10 Things to Do to Start a General Contracting Business

Embarking on the journey of starting and running a general contracting business can be not just profitable, but also immensely rewarding and exciting under the right circumstances. However, there’s much to consider before you take the leap and strike out on your own.

Ultimately, you need to decide if you wish to be in a leadership role, are prepared financially to follow through on your vision, and have a plan to reach your goals. But be practical. Holding onto your day job may be worthwhile and working your startup general contracting business on the side until things get rolling.

Before going solo, here are 10 things you need to do or think about to get your business off the ground and ensure it grows:

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1. Do Your Research

First and foremost, are you truly ready for this? Being an entrepreneur or business owner is a significant responsibility. It means investing time, energy, effort, and money into every aspect of your general contracting business. Thorough research is key to understanding the industry and being prepared for the challenges ahead. 

You need to know everything involved from top to bottom in construction and be responsible for all phases of every project. That includes being your company’s primary salesperson, site project manager, accountant and more. It also means having a business continuity plan.

So, weigh the pros and cons of taking the leap into self-employment and starting your own company. Then, speak to other general contractors who run successful ventures and get their advice and recommendations.

2. Create a Business Plan

A goal without a plan is just a wish. In this case, a comprehensive business plan is your roadmap to success and profitability. It’s a tool that can help you get organized, identify potential challenges, and outline the steps you will take to achieve your goals. It’s also a crucial document when applying for a small business loan, as most financial institutions will want to see your plans before providing funding.

Your business plan should consist of several elements. Include things like the business’s name, description and concept, the types of services you will provide, your target market, your estimated startup costs, and financial projections for how much profit you’ll earn year-over-year.

3. Ensure You Have Financing

Your business plan will help you identify what your startup costs are. Now, you must ensure you have the capital to launch your company, the necessary equipment, and be able to invest in your business. 

Next, you’ll need to open a business bank account (which can help establish credit) and understand your operational costs. That includes equipment and materials expenses and being prepared for unexpected equipment breakdowns and repairs or replacements – which is why tools and equipment insurance for contractors is highly recommended. 

Finally, do a complete review of your finances and estimate your needs now and in the future. After all, even if you have clients lined up, it could be several months before you get paid for the projects you complete, so managing your cash flow is crucial.

4. Register Your Business

Another necessary step is to register your business with the federal government. You’ll need to have a main office address, detail the province or provinces you will operate in, a business name, and select the type of business (sole proprietorship, partnership, corporation, or co-operative).

5. Get Business Permits and Licences

General contractors need to be licensed in their respective provinces to operate legally. You’ll also need to acquire building permits for some projects through the municipality where you’re working, especially if the project involves structural changes to a building.

6. Get Liability Insurance

You must protect yourself, your business, and your customers from unexpected mishaps and accidents. That means getting a contractor’s business insurance policy tailored to your needs. You might require a contractor’s all-risk insurance policy depending on your services and liability risks.

Speak to a licensed broker and ensure you discuss everything to get the coverage you need for your services, vehicles, and equipment. In many instances, a client will require you to have a valid certificate of insurance, or they won’t hire you.

Learn more about the specific insurance coverages for:

• Alberta contractors insurance
• BC contractors insurance
• Ontario contractors insurance

7. Maintain Accurate Bookkeeping

You’ll need to closely monitor all your expenses and income, as well as charge and remit taxes. 

Accounting software such as QuickBooks can help simplify these necessary tasks and is significantly cheaper than hiring an accountant or bookkeeper. 

However, once your business revs up and you’re busy as a bee, hiring a qualified accountant or bookkeeper will ensure you’re profitable and paying your provincial and federal taxes on time while taking advantage of many tax deductions.

8. Promote Your Business

Developing and defining your brand is what will distinguish you from your competitors. Your brand should tell prospective clients who you are, what you do, and your values. Therefore, you’ll need to create a logo that resonates with people (the first thing people will see) and represents who you are as a business.

Once you have an established brand, it’s time to embrace digital marketing online and promote your business offline. For instance, printing high-quality flyers and business cards and distributing them to local businesses and residences can help build brand awareness, as does email marketing, establishing a website and a presence on social media networks. 

These things don’t need to cost a significant amount of money. When starting, you can use a website-building tool such as WordPress or Wix to build a website, and signing up for social media networks such as Instagram and Facebook are free.

9. Establish Supplier Relationships

Developing relationships with your suppliers and vendors can help you secure the raw materials and supplies you need at competitive prices, and may lead to better pricing, service, and reliable delivery.

Based on your services, think about the suppliers you’ll be relying on, such as building materials, electrical, concrete, and landscaping. Prioritize the ones you need most and build resilient and mutually beneficial partnerships with them.

10. Hire Subcontractors

Although you’re the master of your universe as the business owner, you can’t possibly do everything. That means hiring qualified, experienced subcontractors to ensure you deliver high-quality work on time and within budget to your clients. 

For most policies, you will need to ensure your subcontractors have their own insurance. Also, be aware of the taxation and legal requirements involved with hiring and paying an employee or outsourcing work.

Investigating joining a recognized association relevant to your general contracting business may also be worthwhile. For example, if you’re launching a home renovation business in Ontario, you should inquire about becoming a member of the Ontario Home Builders’ Association or the Canadian Home Builders’ Association. Doing so can help you keep abreast of important matters relevant to your industry, provide the opportunity to network and forge partnerships with other contractors, and take advantage of learning resources to grow your venture.

You may need to take several other steps to get your entity off the ground, such as consulting a business lawyer, but now you’re on the cusp of running a contractor business. So, let the real work begin!

– Updated August 9, 2024.