How to become a construction contractor

The construction industry has been characterized by being very “kind” in terms of profits and profits as a result of the services or works that comprise it, so more than one of our colleagues have surely ventured into this business, with results merely satisfactory in the best of cases, despite the economic and financial crises that are experienced.

The construction, reconstruction and maintenance of homes, offices and public facilities will always be a high priority for any entity, even in difficult times like the COVID-19 pandemic that hit the entire world.

So if you are considering construction as your future vocation, and you want to go beyond being an engineer, but an employee of others, and form your own company, I explain here the steps to become a contractor. Prior to that, it is essential to have sufficient knowledge and practical experiences in the field, whether designing in the office or supervising constructions, since all this will be fundamental and will be your foundations to be able to put the burden of your own company under your shoulder.

In addition, you will have administrative tasks required by all countries such as registering your company, and obtaining a state license, as well as the long-awaited letter of guarantee .

Another extremely important tip is to develop a business plan, since nothing is heading if it drifts, so you must provide your short and long-term goals, as well as the necessary equipment. The next thing will be to expand your network of contacts , and build a customer base. As in all professions, it is always good to be aware of the latest advances in technology applied to your sector , only then can you stay ahead of the competition.

If you are ready to start making your dreams come true, these are the most important steps you must follow, according to our experience:

  1. Choose the type of contractor you want to be

Engineering itself has different specialties, so you need to identify the type of jobs you want to do as a contractor.

There are a couple of common types, including general and specialty contractors. To make your choice, it is a good idea to investigate how the demand is currently, it must also be linked to the vocation that you are doing.

General Contractors

General contractors can work on construction projects residential or commercial . They can also participate in the construction, remodeling or renovation of infrastructures.

Generally, state and local authorities have requirements to be able to apply for their public tenders or tenders . For this, you must have the technical team of professionals required, as well as the machinery and equipment requested, since these are medium and large-scale works.

In each country they offer different types of licenses or RNP (National Registry of Suppliers in my country, Peru) to be able to contract with the state, likewise, if you are interested in doing individual consulting, you can go to the specialty where you have the most experience, or simply in all if you meet the requirements. If you are interested in knowing how to register for RNP, you can leave it in the comments.

This type is the most required, since the gains obtained from contracting with large firms or with the state , derive good profits and experience that is accumulated to apply for much larger contracts in terms of challenges and investment. However, you need a lot of money capital to get started.

Specialty Contractors

If you want to work as a carpenter, plumber, or electrician, you will generally have to turn into a specialized contractor . Different licensing authorities define trades in various ways, as well as the requirements you must meet to obtain them.

In general, it is the initial way to start in the world of construction , because you would start doing small jobs or services if you still do not have enough capital , in addition to the fact that you must have a good crew, and their performance is satisfying, or just getting down to business.

  1. Get the necessary knowledge and skills

For some people, construction is a lifelong calling that starts from high school and the first few summer jobs. However, there are other options to take this path even later.

Education and training

Some construction specialists choose to pursue a bachelor’s or master’s degree in construction management, project planning, or architecture, among others. In some states, there are requirements specific regarding the level of education necessary for applicants for contractors, in Peru you do not need a document that endorses you as a specialist, to be able to undertake as a contractor, beyond the permits required to form your company.

In case you do not have previous experience or have not completed university studies, alternatively you can look for workshops or courses where they briefly introduce you to the world of construction and its management. This would prepare you to become a general contractor or to pursue a specialty trade. You may need to complete a specialized training course if you want to follow the path of an electrician, plumber, or similar specialist.

Work experience

You need to gain experience as a construction apprentice or in a construction-related job . This is how you can gain practical experience as a construction contractor or in your specific trade, learning practical and business aspects from professionals with much more experience than you.

Most states have detailed requirements on years of experience for each type of contractor, as well as for training, certification, and apprenticeship programs. The usual minimum is no less than 3 years. You should find out the exact criteria in your state, county, or city, and make sure you meet them before applying for a license.

  1. Register your business / company

Before you can apply for a contractor license in your state, you must register your company with the corresponding entities, giving it a name, as well as who will make it up and the equipment placed in it.

Regarding the type of company, it will depend on each country, so I advise you to get advice from a good accountant and guide you on what is best for you at the beginning, it is very important to advise you at this stage.

Register a business name

You can come up with a business name preferred that you want to operate your business under. You must register it with the respective authority in your state with the name with which they will know it, for example in my case: INGEGEEK INGENIERIA as individual owner and IGR’S CONSULTANT made up of 2 more partners.

