1. Do your research
First things first: are you sure you’re ready to do this? Being an entrepreneur or business owner is a heavy responsibility. It means investing time, energy, effort, and money into every aspect of your general contracting business. You need to know everything involved from top to bottom in construction and be responsible for all phases of every project. That includes being your company’s primary salesperson, site project manager, accountant and more. So, weigh the pros and cons of taking the leap into self-employment and starting your own company. Then, speak to other business owners who run successful ventures and get their advice and recommendations.
2. Create a business plan
A goal without a plan is but a wish, and in this case, a thoughtful, thorough business plan is your blueprint to succeed and be profitable. It’s a roadmap that can help you get organized, identify blind spots or challenges, and outline the steps you will take to be successful. It’s also necessary to apply for a small business loan since most financial institutions will want to see your plans before providing you with funding.
Your business plan should consist of several elements. Include things like the business’s name, description and concept, the types of services you will provide, your target market, what your estimated startup costs are, and financial projections for how much profit you’ll earn year-over-year.
3. Get financing in order
Your business plan will help you identify what your startup costs are. Now you need to ensure you have the capital to launch your company, have the equipment you need, and invest in your business. Next, you’ll need to open a business bank account (which can help establish credit) and understand your operational costs. That includes things like equipment and materials expenses and being prepared for unexpected equipment breakdowns and repairs or replacements – which is why tools and equipment insurance for contractors is highly recommended. Finally, do a complete review of your finances and estimate what your needs are now and will be in the future. After all, even if you have clients lined up, it could be several months before you get paid for the projects you complete.
4. Register your business
Another necessary step is to register your business with the federal government. You’ll need to have a main office address, detail the province or provinces you will operate in, a business name, and select the type of business (sole proprietorship, partnership, corporation, or co-operative).
5. Get business permits and licenses
General contractors need to be licensed in their respective provinces to operate legally. You’ll also need to acquire building permits for some projects through the municipality where you’re working, especially if the project involves structural changes to a building.
6. Insure your business
You’ll need to protect yourself, your business, and customers from unexpected mishaps and events or accidents. That means getting a contractor’s business insurance policy that’s tailored to your needs. Speak to a licensed broker and ensure you discuss everything to get the coverage you need for your services, vehicles, and equipment. In many instances, a client will require you to have a valid certificate of insurance, or they won’t hire you.
7. Don’t forget about bookkeeping
You’ll need to keep a close eye on all your expenses and income, as well as charge and remit taxes. Accounting software such as QuickBooks can help simplify these necessary tasks and is significantly cheaper than hiring an accountant or bookkeeper. However, once your business revs up, and you’re busy as a bee, hiring a qualified accountant will ensure you’re profitable and paying your provincial and federal taxes on time.
8. Promote and market your business
Developing and defining your brand is what will distinguish you from your competitors. Your brand should tell prospective clients who you are, what you do, and your values. Therefore, you’ll need to create a logo that resonates with people (the first thing people will see) and represents who you are as a business.
Once you have an established brand, it’s time to promote it to your online and offline target audience. For instance, printing high-quality flyers and business cards and distributing them to local businesses and residences can help build brand awareness, as does email marketing, establishing a website and a presence on social media networks. These things don’t need to cost a significant amount of money. You can use a website building tool such as WordPress or Wix to build a website when starting, and signing up for social media networks such as Twitter and Facebook are free.
9. Hire subcontractors
Although you’re the master of your universe as the business owner, you can’t possibly do everything. That means hiring qualified, experienced subcontractors to ensure you deliver high-quality work on time and within budget to your clients. For most policies, you will need to ensure your subcontractors have their own insurance as well. Also, be aware of the taxation and legal requirements involved with hiring and paying an employee or outsourcing work.
It may also be worthwhile to investigate joining a recognized association relevant to your general contracting business. For example, if you’re launching a home renovation business in Ontario, you might want to inquire about becoming a member of the Ontario Home Builders’ Association or the Canadian Home Builders’ Association. Doing so can help you keep abreast of important matters relevant to your industry, provide the opportunity to network and forge partnerships with other contractors, and take advantage of learning resources to grow your venture.
There may be several other steps you need to take to get your entity off the ground, such as consulting a business lawyer, but now you’re ready to have a go at running a contractor business. So now, let the real work begin!