
  2. Heavy and civil engineering construction
  3. Specialty trade contracting.
d. Who are the Major Competitors?
  1. DR Horton Inc.
  2. Turner Construction Company
  3. EMCOR Group Inc.
  4. Fluor Corporation
  5. Bechtel.
  6. AECOM.
  7. Skanska USA.
  8. Kiewit Corporation.
  9. Jacobs Engineering Group.
  10. The Conti Group.
  11. Zachry Holdings.
  12. Rio Tinto America
  13. Robert Bosch
  14. Hovnanian Enterprises
  15. Skanska. Zippia
  16. Owens Corning.
  17. PCL Construction Enterprises Inc.
  18. Whiting-Turner.
  19. D.R. Horton
  20. Lennar Corp.
e. Are There County or State Regulations or Zoning Laws for Construction Business?

Yes, there are county or state regulations and zoning laws for construction company business, and players in this industry are expected to work with existing regulations governing such business in the county or state where their business is domiciled.

Zoning laws are almost always enacted and enforced by local, and not statewide or nationwide, authorities. City governments, town governments, village governments, and the likes are merely functions of the state government. They derive all their authority from the states in which they reside.

f. Is There a Franchise for Construction Business?

Yes, there are franchise opportunities for construction businesses. They include;

  • UBuildIt
  • DirectBuild
g. What Do You Need to Start a ConstructionBusiness?
  1. A Feasibility Report
  2. Business and Marketing Plans
  3. Business Licenses and Permits
  4. A Safe Storage Facility for Your Heavy Duty Construction Equipment
  5. Computers, Laptops, and Servers
  6. EIN (Employer Identification Number)/Federal Tax ID Number.
  7. A Corporate Bank Account
  8. Tractors, and Heavy Duty Construction Equipment
  9. Employees
  10. Startup and Working Capital

2. Memorable Name ideas for Construction Business

  1. Shannon Berg Construction Company
  2. Tint Details® Construction Contracting Company
  3. Zone Connect® Construction Contractors, LLC
  4. Emerald Contractors© Construction Company, Inc.
  5. Hughes Temple® Construction Contracting Company, Inc.
  6. Roll On™ Construction Company, Inc.
  7. Perfect Finish™ Construction Contracting Company, Inc.
  8. Peter Jones & Sons© Construction Contracting Company, Inc.
  9. Red Tapestry® Construction Contracting Company, LLC
  10. Vintage Group© Construction l Contracting Company, Inc.
  11. Frank Theodora & Sons© Construction Contracting Company, Inc.
  12. Perfect Hedge® Construction Company, Inc.
  13. Jonnie Blake Corporation, Inc.
  14. Monic Lewis® Construction Company USA LLC.
  15. Sheela Steve® Construction Company, Inc.
  16. Twenty Ten® Construction Company USA LLC
  17. Trio Group® Construction Company USA LLC
  18. Rhodes Brothers® Construction Company USA LLC.

3. Register Your Business

a. What Type of Business Structure is Best for Construction Business?

Even though there are several options when it comes to the business structure of a construction company, the one that most players in this line of business consider is LLC. It is common to consider LLC because providers want to protect themselves from lawsuits.

Please note that an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN.

b. Steps to Form an LLC
  1. Choose a Name for Your LLC.
  2. File Articles of Organization.
  3. Choose a registered agent.
  4. Decide on member vs. manager management.
  5. Create an LLC operating agreement.
  6. Comply with other tax and regulatory requirements.
  7. File annual reports.
c. What Type of License is Needed to Open a Construction Business?
  1. General Business License
  2. Fire and Safety Permit
  3. Zonal Permits (Applicable in some cities)
  4. Signage Permit
  5. Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Construction Business?

These are some of the certifications you can work towards achieving if you want to run a construction company business;

  1. Certified Construction Manager (CCM)
  2. Gold Seal Certification
  3. National Association of Safety Professionals certifications
  4. The Certified Construction Industry Financial Professional (CCIFP).
e. What Documents are Needed to Open a Construction Business?

