How to Start a General Contracting Company
As a general contractor you might be a self-employed specialist with skills in roofing or plumbing, or you can choose to grow your company into a major home builder or commercial construction firm. Understand your goals and your business' potential before you begin, and construct your business as carefully as you will your clients' homes and offices.
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Instructions
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Write a business plan. Whether you need to obtain a small business loan to cover the cost of tools and equipment, or just figure out how much to spend on advertising, a business plan is a must. Use this plan to examine your competition and figure out what market need you can fill. For example, if there are large contracting companies in your area that specialize in large developments, but there are few subcontractors available to take on specific tasks such as tile work or framing, you may decide to focus your business on subcontracting. In that case, your clients will be larger contracting firms rather than homeowners, and you will want to spend your marketing budget on a salesperson rather than on radio ads.
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Set up your business. In addition to the business license and business bank account, you will also need to comply with your state's regulation on bonding, professional and liability insurance, and any licenses your state or city requires for contractors. You may also want to consider an LLC or corporate structure rather than a sole proprietorship, since those forms will help limit your personal legal liability in case your company is sued, one of your workers damages a client's property, or there's an injury on the job.
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Finance your company adequately. To determine how much money your company needs to start, calculate your total start-up expenses, including legal and filing fees, sales and marketing, tools and equipment and so on. Then add the out-of-pocket expenses that you'll need to pay before your client pays you, including all raw materials such as lumber and tile, labor expenses such as contractors, employees and your own salary, and rent on any office space you lease. Make sure that you have at least that amount in the bank, and have enough credit available to meet your out-of-pocket expenses for the second job while waiting for the first to pay you.
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Market your services. This requires that you fully understand your customers, what their problems are, and how your service will fix their problem. For instance, if you specialize in basement conversions, and your local area is rainy or prone to flooding, your marketing materials should focus on how you can fix basement water damage and re-grade the land around the home to channel water out of the basement in the future, while adding livable space that adds substantially to the home's value. Broadcast this message wherever your specific customers are likely to be looking. If your most valuable customers are real estate investors, consider sending direct mailers to local property management firms.
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