The construction industry contributes billions to the UK economy each year. Whether you are thinking of setting up a limited company or have decided to work as a sole trader, it’s critical to have a clear vision of what you want to achieve.
The first step is to create a business plan.
This should most certainly cover which area of construction you are going to focus on. You may want to provide roofing services, for example, build extensions for homeowners, provide services for developers such as plumbing or bricklaying or set up as a developer yourself.
Start-up costs for any construction company can be quite significant.
- Do you need ladders and equipment such as drills and saws, not to mention more expensive kit such as diggers and a van to operate out of?
- Where are you going to find equipment such as skips and scaffolding when you most need it?
- Will you need to bring on board subcontractors and how are you going to pay them?
You’ll also need to market your construction business. Many local builders operate on word of mouth quite successfully and use a little social media such as Facebook to promote their services at the same time. Bigger construction companies need to think about developing a website and putting together a marketing plan.
You’ll also need to be good at managing time. If you provide a great service you will likely be in demand. Unfortunately, there are only a set number of hours in each day.
It’s critical to assess each job properly and how much time it is likely to take and manage each one so that you maximise the amount you earn and keep your customers happy.
A sole trader in the construction industry will charge on average around £150 to £200 a day for their services, with materials and expenses on top of that. A lot depends on the skills you deliver, however. An experienced plasterer, for example, may charge around £350 for a medium-sized room.
Creating a Business Plan
Writing down the aims and goals for your business is important and gives you a clear pathway to follow over the next few years.
This is the time to do some market research and see what sort of construction is popular in your local area. Talk with existing builders and construction companies to see what they are doing. Ideally, you want a niche that brings in enough business and which matches your skillset.
A business plan is also essential if you need to raise funds or get a loan from the bank for your startup. Spending as much time on it as possible makes sense. Fortunately, there are several quality templates and plenty of advice online that you can use.
Construction Business Rules and CIS
Unlike many other sectors, construction businesses follow a huge number of rules and regulations. For example, you will need to sign up to the Construction Industry Scheme (CIS) which has rules regarding any subcontractors you may use for your business.
On top of this, there are health and safety as well as building regulations. You can find out more here.
Managing Start-Up Costs
The biggest challenge a new construction business will have is managing the initial costs. The average for the industry is around £5,000 but much will depend on what type of building service you are providing.
The good news is that you don’t require a base to work from and you may well have much of the necessary equipment already. Major costs will likely be some form of transport such as a van and marketing your new construction business.
If you are looking to expand your service, however, you must have a plan for this and look at where you can raise money.
5 Top Tips for Succeeding in Construction
Starting a new business is never easy and requires a lot of work to get things off the ground. Sole traders in the construction business tend to work from job to job and planning can often be limited. There are, however, several areas that you can focus on to improve your chance of becoming the best new start-up on the block.
1. Customer Satisfaction
There’s an old saying that you are only as good as your last job. This is important for construction business owners, especially sole traders. Word of mouth counts for a lot in this sector and doing a bad job can be highly damaging.
Focus on delivering a good level of customer satisfaction, even when that customer is difficult to deal with. It’s much better to go the extra yard and bear the cost than upset someone.
2. Picking the Right Niche
Choose the right construction offering and keep it fairly narrow, at least in the first instance. You can always expand your services later when you are up and running. It’s critical to pick a niche that has little competition and as many customers as possible.
3. Easy Ways to Market
Marketing takes time and money but there are some ways to get easy wins. If you are doing a job for someone, for instance, take the time to drop your business card or flyer off to the neighbours. Particularly if it’s external building work, they can see you in action and you’ll be surprised how many need the odd job doing.
- You should register with online listings such as Yell and Google My Business. It’s easy to do and gives you more visibility.
- If possible, choose to create a website for your business. It makes you look reputable and is usually the first place people search.
- Facebook is a great option for sole traders as you can build a local audience and post images and video of work you have completed.
4. Be Organized
The problem with construction work is that you can end up having a lot on and not enough time to complete it. It’s crucial to be as organised as possible and give yourself enough time to complete each job.
This normally comes with experience as your construction business evolves. In the meantime, it’s better to overestimate rather than underestimate the time for each job.
5. Work with a Tax Specialist
Finally, sole traders and self-employed construction business owners need to manage their tax affairs effectively. That’s because jobs can often be pretty complicated.
It’s important to have a handle on your incomings and outgoings and working, for instance, with a tax specialist who understands CIS make sure you don’t pay too much tax and have money to invest back into your business.