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How to start a construction company

When it comes to satisfying trades, you can’t do much better than construction. And if you’ve been in the building industry a while, you might be thinking about starting your own business. Here’s everything you need to know about how to start a construction company.

Why start a building business?

For those of us who work with our hands, there’s nothing quite like seeing a long project finally get finished.

This is particularly true for those in the building trade, who might spend several months working on the same project.

Of course, it’s also just as satisfying to be able to choose what projects you work on.

That’s why so many experienced builders eventually end up looking into starting a construction company of their own. Giving them the freedom to choose who, where, and when they work.

Starting a new business from scratch in any industry is no easy task

Though if you’re looking to understand the ins and outs of how to start a construction business, read on.

We’ll guide you through all the essential considerations, including financing, licenses, and common mistakes to avoid.

Creating a construction business plan

To start any new business successfully, one of the first things you need to do is build a business plan. (Pun intended!)

This will help you to outline your initial and future goals with actionable steps and highlight how to meet them. All while ensuring your business stays focused, organised, efficient, and productive past the first few months.

When thinking about making a business plan for starting a construction company, you should look at the following:

  • Business goals – the initial aims of your business and how you plan to achieve them
  • Initial costs – how you intend to finance your business until you start turning a profit
  • Finances – how you plan to monitor and manage your finances, either by yourself or with the aid of an accountant
  • Services – what specific building services you’re going to offer your customers
  • Target market – what area of the construction industry you plan to operate in
  • Prices – how much you plan to charge for your services
  • Logistics – how you intend to purchase and transport the necessary materials to complete your jobs
  • Operational area – where exactly you plan to operate, as well as the maximum range of your work area
  • Marketing – how you plan to market your business to your customers
  • Working hours – how many days and hours you plan to work per week

As you can see, there’s a lot to consider with a business plan, and it can be quite intimidating.

That’s why you can read even more about them in our guide on writing a business plan. Don’t forget to download our free business plan template as well.

What qualifications are needed for starting a construction company?

If you’re already knowledgeable in the construction industry, you’re likely already qualified to start a building business.

However, if you’re new to the trade, then you need to make sure you have the right qualifications. As well as considerable hands-on work experience.

In order to gain this experience, you need to look into attaining the right certifications. We recommend the following courses as a starting point:

  • The Level 1 and 2 Certification in Construction Skills
  • The range of NVQ qualifications offered by our partner, North-West Skills Academy

Alongside these, we also highly recommend looking into joining an apprenticeship scheme. Not only will you learn the essential skills needed to master your craft, but you’ll also earn as you learn.

And remember, you can always take on more certifications down the line. This is especially useful for building trust with your future customers, as certifications show competency.

Other construction qualifications

While getting training is crucial for anyone looking at how to start a building company, so are certain qualifications.

These qualifications are essential for anyone who wants to operate on a building site. And they also clearly display to customers that you know what you’re doing.

Trade accreditation

The Federation of Master Builders (FMB) is an ideal way to show off your skills, helping you to gain more clients in the future.

However, all prospective members must pass an assessment and inspection process. This is why it’s important to complete adequate training beforehand.

But upon completion of this assessment to the desired standards, you’ll be able to display your FMB badge. This means you can impress your customers with the fact that you’re a recognised expert in construction.

Tinder frame being erected

Construction Skills Certificate Scheme (CSCS)

Regardless of what area of construction you plan to work in, it’s a legal requirement to have a CSCS card. If you don’t, you won’t be allowed to work on any construction sites, meaning you’ll miss out on work.

What important business skills do builders need?

Knowing how to start a building company is about more than just your skills and certifications.

You also need different business skills so you can handle the highs and lows of running your own company.

That’s why we highly recommend looking into all the following areas when starting a construction company:

  • Construction knowledge – it goes without saying that anyone in the building business needs a good degree of construction knowledge to do their job properly
  • Attention to detail – building work, like many trades, is precise, which is why you should look to cultivate your attention to detail in all areas of your work
  • Organisational skills – running a business is a fairly complex task. From logistics to finances, you need to be sure you’re organised to stay on top of everything
  • Interpersonal skills – as the boss of your own business, you’re going to be constantly meeting new customers. Which means you need to be able to interact with them in a professional manner
  • Managerial training – being a boss also means taking on new employees, which will be made that much easier with the right managerial training
  • Patience and endurance – unlike other trade industries, construction projects can take a long time to finish, and you’ll need the patience and endurance necessary to ensure your work quality doesn’t slip
  • Numeracy skills – naturally, part of running a business is dealing with the finances and logistics that come with it, which makes a good understanding of mathematics essential

If this seems like a lot to consider, don’t worry. We go into all of these areas and more in our article on becoming your own boss.

