The home remodeling industry is constantly growing and is worth millions of dollars.
People all across the country want to revamp their houses and add a few flourishes.
That means there are plenty of chances for new business owners to enter the market.
All you need is a few skills and a little start-up capital.
So, if you’re wondering how to start a contractor business, you’ve come to the right place.
In this article, we’ll walk you through everything you need to know about the renovation industry.
We’ll also discuss how much profit you can make and the necessary expenses.
- How Profitable Is Owning a Contractor Business?
- What You’ll Need to Start a Contractor Business [& Associated Costs]
- Do I Need a License or Certificates to Start a Contractor Business?
- Why You Should Consider Starting a Contractor Business as a Side Hustle
- How to Start a Contractor Business in 5 Simple Steps
- Things to Consider When Building a Contractor Business
- Frequently Asked Questions
- Similar Businesses to Consider Starting
- Wrapping Up
How Profitable Is Owning a Contractor Business?
According to the BLS, the average construction worker makes around $37,520 annually.
Plus, the yearly salary for a contracting manager is about $98,890.
As a new contractor business owner, you’ll be performing the duties of both positions.
Typically, that means you should be able to make around $140,000 in your first year of operations.
On top of that, most of this figure is profit, since there are very few overhead expenses.
You can also opt to hire a minimum-wage worker when you launch.
This will cut into your profits a bit, but it’ll allow you to expand the scope of your business.
So, you’ll be able to increase your income in the long run.
What You’ll Need to Start a Contractor Business [& Associated Costs]
To launch a new small business, there are many costs that you have to take into account.
Let’s take a look at what you need to start a contractor company.
Right off the bat, you’re going to need to acquire a few permits. These will allow you to operate legally and register your business.
Depending on where you live, the cost of these licenses can change. Usually, they’ll run you around $200 to $400.
As a contractor, you’ll need a few tools to help you execute jobs. That includes hammers, screwdrivers, drills, and wrenches.
The average cost for a construction kit is about $2,000 to $5,000.
You can also opt to buy more expensive machinery, but that won’t be necessary when you launch the business.
It’s best to buy equipment as you need it, to avoid running up your bills.
3. Set-up Costs
There are a few expenses associated with starting a company. That includes official paperwork and opening up a corporate bank account.
For this section, you’ll need close to $500 to cover all the costs.
Since you’ll be working with tools in construction zones, insurance is a must.
With a policy in place, you should be able to protect your business from liability. On average, this can cost between $100 and $300.
To help spread the word about your constructor business, marketing is the way to go. There are quite a few options to choose from.
You can opt for flyers and a few business cards, which should cost about $300. Other than that, you can rely on social media campaigns or purchase a website.
Sadly, these are far more expensive and can run you up to $3,000.
Construction workers have to rely heavily on transportation. They’ll need a large vehicle to move materials around and carry hefty tools.
The down payment on a sizable truck can be anywhere from $3,000 to $5,000. You can choose to rent a vehicle, but this will be more costly in the long run.
Some construction jobs require more than one handyman on site. To ensure workflow goes uninterrupted, you may need some extra help.
Based on the assistance they provide, their service can cost anywhere between $1,000 and $2,000 a month.
You can hire them as permanent staff or under a subcontractor agreement.
Do I Need a License or Certificates to Start a Contractor Business?
To launch your contractor agency, there are many licenses you should apply for.
These will allow you to take out permits for demolition and other various services.
You’ll also need the documents to register your company, pay taxes, and open bank accounts.
To top it all off, without a license, contractors can’t bid on high-paying jobs.
So, the permits are crucial to running a successful, profitable venture.
Why You Should Consider Starting a Contractor Business as a Side Hustle
Construction work is one of the most common side hustles.
Other than to make extra cash, there are several reasons to start a contractor business.
- Low Overhead Costs: When you first open a construction business, the costs are low. Since you don’t need an office, your running costs will only include transportation.
- Excellent Work Availability: People are always in need of construction workers. Whether they want to renovate or build a new structure, there are plenty of jobs to go around. That means you should be able to grow your potential client list rapidly.
- Choose Your Projects: When you own a construction company, you can pick what jobs you take. You can even decide to specialize in one area of construction, like flooring.
