Being a contractor comes with some exciting perks – owning your time, earning more than a regular office worker, and just being your boss. But while many people dream of the enviable life of a general contractor, it is actually a tough job and it’s just not for everyone.
Alongside the benefits of the contracting lifestyle are the many setbacks, sacrifices, and risks of the profession. To succeed in the construction industry, you need a special set of knowledge and expertise, connections, and dedication.
Although general contractors can earn an hourly wage of $33.47 to as much as $45.80, plus commissions, profit-sharing, and project income, they do not have the luxury of holiday pay or sick pay; security of tenure; and regular payslip. You have to work for every penny you earn. Not to mention, general contractors have a very big responsibility along with it are the stressor. Overseeing a construction project, coordinating all its aspects, and managing people is no easy feat. There’s a huge difference between being a skilled foreman or even an experienced engineer, and being a general contractor. So, deciding to become one is not something to take lightly.
There are a lot of factors to consider. But once you’ve weighed up all these issues and have finally decided to foray into the general contracting sector, there are several steps to take before you can start. Here’s a quick guide for beginners.
As with any business venture, thorough market research is crucial to starting your general contracting business. You want to make sure that there is enough demand in the market and that setting up a business is still feasible. You can get information from local job searches, online forums, and local business bureaus. If you are already in the construction sector, you can ask your colleagues if there are enough construction projects in the area.
Likewise, you also need to learn about the requirements for setting up a general contracting business, such as local permits, licenses, insurance, etc. You need to have extensive knowledge of industry regulations to ensure compliance and avoid fines and lawsuits.
Once you’ve established the feasibility of your business, you need to establish your general contracting company. The type of business entity you choose will have organizational and legal implications. You can set up a limited company, corporation, partnership, sole proprietorship, or under an umbrella company. Each legal entity has its advantages and disadvantages, as well as paperwork requirements and legal obligations. If you have limited knowledge of these legal issues, it is best to consult a legal professional for proper guidance.
You’ll need a physical location for your business. Initially, you can make a home office but as your contracts become complex, you’ll need to rent a commercial space.
Some states require general contractors to get a special license. This can be obtained through an examination or application to the state regulator. A license ensures that you have the necessary educational preparation and experience. It guarantees that you understand the complexities of a construction project. Aside from a general contractor license, you also need to get a permit for your company. Check with your local state authority for business licensing requirements.
Once all paperwork has been completed, you’re ready to hire your team. The number of workers you need depends on the type of project. Initially, you’ll need to hire skilled laborers, crew leaders, and office staff. You’ll need them to oversee the day-to-day operations of your project. Laborers can be hired on a contractual basis, especially if you don’t have continuous contracts. Just make sure they are readily available when new projects are up.
You’ll also need to look for dedicated suppliers and sub-contractors for different components of your project. If you have been in the industry for quite some time, your connections can prove useful in finding cost-effective providers.
According to the general contracting company, AFS General Contracting, landing your first contract can be the most challenging part, considering the tight competition in the market. You can start your search online through job boards, listings, or search engines. You can also check forums, social media, as well as offline advertisements. But still, the best way to find new contracts is through referrals from family, friends, or colleagues.
As mentioned above, construction projects are fraught with risks. Hence, insurance coverage is vital to protect you and your clients should things go awry. Likewise, you also need to secure surety bonds to cover you in case you are unable to finish the project.
Follow this guide as you successfully start your general contracting company. Don’t forget to focus on marketing strategies and building your brand to ensure that you have continuous projects.