These are some of the basic legal documents you are expected to have if you want to legally run a construction company business in the United States of America;

  1. DBA
  2. EIN
  3. Business and liability insurance
  4. Federal Tax Payer’s ID
  5. State Permit and Building Approval
  6. Certificate of Incorporation
  7. Business License
  8. Fire, Health, and Safety Permit
  9. Business Plan
  10. Employment Agreement (offer letters)
  11. Operating Agreement for LLCs
  12. Insurance Policy
  13. Online Terms of Use
  14. Online Privacy Policy Document
  15. Contract Document
  16. Company Bylaws
  17. Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?

If you are considering starting a construction company business, you may not need to file for intellectual property protection, copyright, patent, or trademark because construction companies do not require one except on rare occasions.

4. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Construction Business?

When it comes to starting a construction company business, the startup costs could range from $150,000 to well over $1 million depending on how much equipment the business owner decides to purchase and the heavy-duty construction equipment storage space leased. Please note that this amount includes the salaries of all the staff for the first month of operation.

b. What are the Costs Involved in Starting a Construction Business
  1. The Total Fee for incorporating the Business in the United States: $750.
  2. The budget for Liability insurance, permits, and license: $5,000
  3. The Amount needed to acquire a suitable Facility with enough space for a storage facility (Re-Construction of the facility inclusive): $500,000.
  4. The Cost for equipping the office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al): $15,000
  5. The cost for acquiring heavy-duty construction equipment: $2,000,000
  6. The Cost of Launching a Website: $600
  7. Additional Expenditure (Business cards, Signage, Adverts, and Promotions et al): $5,000
  8. Working capital (investment fund): $2,000,000 (2 Million US Dollar)
c. What Factors Determine the Cost of Opening a Construction Company Business?
  1. The size of the construction business
  2. The choice of location for your storage facility
  3. The required licenses and permits
  4. The type of heavy-duty construction equipment
  5. The niche idea (type of construction business)
  6. The cost of hiring and paying a business consultant and attorney
  7. The cost for branding, promotion, and marketing of the construction company business
  8. The cost for the purchase of heavy-duty construction equipment and tractors et al.
  9. The cost for insurance policy covers
  10. The cost for registering the business
  11. Source of your supplies and ongoing expenses
  12. Cost of recruiting and training your staff
  13. The cost for the purchase and customizing of uniforms, shoes, and caps for your employees
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

It is not compulsory to build a new facility for your construction company business, but if you have the required finance, it will pay you to build your facility. The truth is that building or reconstructing a facility will help you come up with an edifice that will conform to what is expected in your city.

e. What are the Ongoing Expenses of a Construction Business?
  • Building supplies
  • Fueling and maintenance of equipment, tractor and utility trucks et al
  • Utility bills – (internet subscriptions, phone bills, signage and software renewal fees et al)
  • Salaries of employees
f. What is the Average Salary of your Staff?
  1. Chief Executive Officer (President) – $85,000 Per Year
  2. Project Manager – $75,000 Per Year
  3. Civil Engineer – $72,000 Per Year
  4. Structural Engineer – $72,000 Per Year
  5. Quantity Surveyor – $70,000 Per Year
  6. Land Surveyor – $70,000 Per Year
  7. Company’s Lawyer/Secretary – $68,000 Per Year
  8. Human Resources and Admin Manager – $42,000 Per Year
  9. Sales and Marketing Executive – $28,000 Per Year
  10. Accountant – $32,000 Per Year
  11. Customer Services Executive – $26,100 Per Year
g. How Do You Get Funding to Start a Construction Company?
  1. Raise money from personal savings and sale of personal stocks and properties
  2. Raise money from investors and business partners
  3. Sell shares to interested investors
  4. Apply for a loan from your bank/banks
  5. Apply for business grants and seed funding from the government, donor organizations, and angel investors
  6. Source for soft loans from your family members and your friends.