- Exceptional Workout: There are many jobs nowadays that call for a sedentary lifestyle. This can lead to major health issues over the years. Thankfully, this shouldn’t be a problem when you own a contractor business. You’ll get more than enough exercise to stay in shape.
How to Start a Contractor Business in 5 Simple Steps
With the basic expenses out of the way, it’s time to figure out how to start the business.
In this section, we’ll take you through the entire process, step-by-step.
Step 1: Research the Contractor Market in Your Area
When you decide to start a new venture, it’s easy to get lost in all the tiny details.
That’s because there are countless factors you need to consider.
So, to avoid drowning in the different aspects, you’ll need to conduct market research.
This involves you investigating similar ventures in your area.
To do that, the easiest method is to examine your competitors.
That’ll give you a better idea of what services you can provide and the cost of various projects.
Step 2: Brainstorming
Once you collect enough data from market research, you can move on to a brainstorming session.
In this part of the process, there are a few details that you need to decide on.
First off, this is the ideal time to come up with a catchy business name.
Spend some time considering how you want people to remember your company.
Besides that, you’ll need a logo.
This image will help attract new customers and make your business instantly recognizable.
After that, you can turn your attention to your service catalog.
That’s when you’ll decide on the type of assistance you’ll provide customers.
There are several options to pick from, including a general contracting business
This is also the time to decide between being a gig worker vs. an independent contractor.
The former operates on a freelance base, while the latter has more consistent jobs.
Step 3: Create a Business Plan and Register the Company
Now that you’ve decided on a name, logo, and service catalog, you can create a business plan.
This is a document that outlines what you want to do with the venture.
Not only will this help you hit the ground running, but it makes finding investors in the future a breeze.
Once you draft the plan, you can also use it to register your company.
This is also an excellent time to apply for licenses and permits
Step 4: Shop for Tools and Equipment
To start operating your company, tools are essential.
So, you’ll need to go on a short shopping spree.
Head out to your local hardware store and pick out the necessary equipment.
You don’t need a ton of tools in the beginning, only the basics.
Step 5: Marketing and Advertising
With your tools in hand, you’re ready to head out to jobs.
These can be tough to find when you first open your doors.
That’s why it’s a good idea to invest in marketing and advertising.
You’ll need to spend a little money to get your name out there.
Some people like to rely on word of mouth or flyers.
However, there are many ways to reach potential clients.
For example, you can try signing up for a business like Angie’s List.
It has a history in the industry of helping contractors find customers.
If you think this will help you start up, check out the fees for Angie’s List.
Things to Consider When Building a Contractor Business
With the main expenses and paperwork out of the way, there are a few other considerations to make.
Can You Run a Contractor Business by Yourself?
Running a contractor business on your own can prove to be a sizable challenge.
You’ll have to perform the duties of the laborers and the administrative tasks.
Because of that, it’s best to hire someone to help you around the office.
This will increase your costs, but it’ll make the workload manageable.
Interpersonal Skills Are Crucial
Many people don’t realize that running a contractor firm involves a lot of communication.
You’ll need to maintain an open dialogue with clients to provide the best service possible.
On top of that, you should be able to relay instructions to workers.
So, it’s best to brush up on your social skills before launching the venture.
Frequently Asked Questions
Which Contractors Make the Most Money?
Typically, construction workers and building inspectors are the highest-paid contractors.
Although, this can change depending on the nature of the service they provide.
Can a Contractor Become a Millionaire?
Absolutely, with the right marketing techniques, contractors can make millions on the job.
All they need is expert craftsmanship and a business-savvy mind.
Similar Businesses to Consider Starting
If you’re still deciding on the type of construction business to start, here are a few similar ventures.
- How to Start a Consulting Business: Consultants are similar to contractors. The main difference is that the former doesn’t deal with the heavy lifting.
- How to Start a Handyman Business: Handymen fix odd objects here and there. This is usually less stressful than construction work.
- How to Start an Interior Design Business: Designers and contractors work closely together. They depend on each other to complete a full project.
Figuring out how to start a contractor business can be tricky.
Luckily, with our handy guide, you should have a much easier time navigating the process.
Start by doing a little market research and brainstorming service ideas.
Then, all you have to do is register your business, buy a few new tools, and start making money.
Did our guide help you launch a contractor business?
Let us know down below and don’t forget to share this article with your friends.