Considerations for Starting A Construction Company

Are you thinking about starting a construction company? If you have experience in the industry and want to start your own venture, be sure to research the necessary business considerations, requirements, and laws before getting started.

To help guide you through the process, here are six tips for starting a construction company.

1. Refine the Pricing and Estimating Process

Most clients want a fixed, lump sum price, so develop a pricing and estimating process for the work you intend to do. Account for all your direct labour, material, equipment, overhead costs, and profit expectations for the job you quote.

Just ask Scott Mayhew, owner of Scott Mayhew Contracting Ltd. in Penticton, who attended several SBBC seminars before starting his business in 2004. From experience, he says, “Clients want accurate fixed quotes, which can be done through construction estimating software. However, accurately quoting for residential renovations can be tricky because who knows what we’ll encounter while renovating.”

2. Set a Completion Schedule

Scott continues, “The key is being open and upfront with your clients from the beginning and throughout the project so they know about the potential variables that may arise.” So, ensure you have enough time in your projected completion schedule to perform the scope of work properly. Always put some contingency time in the schedule for minor delays, weather, equipment problems, or other issues that may occur.

3. Develop a Contract

Develop a comprehensive contract to use for your work with clients. Ensure all your contracts have at least a well-defined scope of work, reasonable payment terms, an achievable schedule, and a good extras and claims clause. Always get everything in writing, and don’t do any work on verbal orders. “Be sure to document all changed orders throughout the project. There are so many aspects in a job that it’s essential to be detailed and clear within the contract to protect us and our clients,” says Scott.

4. Secure Insurance

Insurance is another important asset of your construction company. Secure the proper business insurance, including WorkSafeBC coverage, to better protect you and your company against personal injury and property damage claims.

5. Incorporate Your Construction Business

Due to the nature of the industry, we advise construction companies to consider incorporating in order to provide limited liability protection of personal assets in addition to business insurance. 

If you want to learn how to incorporate your business properly, Small Business BC has a listing of seminars and sells an incorporation kit designed to assist business owners who wish to incorporate their business without using a lawyer.

6. Obtain Business Permits and Licenses

Visit your local municipality or BizPal to find out what business permits and licenses you’ll need to secure for your new company and the type of work you intend to do. Secure all required insurance, permits, and licenses before you start your first job.

Scott’s Advice

What advice would Scott give aspiring entrepreneurs? “Work within your means and try not to grow too fast. I recently downsized my staff from thirteen to four so I can have a more hands-on approach. I find clients are happier because I’m at the job site for quality assurance.”

Careful planning and attention to detail will ensure your construction company stays afloat. With a qualified task force, proper business considerations, legal requirements, and a desire to succeed, your construction business will reap the benefits.

How Small Business BC Can Help Your Business

SBBC is a non-profit resource centre for BC-based small businesses. Whatever your idea of success is, we’re here to provide holistic support and resources at every step of the journey. Check out our range of business webinars, on-demand E-Learning Education, our Talk to an Expert Advisories, or browse our business articles.