5. Write a Business Plan

a. Executive Summary

Shannon Berg® Construction Company is an international construction company that has its headquarters in Grand Rapids, Michigan – USA. The fact that we are based in the United States does not in any way restrict our scope of operations to the United States of America. We are an international construction company and we work for our clients (governments and private sectors) in any part of the world.

b. Products and Service
  • Road Construction
  • Bridge Construction
  • Dam construction
  • Airports and Helipads Construction
  • Seaports Construction
  • Skyscrapers construction
  • Estate construction
  •      Public facility construction (hospitals, schools, shopping malls, office complexes and industrial facilities et al)
  • Construction of residential facilities
  • Property Makeover Services
  • Construction Consultancy and Advisory Services.
c. Mission Statement

Our mission and values are to help governments, the private sector, and individuals in the United States of America and throughout the world realize their dreams of building world-class structures that can compete on the global stage.

Vision Statement

Our vision is to build a first-class construction company that will have an active presence in North America, South America, Africa, and Asia.

b. Goals and Objectives

The goals and objectives of the construction company are to ensure that construction projects are successfully completed within the constraints of quality, and with minimum cost.

c. Organizational Structure
  • Chief Executive Officer (President)
  • Project Manager
  • Civil Engineer
  • Structural Engineer
  • Quantity Surveyor
  • Land Surveyor
  • Company’s Lawyer/Secretary
  • Admin and HR Manager
  • Business Developer
  • Accountant
  • Front Desk Officer.

Marketing Plan

a. SWOT Analysis
Strength:

Shannon Berg® Construction Company can confidently boast of having a competent and highly experienced management team who are regarded as some of the best in Michigan.

Although we are a new construction company, but our president and board of trustees are respectable people in the United States of America who have served the US government in various capacities.

Weakness:

The fact that we are a new construction company could count as a weakness. It is normal for clients to think twice before awarding construction contracts to newbies in the industry. Another weakness that can count against us in the industry is the fact that we may not have the financial muscle to drive the business the way we want it to go. We require a huge financial base to be able to acquire some of the heavy-duty construction equipment we need.

Opportunities:

Our business concept, mission, and vision put us at an advantage in the industry. We will start small to build trust in Grand Rapids, Michigan. There are loads of opportunities for us there simply because we are well-positioned to work with both the state government and the highly organized private sector.

Threat:

In the construction industry, both the already established companies and start-up construction companies are subject to threats from government policies, global economic downturns, and unforeseen natural disasters (disasters that may cause setbacks).

b. How Do Construction Businesses Make Money?

Construction company businesses make money by offering the following services;

  1. Road Construction
  2. Bridge Construction
  3. Dam construction
  4. Airports and Helipads Construction
  5. Seaports Construction
  6. Skyscrapers construction
  7. Estate construction
  8.     Public facility construction (hospitals, schools, shopping malls, office complexes and industrial facilities et al)
  9. Construction of residential facilities
  10. Property Makeover Services
  11. Construction Consultancy and Advisory Services
c. Payment Options
  1. Payment via bank transfer
  2. Payment via credit cards
  3. Payment via online bank transfer
  4. Payment via check
  5. Payment via mobile money transfer
  6. Payment via bank draft
d. Sales & Advertising Strategies
  1. Introduce our business by sending introductory letters alongside our brochure to all the corporate organizations and government offices in the United States.
  2. Promptness in bidding for construction contracts
  3. Advertise our business in real estate/properties magazines and websites
  4. List our business on yellow pages
  5. Promote our business on satellite TV and radio stations.
  6. Attend expos, seminars, and business fairs et al
  7. Create different packages for different categories of clients in order to work with their budgets and still deliver quality projects (housing/property) to them
  8. Leverage the internet (social media platforms and our official websites) to promote our business.

Financial Projection

a. How Much Should You Charge for your Product/Service?

Although our prices may not be outrageously lower than what is obtained in the industry, but we are hopeful that whatever price we bill our customers will be amongst the lowest they can get in the industry. The fact that we are going to be billing our clients lower than what is obtainable in the industry is not in any way going to affect the quality of our projects.

b. How Much Profit Do Construction Business Owners Make a Year?

