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8 Construction Startup Tips

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Obtaining construction financing is easier said than done, and the process that needs to be followed in order to start a new construction business is not child’s play. However, the construction industry is a high-growth one, so there are plenty of opportunities for success if you follow the right guidelines.

Here, we will discuss some handy construction startup tips to help maximize your chances of success.

Construction startup tips

1. Determine Your Sector

There are primarily 3 main construction sectors; namely, industrial, infrastructure, and buildings. Industrial includes chemical plants and mills, while infrastructure includes dams, bridges, and roads.

As for the building sector, it includes commercial, institutional, and residential properties. So, you will need to determine what sector you wish to enter, regardless of how broad or niche you wish to be.

2. Perform a SWOT Analysis

A SWOT analysis will determine the strengths, weaknesses, opportunities, and threats that you need to be aware of. You will also need to determine where you are, where you wish to go, and how you plan on getting there.

For example, what trades do you currently have industry contacts in? What about experience and skill? You should also talk to people that are either in your trade or in a similar one. If you do need to learn a trade in order to grow or remain competitive, look into the process needed to learn it.

3. Determine Who the Major Players Are

Given that the construction industry is in high demand, there are plenty of players who are in it to obtain a slice of their own.

You will need to better understand the local landscape by talking to trade organizations, the Chamber of Commerce, and others who work in the industry.

For example, you may want to consider joining certain trade organizations, as they will help you stay updated on regulatory and legal changes. They can also serve as a great source for networking.

You will also need to look into the demand in your given field while determining failure/turnover rates, market saturation, and ageing infrastructure issues.

Even your area’s population should be calculated and tracked, as demographic projections over the next 5 to 10 years can determine whether your business succeeds or fails.

4. To Niche or Not to Niche

The general rule of thumb is you will need to find a market niche that you can specialize in if you want to increase your chances of success. However, you may need to become a jack-of-all-trades construction company, in the beginning, to make ends meet.

For example, you can begin by being a company that builds new homes from start to finish. However, you may want to narrow your work to only building additions in the not-too-distant future. Or, you can specialize in constructing small, separate domiciles on a residential property.

Of course, identifying a particular niche can be difficult, so you may be tempted to follow trends to make things easier. However, it is important to remember that trends can disappear, and when they do, so will your business.

Due to this, you should be able to pivot to new trends quickly. You may also wish to refocus on another niche while performing odd jobs here and there to pay the bills.

5. How to Determine Your Core Clientele

Many startups make the common mistake of assuming that their target customer is the person or group who uses their finished product. While this may usually be the case, there are times when you may be focusing on the wrong demographic.

In order to figure out who your client is, you will need to determine who will be paying for your work, as well as who you will be marketing your services to.

For example, if you work as a subcontractor, then your target customer may be general contractors. If you work in the commercial space, then your client may be the property owner or the development group.

Those who specialize in remodelling homes that have been repossessed may need to focus on the credit union or bank that wants to re-sell their property.

6. How to Finance Your Construction Company

It goes without saying that the construction business is a very capital-intensive enterprise, so you may need to buy or rent heavy equipment. You may also need to purchase materials in bulk to meet demand and/or save money.

Here, a solid business plan is in order, as it will help you accurately outline your assets. A sound business plan will also make a case for your business to access funding for SBA loans, private interests, and other sources of investment.

7. Determining the Requirements You Will Need to Follow

The construction industry is very heavily regulated, so you should be aware of the codes, regulations, insurance requirements, and OSHA practices that you will need to comply with.

Requirements may also vary, depending on location and industry, so it pays to perform the necessary due diligence.

8. Where to Setup Your Business

You must determine how much space you will need for office personnel, meetings, and equipment. If your company is small, then you may be able to manage with a modified box utility truck.

However, larger firms may require parking areas for their heavy equipment, as well as office buildings and shop space. So, you will need to identify shop space and the scale of the headquarters before you proceed.

The Truck Loan Center Difference

If you need construction financing or want to learn more about the steps involved, we can help. Truck Loan Center specializes in construction equipment leasing and financing and can be reached via our website for further details.

We are a full-service construction financing company from invoice factoring and small business loans to lines of credit and working capital.

You can also call us, toll-free, at 1-866-230-0094 if you would like to discuss your construction financing needs and concerns in confidence.

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