Starting a Successful Construction Company in 2024

do you want to start a construction business but i want to show you five simple strategies and steps that you can use to start and grow your construction business right now so 90 percent of all construction businesses fail within the first two years why is that is it because contractors are bad at what they do is it because um they don't understand construction no not at all so what really happens is most construction companies they start off uh the owner starts off as maybe like in the trades or maybe he's a drywall guy or a framer or maybe he's a superintendent for a gc and you know they they do that for years and one day they say hey you know what i'm gonna start a drywall company uh instead of getting paid you know 20 bucks an hour i'm gonna go get my own contracts or maybe uh maybe there's a superintendent that says hey you know what i know how to run a job i'm gonna get my own jobs i don't need to work for somebody so that's pretty much how it typically starts so maybe that's the case with you who knows but what happens is the reason most construction companies fail is because they know the construction side but they don't necessarily know the the business side of construction so typically we're looking at things like estimating sales follow-up there's an aspect of accounting a legal part there's uh how to get leads there's uh there's like a hundred things to think about even before you start breaking ground before you start shooting track before you start hanging drywall there's a thousand things to think about how do you do a submittal package how do you prepare a bid how do you write a proposal how do you um find the leads how do you get the gcs interested how do you get the architects the developers how do you how do you figure this stuff out now unfortunately there's not really a school that can teach you this stuff you can go to construction management school and learn how to do this because construction management school is just going to teach you the basics the bare bear bear basics on how to actually run a job professionally and i put quotes because uh let me let's not get into that um construction management school is not all it's cracked up to be uh maybe it gives you like a nice little foundation but it definitely isn't gonna teach you what you need to know it's not gonna teach you how to read blueprints draw architectural plans structural plans it's not going to teach you that you're not going to learn that in a trade school there you can probably go to like one of those technical schools and maybe learn how to read the plans but that's about it and that's it's like five percent of what you need to know anyways so what i want to do today is i want to show you uh you came to this article for a reason which is how to effectively start a construction company in 2022 uh now we're about to hit 2023 so i might have to update this article soon but it's pretty much going to be the same thing because we are in a a very basic sales industry so a lot of people forget but construction is a face to face shake your hand look you in the eye type of industry it's not like uh like a digital marketing let me do an internet course that you know for someone to buy and then let me sell them a better course after that that's not how construction is uh it's not something that it's you're literally gonna meet people at trade shows you're gonna go to people's offices you're gonna go to the job sites you're gonna go to job site meetings oac meetings you're gonna meet the architects you're gonna solve problems and that's how you build those relationships that you need to be able to to be successful in this business so uh what i'm going to show you is not something that is uh uh out of this world it's something that is you don't need to be a rocket scientist or a brain surgeon to really understand these principles it's basic sales 101 so let's start off with step one oh by the way we are a construction estimating firm so we work with contractors and developers and architects in preparing costs for projects so if you find yourself needing estimating which is the most important part of any construction company it's what brings money into your bank account uh let me know and we can help you just sign up on our website or give us a call we can help you but anyways so um if you search around the internet you're gonna get like uh 10 tips to start your company and they're going to talk about like very uh unimportant things like getting your license getting your insurances step two make sure you get an accountant step three and the truth is you need all those things but it's not what's gonna get you moving what's gonna get you moving getting leads bidding jobs estimating projects negotiating them getting in front of them in front of your potential client and sitting in front of the sitting with them at the table reviewing plans value engineering the drawings that's what's going to get you started winning jobs you're not going to do it by going out and getting your life i mean you have to get your license but that's not like the first thing you should do the first thing you should do is start setting up your pipeline because most of the time in commercial construction whatever you do today you're not going to see the results for probably six months three to six months is a typical life sales cycle of a commercial job uh residential is a month or two uh you go and you meet the customer in their house they're gonna they're gonna get a few bids they're gonna talk it over with their wife with their husband and they're gonna make a decision and and you know typically it takes a month or two before you even get a decision so what i want to do today is i want to give you these five steps it's like think of uh sprinting what do you need to do to get to the finish line it's not getting your licenses i'm gonna show you show you these five simple principles so step number one is before you do anything is you want to decide on your specific specialty or niche so what does that mean um does it are you going to be a drywall contractor are you going to be a general contractor a home builder a remodeler uh you don't need to decide on you know 10 years from now where you're going to be but what you do need to do is think of things like profit margin think of things like uh do i want do i have finance do i have financing available to finance big jobs do i want um do i want to work on smaller projects so i'm not so stressed do i want to build a big team so all of these things are things that you have to start thinking about