Smart entrepreneurs look for business ideas that are recession-proof. They don’t want to build a business and then find that it goes bust in a few years! They want to invest time and money into a going concern that rides the economic waves of uncertainty.
Believe it or not, one such example is the construction industry. Sure, you may have heard how some building firms have fewer contracts in times of economic strife. But, they are the least likely of all industries to go bankrupt!
Construction is an industry that encompasses a broad range of niches. We know that building companies construct new homes and commercial premises. But, they also work on a lot of renovation projects for existing properties.
As you can imagine, starting a construction company can become a lucrative exercise. It’s not unheard of for successful firms to make millions in profit! Is that an industry you’re keen to start a business in? If so, you might have some questions about the cost.
The good news is one can start a construction business almost on a shoestring! The following tips will show you how:
Choose a particular niche and stick with it
As an entrepreneur, you know that it’s possible to expand a business into other niches. The trick is to do so when your company is making a profit. A lot of people fail when they diversify their services too early on.
When starting a construction business, it’s crucial just to stick with one niche. That way, you can become an industry leader – not a follower. You might think that not diversifying early on will limit your profit.
The thing about early diversification is you start to lose focus. When that happens, your “bread and butter” niche starts to suffer. If it starts to make a loss, you won’t be able to expand the other areas of the business. At that point, you may have to make the tough call of shutting down your firm and leaving many people jobless.
That’s why it makes sense to just stick with a specific niche area. For example, you could offer your services only to residential customers. Or you might want to stick with B2B (business-to-business) contracts.
Don’t buy everything brand new
One of the classic mistakes new construction firm owners make is to buy brand new everything! As you can appreciate, the cost of new items is much higher than used items.
You might not know it, but it’s possible to get used items that work just as well as brand new ones! Providers like SJH All Plant Machinery Sales can supply used plant machines cheaply. That means your total cost of ownership will be lower. And your cash flow won’t take such a hit!
Have a solid business plan
When you start a construction company, it’s crucial to have a solid business plan. You need it for many different reasons. First of all, it’s a document that will outline your plans for the future. For example, where do you wish to expand in say five years?
Another reason is to do with securing finance. Unless you’ve got plenty of money, you’ll need some capital investment. There’s no way you can start a construction firm with only a four-figure sum. You need significant investment to pay for all kinds of startup costs.
Business plans are also useful when it comes to checking on completed milestones. One of them might be to hire a team of workers. Another could be to win a large public sector contract. You should think of your business plan as a roadmap for your firm. It will help you to stay focused and on-track.
Hire people on a self-employed basis
One of the best ways to keep your costs down is through your HR techniques. As you might already know, it costs a lot of money to hire an employee. You have to pay for overheads like tax, insurance and benefits.
When you hire people on a self-employed basis, all you need to do is pay an invoice. They arrange their own tax affairs. All you need to do is make sure they follow site safety procedures. After all: the last thing you want is to get sued because of an unsafe working environment!
To be honest, most of the construction industry work on a self-employed basis. Many people enjoy the freedom of working for themselves. Plus, they are free to work for more than one “employer” at a time!
Invest in decent site security
I know the thought of organising security at your building sites is an expensive one. But, the costs are much cheaper than replacing stolen plant machinery! The ugly truth of construction is many rogue people want to steal expensive machines.
That’s because they can sell them to other people on the black market. Meanwhile, you have to claim for replacements on your insurance. Or you have to somehow find the money to pay for new machinery!
The good news is you can invest in good security but keep costs down at the same time. For instance, did you know you can get CCTV security cameras installed that you can view from a remote area? That means you don’t have to hire someone to guard each site 24/7!
Another option is to pay a security company to do regular patrols in and around your building sites. Other things you can do include keeping plant machinery keys off-site. Plus, you can even add security marks to each item.
Work on small-scale projects
Last, but not least, one way to save on costs is to work on smaller building projects. Doing so means that you can reduce your initial outlay. Plus, the cost to buy materials and hire self-employed construction workers is lower.
Examples of such projects might include residential homes, extensions and outhouses.
Well, I hope you enjoyed learning how to start a construction company for less. Feel free to share a link to this page with people that might need to read it too!