Can You Start A Construction Company While Being Cost-Effective?

If you own or are about to start a construction company, you know that cost-effective work can be difficult in the construction sector. A lot can go wrong during a project, and both the timescale and budget will require tweaking, rethinking, and far more resources than you’d like to allocate.

When you’re just starting out as a construction company, the idea that you could save money and cut costs along the way is a very attractive one! However, is it a realistic thing to aim for in such a volatile and varied industry? 

That’s something we’re going to consider with the tips below. You could very well keep your costs lower than expected at a time like this, but how much could you save?

What you need to start a construction company

Starting a construction company involves obtaining the necessary licenses, insurance, and equipment. You’ll need a business plan that covers your costs, goals, and target clients.

Register your company’s name and set up your legal structure—LLC, partnership, or corporation—so you protect yourself from risk. Get general liability and workers’ comp insurance.

Hire people with the right skills or line up reliable subcontractors. Establish and maintain connections with suppliers to ensure steady material delivery. Always follow state and local rules to stay out of trouble.

Don’t Invest in an Office Yet

Construction businesses don’t strictly need their office premises to work out of. If the team size is just made up of yourself or yourself and one other person, it’ll be a massive waste of money to invest in corporate real estate. 

Remember, you’ll mostly be working outside of the office anyway when you start a construction company. Your projects could take you miles away from this central hub.

Deciding to invest could mean you end up paying to keep the lights on in a building that no one has the time to use in the first place. Use your home for the time being.

Make office hours once a week to take calls, answer messages, and balance the books, or use the money you would have spent on office space to hire remote freelancers or virtual assistants to do this work for you. 

Rent Your Equipment When You Start a Construction Company

You don’t need to pay for every piece of equipment you could ever end up using from the beginning. You don’t even need to pay for the equipment you will need! You can rent anything and everything you might require for a project, which could save you a significant amount on investment and growth. 

Indeed, if you come up against a project brief that’s going to require the use of a stud welder, but you don’t own tech like this, get in touch with a company that can rent one to you. Do so in plenty of time to ensure the project timeline proceeds smoothly, and then you can focus on organizing your inventory for the task ahead. 

This way, there’s no need to source a welder of your own. Deciding to do so isn’t always a cost-effective decision, as you never know when you’ll need to use one again. 

Encourage Word of Mouth Marketing

Advertising a new construction business can be an expensive thing. You need to gain the trust of your clients first to showcase your skills and earn a profit. Most companies can bring in customers who can afford to take a chance on them, but you’re not marketing a typical product here! 

That’s why you should encourage and rely on word-of-mouth marketing. You can do this by starting up a referral program for those you’ve worked for already, but as a tradesperson or contractor, word of mouth is likely to be the most natural form of marketing for you anyway. 

Anyone who’s used your services and is satisfied with your work will readily pass on your name, mainly if you focus your efforts in the local area. 

Look Over Insurance Carefully as You Start A Construction Company

As a construction business, you can never avoid the insurance cost. You’re going to need liability cover at the very least, to ensure the cost of accidents and emergencies don’t come out of your pocket.

This will protect your company in the long run and save you a significant amount of money, but the initial price can be substantial. 

Insurance will always carry a financial burden. Lessen this risk by thoroughly and carefully checking the policies you’re interested in taking out; never agree to be covered without knowing what you’re paying for first. 

Can You Start a Construction Company While Being Cost-Effective?

It all depends on the kind of company you’re interested in running, what equipment you need, the manpower you’ll require, and how much time you’ve got to get things up and running. 

You can be as cost-effective as possible while still incurring large overheads from the outset, but we can at least ensure you’re not wasting your funds unnecessarily. As such, take note of the four tips above and see how they can change the way you use your startup budget.