It depends, but according to the job search website indeed.com, in 2016, the average construction business owner made only $120,000 per year; while construction company vice presidents average $117,000 annual salary, senior project managers average $102,000, and project managers average $79,000.

c. What Factors Determine the Amount of Profit to Be Made?
  1. The capacity of the construction company business
  2. The location of the construction company business is covering
  3. The management style of the construction company business
  4. The business approach of the construction company business
  5. The advertising and marketing strategies adopted by the construction company business.
  6. The number of years the construction company is in business
d. What is the Profit Margin of a Construction Company Business?

The profit margin of a construction company business is not fixed; to a large extent, it will depend on some factors that are unique to your location. But on average, construction companies earn up to 20% on a project.

e. What is the Sales Forecast?

Below is the sales forecast of a construction company business based on the location of the business and other factors as it relates to such startups in the United States;

  • First Fiscal Year (FY1): $2 million
  • Second Fiscal Year (FY2): $3.8 million
  • Third Fiscal Year (FY3): $5.2 million

6. Set Up your Office

a. How Do You Choose a Perfect Location for a Construction Business?
  • The demography of the location especially as it relates to the frequency of construction projects
  • The demand for the services offered by construction businesses in the location
  • The purchasing power of businesses and residents of the location
  • Accessibility of the location
  • The number of construction companies in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al
b. What State and City are Best to Open a Construction Business?
  1. Los Angeles, California
  2. Chicago, Illinois
  3. New York City, New York
  4. Las Vegas, Nevada
  5. Phoenix, Arizona
  6. Silver Spring, Maryland
  7. San Diego, California
  8. Boston, Massachusetts
  9. Richmond, Virginia
  10. Green Bay, Wisconsin
  11. Dallas, Texas
c. What Equipment is Needed to Operate a Construction Business?

You should be prepared to purchase some of the heavy-duty equipment and machines needed in the construction field. You would need to purchase concrete mixers, block molding machines, grading machines, gathers, cranes, forklifts, and loads of other construction machines.

Also, you should ensure that you have the required software applications. You would need engineering/civil engineering software applications such as Computer-Aided Design Software Application (CAD), Auto Cad, and other related software applications (payroll software, accounting software, CRM software et al).

7. Hire Employees

When it comes to hiring employees for a standard construction company business, you should make plans to hire a competent Chief Executive Officer (President), Project Manager, Civil Engineer, Structural Engineer, Quantity Surveyor, Land Surveyor, Company’s Lawyer/Secretary, Admin and HR Manager, Business Developer, Accountant, Front Desk Officer. It is the practice for construction companies to hire contract staff as laborers in construction sites.

8. Launch the Business Proper

No construction company opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.

The bottom line is that with a proper launching of the business, you will be able to officially inform people that your construction company is open for business.

a. What Makes a Construction Business Successful?
  1. Having an innovative business idea
  2. Following a clear vision
  3. Creating a solid business plan
  4. Developing missing skills
  5. Finding the right talent and network
  6. Being financially prepared
  7. Building a strong company culture
  8. Maintaining excellent customer service and outreach
  9. Analyzing your competitors
  10. Being open to change
  11. Accepting and learning from feedback
  12. Never giving up.
b. What Happens During a Typical Day at a Construction Company Business?
  • The business is open for the day’s work
  • The to-do list is reviewed (building plans, survey documents, and paper works are reviewed)
  • Employees go straight to the site to carry out various duties.
  • Construction equipment are cleaned and returned to the warehouse after the completion of each project
  • The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Construction Business?
  1. Good managerial and human development skills
  2. Team-building & Interpersonal Skills.
  3. Excellent communication and negotiation skills.
  4. Organizational skills.
  5. A strong understanding of the construction and civil engineering industry
  6. Attention to detail and the ability to stand for long periods
  7. The ability to analyze quality or performance.
  8. Good supervisory skills
  9. Familiarity with all aspects of civil engineering and construction works
  10. Experience in working as a construction contractor
  11. Experience in managing people