in the beginning because once we do this we're going to start running so this is the only planning we're going to do um so let me give you a few guidelines so um so subcontractors on jobs will typically make 20 to 30 percent uh profit on their jobs uh while a general contractor is gonna make probably around 10 if you do really really really big jobs it might be a little less if you do higher end residential or something like that as a general contractor you might be able to bump that up to like 20 but typically when you're managing when you're a general contractor you're managing the project you're not actually building it you're more of a construction manager when you're a subcontractor you're the one doing doing the actual work now there's pros and cons between residential and commercial so if you if you get into commercial uh you are going to get big big jobs but they're not going to be you're going to have to finance them so that means you're going to have to get credit lines you're going to have to have a lot more paperwork involved uh submittals change orders uh you should always have a contract but you're gonna have 20 30 page contracts versus maybe five page contracts um you're gonna um you have to one now the biggest the biggest hurdle that a lot of people face is getting in the door when it comes to financing so as a subcontractor you have to finance the job you're usually going to get you're usually gonna submit your billing every month and you don't get paid for 30 days 60 days maybe even 90 days in certain cases and you're gonna have to fight for money sometimes uh when you're in residential it's a little different you usually come in asking for 20 upfront 30 maybe even 50 of the job up front that way you could buy all your materials and things like that now i personally believe that if you're a real contractor you shouldn't have to get money up front because you should be able to finance your jobs however um just if your homeowner if it's standard practice that your homeowner that every bid they're getting is requiring a 20 deposit then why not you get money up front and you can start the job without worrying about cash flow issues so there's pros and cons the other part of it is that commercial you're going to get real big jobs sometimes where with one job you might be there for six months or a year building and residential you're going to have quick turnovers you're going to come in and out in two or three months boom boom boom boom boom and and you're always going to have to be baiting baby chasing the next thing commercial gives you a little bit more time to do that um so a couple of questions to ask yourself what do you have experience in uh what what did you grow up in what did you grow up in the trades did you go to did you or were you superintendent you know what is it that you're experiencing uh what what jobs are the most profitable that's another one so you might see that some type of jobs take up a lot of your time but the profit margin is very small you want to avoid those you want to get the ones that are a lot bigger what is in demand in your area you might see that people are building houses left and right in your area so maybe for a season you're focusing on residential and then maybe when that dries up a little bit maybe you jump into commercial so these are all things that you want to think about um that leads me to step two so now that you decided what you're gonna do step two is start finding potential projects so if you notice i haven't talked about licenses insurances uh workers comp i haven't talked about any of that stuff it's important to get it but i don't think that's the first thing you should focus on i think the first thing you should focus on is that is actually really after your plan is this uh go and chase go run and find projects um how is it that you find projects well most contractors if you ask around they have this like big batch badge of of honor saying i don't do any marketing i get all my leads through word of mouth now word of mouth is going to be probably your best type of lead because uh it's a referral from a friend or from a neighbor or something but the only problem with that is you can't control it you can't figure out you know you can't say like oh if i talk to 10 more people they're gonna refer me to eight more that doesn't work like that it works on based on whenever hey i know you just did your artificial turf um you know who did it for you or hey i know you just did your bathroom you know can i get the contact of your contractor you know that's kind of how it works but you can't control that how can what can you control two things one you could sign up for a lead generation platform so if you're in the commercial side of things if you're a gc or an architect i mean i'm sorry gc or a subcontractor there's these software companies like the blue book bid clerk cmd dodge there's a bunch of them i recommend usually the the blue book is probably the most complete database out there you literally it's only like 100 or 200 bucks a month for one region by the way i'm not i'm not part of the blue book i don't get any commissions this is strictly to help you find your projects you can actually go up there and find all the projects that are out there that you would uh want to do recently i did a a search in my area and there was 93 potential projects i was looking to to start bidding with a partner company of ours that we're going to be working on framing and drywall jobs and i found 93 jobs bidding within 30 days and i said i couldn't believe it 93 jobs in my ins in my in south florida that's i mean you can't bid 93 jobs it's almost impossible so that means that you can cherry pick which ones you actually want to do so that is uh my recommendation on how to start getting the leads uh when you give them a call ask them it's super simple hey can i be part of the bidding hey can i um can i um can i bid this job for you um that's that is they're usually gonna say yes for you for that so number three start estimating and sending bids so estimating is the lifeblood of your business you cannot have a construction company if you don't focus on estimating the problem with that a lot of contractors run into is they get busy running their jobs that they neglect the estimating so they run out of jobs and their job their workers leave them their subcontractors go somewhere else and and the secret to growing a successful construction company is is really estimating uh is one getting the leads but then you have to follow up by submitting bids for them and if you're if you're passing up on bids