New businesses are started every day, so it’s important to make sure that you have all of your bases covered before you open the doors to your business. A lot of work goes into planning, starting, and running a successful business, and some people may not even realize how much work this takes. Here are six things that you need to do in order to start your own contracting business.
#1: Plan Your Business
It’s important to have a very detailed plan of how you expect to start your business. Some of the easy parts of planning for your business include what to name it and what your logo and/or slogan will be. Other aspects, such as startup costs and who your target market will be, will require you to do a little more research. One way to get all of this information down on paper is to create a business plan. A business plan should include:
- An overview of the entire business plan
- A detailed description of your business
- A market analysis
- Your marketing and sales plan
- An analysis of other contractors in your area
- A management plan and description
- A detailed description of the products and services you plan to provide
- An operating plan
- Financial needs and projection into the next 3-5 years
#2: Register Your Business
The next thing you need to do is register your contracting business as a legal entity. You need to establish whether your business is a corporation, LLC (limited liability company), partnership, or sole proprietorship. You’ll also need to register for taxes, and your contracting business will be taxed differently depending on what type of business you register as. Most businesses register as an LLC because owners can be held personally responsible if the business is sued. LLCs also aren’t taxed on a business level.
#3: Open a Bank Account for Your Business
Some small business owners use their personal bank accounts for their business, which isn’t always a good idea. For example, if someone sues your contracting business for whatever reason, all of your personal assets associated with your personal bank account are at risk, along with your business. Having a separate business account also allows you to build credit for your business, which will allow you to get loans that you may not be able to get with your personal credit. A separate business account will also make it easier to keep up with all of the financial aspects of your business.
#4: Obtain Permits, Licenses, and Insurance
As a contractor, you’ll become licensed once you’ve completed an accredited construction program and have passed the exam. Keep in mind that state requirements for licensure may differ, and some states may require you to renew your license sooner than others. You’ll also need to obtain the necessary business permits, which also include permits to work on a house or other building for contractors.
You’ll also need various types of business insurance to protect your business from the unknown. Some types of insurance that contractors will need include:
- General Liability Insurance (GLI) will cover all of the basics.
- Professional Liability Insurance will protect you if advice given to a client proves to be ineffective.
- Commercial Property and Commercial Auto Insurance will protect your building and company vehicle against damages, respectively.
- Workers’ Compensation Insurance will cover you in the event that any of your employees gets injured or killed on the job.
#5: Create a Website and Social Media Accounts
Even though as a contractor you’ll be doing all of your work in person, it’s still beneficial to you to have a professional business website. Your website is a chance for you to showcase your work so future clients will know what they can expect from you. You should also have all of your contact information (business phone, email, address, etc.) and social media links listed on your website.
In the same way you’ll create a separate bank account for your business, you’ll also need to create a separate social media account. Social media allows you to reach more people than advertising in the local newspaper would, even if you’re a local business. Billions of people use social media every day, which is much more than those who read newspapers.
#6: Market Your Business
As mentioned above, social media can help you in marketing your business, even if you’re only a local business. In fact, all forms of digital marketing (marketing done online) can help you reach the most people possible. Other examples of digital marketing include:
- Content marketing
- SEO marketing
- Email marketing
- PPC (pay per click)
Once you’ve completed all of this, remember to keep a professional image. This means communicating well with your clients and any subcontractors you may use, and to practice discipline and integrity.