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How to start a building business

With initial considerations out of the way, let’s look at the first steps to take when starting a construction company.

From registering your business to construction insurance and safety regulations, we’ve covered it all below.

1. Registering your business

One of the very first things you’ll need to do is name and register your business with HMRC. The latter of these is very important, as you can’t legally operate without being registered.

However, registering is not as simple as telling HMRC that your business now exists. Instead, you need to choose whether your new company will be a sole trader or a limited company.

Take your time researching the difference between these two business types. Both have their own advantages and disadvantages, and you want to pick the one best suited for your business style.

House under construction

2. Applying for business insurance

Business insurance is vital to protect you, your business, your income, and any third parties, should the worst happen.

This means you need to consider a range of insurance options to cover all your bases. This could include:

  • Public liability insurance – this type of insurance will protect you in the event a member of the public is injured during work, and is usually a contractual requirement for projects
  • Professional indemnity insurance – this type of insurance will protect your name and reputation from legal costs associated with unsatisfied clients claiming faults with your work
  • Tool insurance – this type of insurance will ensure you have the funds to replace any tools or equipment that are damaged or stolen, either on-site or at home
  • Employer’s liability insurance – this type of insurance will give your employees financial cover should they be injured at work and is a legal requirement for all employers

If you want help finding the right policies for your needs, we suggest speaking with a construction insurance specialist.

You can also read our articles on insurance for builders and picking the right tradesperson insurance for more information.

3. Registering for the Construction Industry Scheme (CIS)

Regardless of what building business you set up, it’s a legal requirement for you to join the Construction Industry Scheme (CIS).

The CIS is designed to make payments from contractors to subcontractors accountable. Allowing for tax on a subcontractor’s pay to be taken ‘at source’ by a contractor and sent to HMRC.

You can find out more about this topic in our article covering the CIS in depth.

4. Accounting and bookkeeping

As a business owner, it’s crucial you stay on top of your books to avoid running into financial trouble.

You need to have a clear picture of the money coming in and out of your business. This means monitoring your cash flow, claiming relevant business expenses, and preparing for your tax liabilities.

We suggest reading our article on small business accounting for more information on the topic.

builder's toolbox full of essential kit

5. Buying your construction tools and equipment

As a builder, one key investment you’re going to have to make is in what tools you use. After all, a tradesperson is only as good as their gear, right?

To make sure you have everything you need to get off the ground, we suggest investing in the following equipment:

  • Ladders
  • Drills
  • Different types of saws
  • Hammers
  • Basic tools, such as screwdrivers, pliers, wrenches, and spirit levels
  • The buying or hiring of large machinery, like diggers and excavators, as and when required
  • Basic supplies that you’ll need again and again, such as adhesives, plaster, paint, cement, etc…

On top of these, you’ll need to invest in transportation to move your equipment and supplies between sites.

Take a look at our article on the best van lease deals to find the right vehicle for your needs.

And don’t forget – if you become a Checkatrade member, you get discounts on any tools and vehicles you buy.

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Construction health and safety regulations

Anyone looking into how to start a business in construction needs to be aware of the relevant health and safety regulations.

These regulations are stringent and must be followed to the letter by you and your employees to avoid legal repercussions.

It’s therefore crucial you read up on health and safety in the construction industry as a priority. Similarly, before launching your construction business, you need to be up to speed with the most recent building regulations as well.

two people starting a construction business

How to grow a construction business

Now that all the practical boxes have been ticked, let’s look at how to grow your construction business. After all, you’ll need to grow your business if you want to maintain a steady income.

1. Scaling your business

Before thinking about scaling and growing your business, you need to be sure you can handle it.

This means making sure you can accommodate the increased demands of jobs, without sacrificing other areas of your business.

