Imagine the joy of pointing at a flyover or a residential beauty and saying "I built it!"
The construction business is alluring, full of challenges and is one of the fastest growing sectors in the recent times. A country’s economy is strongly linked to its construction industry, as it initiates essential structural changes that influence and stimulate the development of a nation. From start up costs to marketing yourself, there is a lot you need to roll out, in the construction industry. Here's how you can go about it:


What's the plan

If you have friends who are willing to partner with you, you can consider starting as a partnership firm. A capital of at least Rs. 50 lakhs to 1 crore is needed to begin with. If contract-based construction work is what you are looking at, then you may need to show additional personal investments as guarantee to the bank. Click on capital generation opportunities, to know in detail about the sources you can tap into to generate capital.
 

Know what you are getting into

Understand the construction market before you step into it. Study the industry and read related newsletters and magazines to know the current market trends. If you have narrowed down on a particular location to set up your construction business in, then learn about and stay updated on the market trends in that particular region.

  • Talk to other business owners in the same segment and the members of the community about the need for construction related services
  • Research and find out what competitors charge for various construction services offered
  • Research necessary business considerations, requirements and laws before starting your own business


Draft a Business Plan

This document will act as a road map in helping you achieve your business goals, and must include:

  • the specific business goals you wish to achieve
  • your target audience
  • your competitor analysis
  • construction services you will provide
  • the various financial aspects of the construction business
  • the client base you desire to have in the future
  • the list of tools and equipments needed
  • scope of market analysis
  • your advertising and promotion plans
  • a start-up budget and an expansion budget, if any
  • the number of workers you plan to hire
  • the profit you expect to make and how you foresee to market yourself in this sector


To know how to go about researching your market, and writing a business plan, click here
In case you have a difficulty drafting a business plan, you can tweak and rework on a sample or existing business plan available on the internet, and modify it to suit your needs. Alternatively, you can hire a professional to draft it for you, with your elaborate inputs.


Be on the right side of the law

  • Legal: Make sure to follow the rules to avoid any setbacks later. First, decide on a company name, and then, register your newly formed business to protect your intellectual property from being misused. Decide if you want to begin operations as a Sole Proprietorship, a Partnership, a Corporation, a Limited Liability Corporation (LLC) etc.
  • License: To legalize your construction business; you must apply for a general business license in the state through which you are planning to operate. See to it that you provide detailed information for specialty licenses, if any, as may be applicable for specific services you intend to provide. For trades like electrical, plumbing and gas fitting, a tradesman license is a must.
  • Regulations: As you take the big plunge, remember to get the building or structural construction permits, and comply with the laws that govern the construction industry. Make sure to adhere to energy efficiency standards, procedures for dealing and disposing hazardous material, regulations related to Housing and Urban Development (HUD), Occupational Safety and Health Administration (OSHA), and environment safety, among others.
  • Taxes: Once your business is operational, you will have your earnings to put on record and taxes to pay. Along with getting your company a PAN card, you will also need to get your GST registration done. You can click here to read more about GST.
     

Plan your resources
Your construction business will need tools, equipments & machinery to begin with. You may need to prepare a comprehensive list and procure the same. Second hand equipments might need servicing or repair. Instead of gathering equipments to do the job yourself, you could also choose to subcontract a lot of your work out. This helps finish projects in time with a lot less stress.

As you start out, you could also consider renting equipments as needed based on the projects at hand. In the lean times, a huge workforce and equipment inventory could turn out to be a drain on your budget. You'll need to plan well and train yourself to be a resourceful manager.

For easy finance to buy heavy equipments, you can opt for business loans that are easy to avail and repay. You can also get in touch with a dedicated Relationship Manager to guide you with the right products & services. 


Promote your business

Make your business known. Make efficient use of multiple media to get noticed and get in touch with your clients. Use word of mouth — ask your friends and colleagues to spread the word and attract new orders. Create and distribute brochures and pamphlets; use social media, print ads, mobile advertising etc. Gain an immediate presence in your related business network. Email is another good tool to keep regular touch with your clients as the business takes off.

Starting a construction business is not an easy task. So speak to experienced minds from the industry and benefit from it. Do check out the SCORE Mentors Program as well. Get to the core of the construction business, understand the nuances, and only then, get started.

Watching your hard work bud into a concrete structure, is one of the most fulfilling experiences of being in the construction business. Whatever you build — road, residential marvel, highway or school — do it well, for it will have a bearing not just on your business but on the community you live in, as well.

Liked what you read? Even as you get started, you can read about how to run your construction business

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Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Kotak Mahindra Bank Ltd. and its employees.