Obtain an Employer Identification Number

In Peru, it is called RUC (Unique Taxpayers Registry), which is a mechanism to identify and classify taxpayer and non-taxpayer persons and entities declaring income and assets. It is necessary, even if it is tedious, but the formality is like that.

  1. Make a business plan

Today, there is hardly a business field where you don’t need a business plan to build a winning business. The construction industry is no different, so if you want positive results, having one is essential.

Set up the basics of the business plan

Your business plan should have important details about its structure, operations and objectives . It should contain information about your planned services, competitive analysis of the market you intend to enter, your competitive advantages, financing plan, marketing and sales strategy, administration and personnel, among others. Today if or if you have to do this.

Many training programs include preparation to create a solid business plan. This can be of great help if you have no prior experience in business planning and strategy.

Determine your competitive advantage

As part of your business plan, you should research the market you want to enter as a general or specialty contractor. Find out how many similar specialists there are in your area, what their advantages are and how you can offer your services competitively, always adding value. The best approach is to clearly describe the skills that set you apart from the rest, so that you can develop them and gain market share through them.

Prepare contracts and forms

You will need a variety of documents different for your operations as a contractor. It’s a good idea to prepare your templates ahead of time so that you are ready for the first client. These include contractual agreements with clients, payment terms and pricing schemes, among others.

  1. Get a state license

How to become a licensed contractor? Each state sets different criteria for obtaining a general contractor license and for special licenses.

Make sure to check with your local authorities if they have any other criteria that you must meet before starting your operations in your territory.

  1. Get a bond

One of the important contractor license requirements that you typically must meet is posting a bond . It is a security mechanism that is often required of professionals to ensure legal compliance. Being linked as a contractor is a sign that it is safe to do business with you . Bail bonds are commonly used in construction.

Get a fair bail premium

The cost of your surety bond depends on the strength of your personal and business finances. It represents a small percentage of the required amount of the deposit . The main factors that affect you include your credit score, the finances of the company, as well as the fixed and liquid assets you may have.

The bond that they request as a contractor to contract with the state between 5% and 10% of the contractual amount. If you want to pay less on your bond, be sure to clear any outstanding payments and polish your credit report before requesting a bond.

  1. Get the right equipment / machinery

When it comes to construction equipment, the expense can run into the millions. At the same time, you can’t start your operations without making sure you have all the tools you need to do your job right.

Get the equipment you need

Balancing finances and the necessary equipment can be difficult, but there are variants to managing it. You can rent tools up front or negotiate a loan with other contractors.

The best option, of course, is to buy everything you need. To this end, it may be worth seeking external financing if you do not have seed capital.

If you are looking to invest in equipment for your business, you may want to consider local loan programs for entrepreneurs promoted by your locality. Other financing options include obtaining a business line of credit, a loan from a community bank, or joining a credit union.

Get the right software

Don’t forget that you will also need Construction Software solid . It can help a lot, especially if your team is quite small and you have to handle many tasks at once.

There are also a number of good options project management software on the market. It is worth selecting one that suits your craft and your specific business needs, as it will greatly improve your productivity and work organization.

  1. Invest in marketing and business relationships

An important point in a strong business plan today is how your construction company would advertise its services, find clients and establish a brand in the market.

Boost your marketing efforts

Making a name in your field is essential and you should start working on it from day one. You should allocate resources for your marketing efforts , whether internal or external, so that it develops your building brand. Very soon I will be releasing my Community Manager book written by a civil engineer .

Creating your commercial network

It is also important to forge good working relationships , both among your colleagues and with current and potential clients, as they may also recommend you to other people. Joining industry associations is also a good step in this direction.

Industry events, conferences, or congresses are a great way to meet fellow professionals and potential project leaders, as well as expand your knowledge of their craft. Don’t miss out on the opportunity to attend conferences and workshops.

  1. Keep learning new knowledge and skills

The construction field is constantly evolving, with new materials and construction methods increasingly intelligent and efficient. The same goes for the way a business can be run. At Ingegeek we upload content every day on our social networks, as well as new and innovative tools, software, and others related to construction.

Get continuing education training

If you want to run a successful recruiting business, you need to be aware of the latest insights and trends in the field. You also need to stay up-to-date with the latest styles of management and business strategy.

Continuing education is essential to achieve this. Also, the licensing authorities in your area may require you to receive training each time you renew your contractor license.

You can look for a contractor certificate program if you want a less intensive training option. However, if you want to improve your skills, you can also consider an associate contractor’s degree or a bachelor’s degree from a university.

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