How to Start a Successful Contracting Business
Many of us have dreams of starting our own businesses, only to face some cold realities when our dreams are realized. Becoming self-employed can undoubtedly be rewarding and lucrative, but the added complexity can be difficult to manage. And it’s that complexity that we rarely foresee when we dream of our own start-up businesses. While there’s no way to completely prepare for everything you’ll experience, there are some considerations for Pros who want to become GCs. Here are some ways – general and specific – to start a successful contracting business.
Pro Tips on How to Start a Successful Contracting Business
The main ingredient in a successful business is the addition of value. If you add value – especially if you add more value than your competitors – you’ll be well on your way to success. However, you choose to approach a GC license and business, always ask yourself how you will go about adding value for your customers. Then, figure out how you can add even more. It’s not enough to do great work. Are you dependable? Organized? Do you show up with coffee to check in on clients?
Consider Specializing in a Trade First
Before pursuing a GC license, consider specializing in a trade and subbing for GCs. You’ll pick up valuable information about being a GC without the responsibilities. The things you don’t realize that you don’t know can really hurt you, so use this time to discover what you hadn’t thought about. A good GC may not be able to do every trade, but he knows what every job requires. Can you do that? And ask yourself why you want to be a GC in the first place. Have a good answer.
Find a Mentor
Although it’s difficult, finding a good mentor in the GC field could be the best professional move you ever make. A major ingredient to any successful venture is finding someone who does things well and then imitating them. Perhaps you will find a GC mentor while you first specialize in a trade while subbing.
Become an Expert Communicator
As mentioned above, it’s not enough for a GC to do great work – he also must be a great communicator. You’ll be dealing with subs, with owners, with architects, with engineers, and a handful of other people who contribute to the finished product. Be realistic, diplomatic, and patient. Answer your phone. Add value by going above and beyond. Make sure everyone shares the same expectations. There may even be times when you need to decline a job, so know how to do it graciously.
How Much Money Do You Need to Start?
One Pro estimated that to gross around $150,000, a new GC should expect to need $5,000 for insurance and licensing, $12,000 for a truck, $2,000 in tools, $10,000 in cash reserves, and $5,000 for advertising during the first year. That’s a pretty big nut to crack right away, but it’s achievable. Surely, some have done it with less, and others have squandered a lot more. But it’s important to see things for how they are and be realistic with your cash needs.
Be Prepared to Make Mistakes
It’s an inevitable fact of life and business: you’ll make mistakes. Sometimes they will be big ones. Be prepared to fix those mistakes.
Build a Network
Your network is a valuable source of productivity and opportunity to you. You can offer those same things to your network of people. You’ll need to know reliable architects, engineers, and subs. You’ll even want to know your competitors. This can be one of the most important parts of starting a successful contracting business.
Consider an SEO Profit-Share
Consider subbing out your marketing to a tech-savvy company that will advertise on a profit-share basis with the revenue it generates. Any profit-share agreement should sunset after each year or so. You probably won’t need to spend as much on marketing as your reputation for adding value grows. But, you also don’t want to be hunting for business at the beginning. Eventually, word-of-mouth can be your only marketing strategy. But, until that plan is viable, you could benefit from targeted advertising.
We wish you all the best as you start a successful contracting business. If you’re a Pro and you have GC tips, add them in the comments below with your own Pro tips.