you're never going to grow your business and but but when you're starting out there's like a catch-22 you're too busy during the day running your jobs there's too many emergencies that you can't sit in front of your computer or sit in front of your plans to estimate so you have to do it when at night and on the weekends so you have to do it yourself or hire someone however an an estimator in-house is going to cost you 80 to 100 000 a year that translates to probably around 1500 to 2000 a week now let me ask you if you are do you have enough work to justify paying someone two thousand dollars a week to estimate for you if not that means you're either hey you're gonna miss out on projects two stuck doing it yourself nights and weekends or three there is a on a third option which is using an estimating service so estimating services you have to be very careful uh that this is what we do we're a licensed general contractor but what our specialty is in is helping general contractors developers subcontractors homeowners prepare construction bids and also construction budgets we do it for banks we do it for investors we do it for construct for all types of projects you have to be very careful because there's a lot of companies out there that are estimating companies that are overseas so you have to really vet whoever you use now obviously i'm going to recommend that you work with us hopefully you're getting some value from this video and from this article that we wrote you know hopefully you'll decide to work with us so that leads us into step number four which is set up your licenses and insurance now if you notice it's like one of the last things i talk about because this is easy you can do this with a simple phone call call your commercial insurance agent and say hey i need general liability insurance and i need workers compensation insurance that's it that's all you need to do and they're done with step four boom i'm not even going to talk more about it because i don't want you to think that there's more to it than that your license you got to check with your local building department a lot of times you might need a license to operate legally so definitely do that but in terms of the insurances all it takes is a simple phone call and clicking a couple of docusigns or signing some papers and you're good that's it so if you go to a bunch of other websites they're gonna start with this oh step one get all your licenses step two get all your insurances workers compensations is important because if somebody gets hurt you're liable blah blah blah everybody already knows that so why are you going to waste your time talking about that which leads me to the last step which is step number five follow-up follow-up follow-up the biggest mistake that every contractor makes because of being busy is they get so tied up in the operations of their business that they don't follow up you can get the lead you can go visit the client get the lead convince somebody to give you a set of plans to give you a shot you can estimate that job you can prepare your proposal submit it and if you don't follow up at least every two weeks three weeks maybe once a month at least to to check you know the status of the job you're you're gonna lose you're gonna lose the job and they're gonna use you as your number i remember uh i was doing um i was getting proposals for a project once through and i was using uh the blue book platform i submitted it i started getting back bids from subs all these people that i had no clue who they were reputable companies but i had no clue who they were and i would just get proposals in that in my inbox so to me one tile company was exactly the same as the next so everybody complains like oh in order to win in construction you have to be the low bidder the little bitter the little bitter you only have to be the low bidder if that's all if if you only give your potential client your proposal and that's all they know about you then of course we're gonna look at the low bid who's the cheapest because all these people in my eyes are the same now you might be way more qualified way better at your job than somebody else but i would never know that unless you come to my office shake my hand look me in the eye and let's have a meaning hey i'm interested in working with your company i want to start getting involved in your bids you're a professional company you're serious company i want to get involved with a few serious companies that i can bid for and that's how you start getting bids if you come and you sit in my in in the chair in front of my office and you spend 30 minutes or an hour out of your busy day because i know contractors are busy if you do that and you look me in the eye and you say i'm serious about working with you guess who's going to get the next at least the last few looks what does that mean if you submit a bid and you're not the low bidder i'm gonna call you and say hey john look you're not the low bidder my low bid is this what can you do about your price to lower it a little bit because i want to try you guys out you know and that's what that's how you're going to get your first jobs very simple uh following up is the key so so yeah that's in a nutshell if you do all those things those five simple principles you're going to grow your construction business now i wrote an article called 27 ways to get more construction projects i recommend you take a look at that especially if you're starting out i list 27 different ways 27 different types of clients different strategies on how you can find your potential client for example a lot of people forget that they can go look up property managers because those guys build those guys renovate those guys are basically construction managers for apartment buildings and for leasing companies you know for for malls and things like that people don't think about that if you're gc go build relationships with architects read that read read about all that stuff in my 27 ways article so anyways i hope that helped if you need help with estimating if you want to chat about how to grow your construction business you want to take 5-10 minutes and pick my brain or pick my team's brain we we would love to help you give us a call the number go to our website imbuilders.com and maybe i'll put the website uh below in the description or the phone number give us a call shoot us an email and we'll be more than happy to help you all right good luck [Music]

Channel: I AM Builders+

Views: 49,687

Keywords: starting a construction company

Id: g7MnWOLsaAE

Length: 19min 24sec (1164 seconds)

Published: Fri Aug 05 2022