The construction business is booming once more.
According to Sageworks, in recent years the residential construction industry is one of the fastest-growing industries for small businesses. That is because there has been an increase in housing demand, lending activity and real estate values.
In addition, six of the 10 fastest-growing industries among small businesses are tied to construction—including contractors, real estate agents and architects.
The commercial construction market is also experiencing a rebound. IBISWorld (link is external) predicts that the next five years will see a period of robust growth for commercial construction companies. Demand for more business office space and the resurge of disposable incomes will also raise the demand for retail buildings.
If you are interested in making the move into the construction, now is the time. Here are seven considerations and resources that can help you get started.
Learn general information about starting a business
Start by familiarizing yourself with the basic steps involved in planning and forming any kind of business, including planning your business strategy. This comprises incorporating and registering with the right government agencies. Go to the SBA.gov to learn more about starting a small business.
Get help & be mentored
You don’t have to go at it alone. There are small business assistance programs such as SCORE Mentors, your local Small Business Development Center and Women’s Business Centers. They can help you with understanding the ins and outs of the planning process. SCORE can even pair you with a mentor from the construction industry, at no cost.
If you are a veteran, contact your local Veterans Business Outreach Center. They offer workshops, mentorship and financing advice.
If you need help writing a business plan, check out Small Business Association’s (SBA) step-by-step online business planning tool.
If you do not have savings or access to a traditional bank loan, you might want to consider an SBA loan program. Other financing options for small businesses include credit unions, community banks or a business line of credit.
To understand your options, visit Business.USA.gov. The “financing wizard” can pinpoint available government resources that can help get you the financing you need.
Get licensed, bonded & insured
Protect yourself, your business and your clients by ensuring you have the right licenses and permits, business insurance and surety bonds. Here is more information on why you should and how you can obtain them:
- Business licenses and permits: In addition to a general business license, most construction or contracting businesses need specific licenses to operate. For example, a tradesman license is required for electrical, plumbing, HVAC, gas fitting and other construction trades. Check with your state business license office for information about what you’ll need. If you headquarter your business out of your home, you’ll also need to obtain a home business permit from your city or county.
- Surety bonds: Typically, construction businesses need construction bonds in order to operate legally. You arrange for a surety bond from a third party who promises to pay your client if you do not fulfill your work obligations under a contract. Learn more about surety bonds from the Surety & Fidelity Association of America (link is external) and take a look at their bonding resources for small and emerging contractors (link is external). Bond regulations vary by state, so research your state’s requirements or speak to a reputable surety bond agent. If you are unable to secure a bond through a commercial channel, SBA offers its own Surety Bond Guarantee program.
- Insurance: Depending on the nature of your work and whether you employ workers directly, you will need several types of business insurance—general liability, vehicle and property insurance. Individual states also require businesses to carry specific insurance, such as workers’ compensation insurance, unemployment and state disability insurance.
Familiarize yourself with construction industry regulations
From energy efficiency standards to workplace safety regulations, the construction industry is heavily regulated so it is critical to understand what regulations exist that may impact your business.
Develop an occupational health & safety plan
The Occupational Safety and Health Act (OSHA) requires that construction workers are provided a safe workplace free from recognized hazards. Take a look at SBA’s Workplace Safety and Health guide for information about resources that can help you establish a safe and compliant workplace.
Finding & hiring labor
The construction industry generally secures labor from four sources: subcontractors, hired employees, labor brokers or independent contractors. Look to SBA.gov for tips on hiring your first employee and then check out the particular laws and tax ramifications of hiring independent contractors.
Caron Beesley is a small business owner, a writer and marketing communications consultant. Beesley has worked with organizations including the Small Business Administration (SBA.gov) and private companies to promote essential resources that help entrepreneurs and small business owners start up, grow and succeed. Follow Beesley on Twitter: @caronbeesley