Therefore, we suggest looking into all the following areas and their functionality before focusing too much on growth:

  • Business streamlining – a business needs to run smoothly if it’s to expand in the future. So, be sure that all areas of your business are working properly together before looking to grow
  • Financial stability – a large financial safety net and backup income is always a sound investment to have before you expand. So, be sure to look at all the financial options available to you
  • Quality consistency – quality of work should always be at the forefront of your mind on any project. So, be sure that you can maintain this quality as you grow
  • Team growth – new staff will always be necessary as a business grows. So, be sure to hire new staff when necessary to keep up with demand

2. Digitally marketing your business

For any business to succeed in the modern day, it’s essential to have a solid digital marketing strategy. This means that you need to put aside money for the areas below, as they’re not ones to neglect:

  • Business website – acting as the face of your business in the online world, you need to be sure your website is up to scratch. You can learn all about this in our piece on building small business websites
  • Social media – construction, like many trades, is very visual, making it very easy for you to show off your skills on social media. Read our article on marketing your business on social media to learn more about how to do this
  • Joining online directories – despite how it might seem, online directories are still one of the most used methods for customers to find reputable tradespeople in the UK. Why not speak with Checkatrade today to learn more about joining up.

3. Advertising your building business

While digital marketing is important, so too is traditional advertising. With the right implementation, you’ll quickly find out just how effective it can be in drawing in leads:

  • Print media – an incredibly potent tool in the advertising arsenal, print media is essential for all building companies. Learn more about how to use it properly in our print marketing article
  • PPC – essential for online advertising, correct use of PPC will quickly get you in front of your desired customer base. Speak to a reputable PPC expert in your area to ask more about how to implement it correctly
  • Company signage – cheap and effective, company signage on your van and uniform is an excellent way to advertise your business when you’re on a job. Essentially, you’ll be advertising for free every time you work
  • Event sponsorship – although not as common as it once was, events sponsorship is a great way to get your name out there and network with other local businesses to prospective customers

4. Other marketing ideas

Finally, it’s always useful to invest in a few passive marketing areas to give your business that extra leg up:

  • Customer reviews – good reviews are one of the main things new customers will look for when searching for tradespeople, so don’t be afraid to ask for happy clients to leave a review at the end of a project
  • Networking – word of mouth has always been one of the main ways for tradespeople to find more work, and this is only helped by networking, which can result in the customers of other businesses coming to you for different work
  • Google My Business listings – a simple investment, but one that can quickly pay off, applying for the Google My Business listings ensures your business will always appear in local searches where you work

Much like your business plan, there’s a lot to think about when it comes to marketing.

That’s why you can learn even more about it by downloading our free marketing guide. As well as by reading our guide on marketing for builders.

How to get more construction work

Once you’re growing and you’re taking on more clients, it’s only natural that you’ll want to grow even further. So, to get more building work, it’s always worth investing in any of the following areas:

  • Further accreditations – as you’re no doubt tired of hearing, the more qualified you are, the more your customers will trust your work. That’s why it never hurts to look into other courses you could do to further hone your skills
  • Niche work – eventually, once you have enough steady work, it can be worth looking into specialising in a certain area of construction. That way, you can corner a target market and make yourself the expert in that field
  • Repeat business – going hand in hand with quality, so long as you always do a good job, you’re more than likely to have previous customers coming back to you for more work

Save money and save time with Checkatrade

So, hopefully, you should now have all the information you need for how to start a business in construction. But did you know we can offer more than just advice at Checkatrade?

From clearly displaying customer reviews to free marketing materials, it’s never been easier to save time and money with Checkatrade.

As long as you pass up to 12 checks, you’ll instantly be seen as a trusted and guaranteed business.

Speak with our team today to learn more about becoming a member, as well as the other services we offer. We also have guides on other trades, including how to start a scaffolding business, if you want to consider other areas.

Construction business FAQs

How much does it cost to start a construction business?

Beginning any company is expensive, especially when you take into account the materials and legal costs. Therefore, it’s hard to provide a solid answer as to how much you might have to spend to get started.

That’s why we suggest doing thorough research in this area before committing to such an investment.

How much can I charge for construction services?

Deciding how much to charge for your company’s services is something you need to put a little thought into.

You don’t want to charge too much as this will put off customers. But if you charge too little, this will affect your profits. We’ve created a handy pricing template to help you factor in all your costs.

Therefore, you should consider the following areas before setting your prices:

  • How much experience do you and your employees have? If you’re offering services by experienced workers you can increase your prices
  • How much training do you and your employees have? Multi-skilled tradespeople generally offer more varied services with a high-quality finish, meaning you can increase your prices
  • Where are you located? If your company is based in London or an area with higher living costs, it may be time to raise how much you charge
  • What services do you plan to offer? Every different job will have a different price point, so it’s worth setting dedicated costs for each service you offer
  • How much are your competitors charging? It may be a good idea to look into the amount your competitors charge for different jobs so your prices will stay competitive

For more insight into how to set your prices, you might want to read our article on builder salaries.

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