Opening a Construction Company - What to Start With?

Along with the increase in demand for real estate, the desire of people to improve their living conditions, the interest in construction companies and professional craftspeople is also growing. Therefore, opening a construction company is a good decision, despite the high competition in this area.

Starting a construction business is not that difficult if you know what to do. It is important not only to write an effective business plan, but also to study the market, competitors, and understand what the target audience wants. You also need to think of employees you need to hire for making your company thrive - from sales managers to construction accountant. If you are planning to create your own company, detailed instructions will help you, where sequential steps are prescribed and obstacles that you may encounter on the way to opening a construction company are indicated. So let's get started.

1. Determining the purpose of creating a construction business

Starting an entrepreneurial activity in the construction industry, answer yourself the question why you need a company. What is the purpose of starting a business? Will it be an additional source of income or a serious enterprise that implements large projects, or maybe self-realization and a desire to implement unusual ideas? Do you want to find a new hobby or are you looking for ways to make money?

If you're looking to secure an interesting activity that you can return to from time to time without delving into the details, remember that a construction company before opening and after it will constantly require an infusion of cash to stay afloat. It is not granted that the investment will return to you if you treat the business as entertainment and do not make efforts to develop it.

It is important to realize here that before you open a construction company from scratch, you need to understand this business. Then there will be good chances to successfully go from the idea of ​​creating a construction company to a real profitable enterprise.

And if the goal is to make money on your favorite and promising business, you need to approach this thoroughly. That is, to analyze the market, decide on a niche in the construction business, and understand for whom you will work and what benefits you will give to people.

2. Analysis of the construction market and choice of activities

Possible activities:

- Private, individual construction of residential buildings, including multi-storey buildings, as well as garages, sheds, and utility blocks;

- Repair and construction of industrial buildings and structures, including power stations, utilities, as well as road transport network facilities;

- Repair and reconstruction of damaged facilities;

- Carrying out internal and external finishing works.

The development strategy and the amount of investments to launch and promote the construction business depend on the choice of a niche.

In addition, you should have certain knowledge in the field in which you are going to get into. This is especially true for the construction and restoration of industrial facilities. And for the reconstruction of infrastructure facilities, you will most likely have to work closely with government agencies.

As for competition, you need to know your colleagues in the construction industry by sight. Therefore, it would be nice to determine who the competitors are, how many years they have been working, and what sphere of influence they have. It is also important to understand if they are your direct competitors or if they have other tasks and target audience.

If you are a new figure in the construction market, take a niche where there are few participants. For example, open a home improvement firm. Then you will not have to purchase or rent high-tech equipment and other production facilities, hire or form a diversified repair and construction team, etc. In addition, finishing works are required for all types of buildings as the final stage of construction. You can also start with finishing if you have a small budget for starting a business, and then expand the list of construction services or open a network of companies.

However, remember that the construction business is not only a high level of demand for services, quick profitability, and a high cost of the check but also fierce competition, significant costs for the purchase of building materials, and the ability to effectively manage all complex business processes.

3. Construction business planning

For a successful business, it is necessary to draw up a business plan for a construction company. This document will help you determine the direction of work and development strategy.

Effective planning is an action plan, error prevention, cost calculation, determination of profitability periods, etc.

It is important to answer the following questions:

Who is your target audience?

Will you work with the end user, or provide construction services to other companies or public authorities?

What are the values of the target customer?

Will your firm's construction services meet the needs of the audience?

Will the client be able to pay the price you set?

If your construction company will convey values that are close to the target audience and fully satisfy their needs for construction/repair, then you have an effective concept. And this is a guarantee that you will be among the best and most sought-after companies in your region.

You have two options for starting a new business:

- Independent start;

- Purchase of a ready-made construction company.

When opening a company on your own, you will have to rely only on your own strength. You will need to come up with a name, develop a corporate identity, choose a legal form, tax regime, and go all the way from concept formation to launching a company. In this case, you can use the help of a mentor or a consulting firm.

A mentor is an experienced businessperson who has already gone through all the stages of creating a project. They can tell you about the difficulties they have encountered, how to get out of various situations, work out the strategy of a construction company with you, share useful contacts, and discuss business ideas. However, they will not have a direct influence on the opening of a construction company. The mentor will become only a source of practical knowledge.

The specialists of the consulting firm are engaged either in the full cycle of services for opening a company or you hire consultants to work out those issues in which you lack knowledge: writing a business plan, recruiting, financial reports, developing corporate identity elements, etc. You can also order support for your business until it gets stronger.

When you buy a ready-made company or franchise, you skip some of the steps of opening a construction company. You do not have to deal with a design project, buy equipment, select premises and negotiate with landlords, hire employees, etc. You will receive ready-made advertising materials and promotion channels, you will be taught effective methods of running a construction business.

Buying a franchise is expensive. You will be limited in the choice of suppliers of building materials and the list of construction services. You will have to follow the franchisor's instructions, follow the plan and submit progress and income reports. You will not have complete freedom of action, but the risks of bankruptcy are minimized.

When buying a ready-made business, check the timeline of the company's presence in the market, the speed of business development, the size of the lump-sum fee and royalties, the support of the franchisor, the company's competitors in the area where you are going to open a construction company.