Amid the robust demand for real estate construction, becoming a general contractor offers multiple lucrative opportunities. General contracting as a business is the right option if you are confident in dealing with people, getting others motivated to work as required, and handling multiple roles in a single construction project.
By nurturing and developing the right types of skills, you can become a successful general contractor and be in the lead role of a construction project in your local area. The job outlook of the US Bureau of Labor Statistics (BLS) predicts an 8% growth rate between 2021 and 2031, which is faster than average. The demand for general contractors is further increasing as construction spending exceeds 1 trillion dollars a year.
There is no paucity of construction projects, and you can select the ones you like and help the project owner start the project and complete it in the planned way.
Here are some expert tips for getting started as a general contractor, helping you focus on necessary aspects that can make you a full-fledged general contractor.
Starting a General Contracting Business
A general contractor is a challenging position in a construction project, and at the same time, it is also one of the most rewarding jobs. When starting a general contracting company, you are venturing into a business of your own. It brings in various challenges, however, with the help of the right types of skills and knowledge, you can successfully take the project through each stage of its completion.
As a general contracting company, you will handle various aspects of a construction project like, budgeting, managing subcontractors, schedules, and contract work, among other responsibilities. To become a general contractor and operate legally in the United States, you need to be licensed and experienced in the industry. Your general contracting company will also subcontract work to other contractors depending on their skill sets, credibility, and past work.
To become a general contractor, you need to have some experience in the construction industry to manage people in the right way to finish each part of the project.
Having the right types of skillsets of an expert laborer and a site supervisor will help you understand the intricacies of big construction projects and help you conduct the project more efficiently.
Here are some tips that will help you reach your career goal as a reputable general contractor in a short period.
1. Enlist The Essentials of Starting a General Contractor Business
Once you have decided to become a licensed general contractor, you must first enlist the essential things you need to do to become a general contractor. Though a wide variety of construction projects are available, know the vital elements you must possess to take on and conduct a construction project confidently. Create a contracting business plan that will ensure you cover all the essentials when starting. Your business plan for becoming a general contractor must include:
- The structure or management you aim to develop for your business
- Business concept, description, and strategy
- List of services your company will be offering
- Target markets you will be working on
- The initial number of employees
- Approximate startup costs, including business license, equipment costs, worker salaries, and others
- ROI and profit estimates for every one or five years
When you are starting to become a general contractor, budget around $15,000 – $20,000 for funding your business. Otherwise, take out a construction loan from banks or investors. Besides gathering the necessary knowledge and skill sets required to lead a construction project, aspiring general contractors must research their competitors. It will give you an idea of client preferences, help determine your value propositions, and guide your business decisions.
2. Getting Licensed To Get Started As A General Contractor
Once you have equipped yourself, the next step is to earn a license to act as a general contractor. In many states, there are examinations to be passed to become eligible for a license. Contractor’s license types and exams depend on the type of work you want to specialize in and the state you will operate. For example, California’s Contractors State License Board (CSLB) covers general engineering and general building to specialized examination topics like electrical, fire protection, glazing, landscaping, and others. present-day construction process is becoming more complicated, it is necessary to get proper education and knowledge to become a successful general contractor.
Some areas may not require any license at all. Research online what local government offices you will need to apply for a license. Licensing requirements may differ at the state, city, or county level. Here are the most common eligibility criteria to become a licensed general contractor:
- Minimum 18 years of age
- Eligible to work legally in the US
- High School Diploma or GED
- Clean work record
- 4 years or above experience at the journeyman level in the past 10 years
- Pass the contractor’s license exam
- Proof of insurance or bonding
To get started as a general contractor, it is necessary to study construction topics in detail and get related knowledge. This will sharpen your skill sets as a professional, help you understand the risks and challenges while working on a project, and how to mitigate real hardships on the worksite.
3. Get Protected Through Surety Bonds
Insurance
Along with licenses and certifications, you will need some kind of coverage to protect your business and its employees. Insurance covers all liabilities due to the workers’ injuries on-site, protecting you from financial claims, damages, and lawsuits. These are the main types of construction business insurance coverage to obtain if you want to become a licensed general contractor.
- Workers’ Compensation Insurance
- General Liability Insurance
- Property Insurance
- Insurance for Company Vehicles
- State Disability Insurance
- Unemployment Insurance
Surety Bond
A surety bond, known as a contractor license bond, is one of the legal requirements to become a general contractor. These guarantees help assure your client that your job completes all promises, follows regulations, and that they can get their money back or get compensated for any loss that may happen during the project construction. The surety bond is issued by a third party, depending on your past track record as a commercial contractor. Visit the Small Business Administration (SBA) Surety Bond Program which provides small business owners bid, performance, and payment surety bonds.
While applying for a surety bond, cover the project specifications, estimated completion time, and the financial implications involved in it. Your chance of getting the surety bond is dependent on factors like work history, number of project biddings you participated in, number of projects accomplished, etc. Surety bonds or general contractor licence bonds are a requirement in the majority of US states.
Hence, maintain a good work record to get your surety bond while getting started as a general contractor.
4. Know All The Rules & Regulations
Rules and Regulations govern all industries, and the construction industry is not an exception. If you want to become a successful general contractor, then you must be knowledgeable about industry regulations, stay updated on different legal controls, and follow all the protocols while working on a construction site.
This will safeguard you and your construction business employees from legal troubles. One of the best ways of knowing and staying up to date on the construction business’s legal requirements is to check the US Small Business Administration website.
5. Be A Certified OSHA Professional
Source: osha.gov
The Occupational Safety and Health Act (OSHA) is a vital requirement for your business, and before you get started as a general contractor, you must be certified in this. This is the best way to protect yourself and your workers from all the hazards of working on a construction site.
OSHA requires general contractors to follow these safety practices on-site:
- Imparting safety training to the construction workers and employees
- Having a written safety policy
- Ensure that subcontractors follow all the safety protocols and don’t create any hazards
- Perform timely site inspections to verify safety
- Wearing personal protective equipment such as hard hats, face shields, protective footwear, visibility vests, respirators, etc.
Without an OSHA certification, you cannot become a licensed general contractor for working on Government contracts. You may even face the ire of the law by imposing heavy fines or shutting down your company when you fail to comply with OSHA requirements.
6. Pay More Attention While Hiring Subcontractors
When getting started as a general contractor, you will be hiring labor or subcontractors for various capacities in your construction project. Pay special attention while doing this as the hiring of the wrong or underqualified professionals may completely ruin the project and may heavily jeopardize its normal progress and completion. So, to become a general contractor that holds a strong reputation, do proper due diligence before hiring construction workers and subcontractors for your commercial projects.
Another general contractor tip is to hire professionals smarter and more talented than you, this way you can entrust them to handle any assignment without guidance. Whether you hire your own employees, work with independent contractors, or outsource jobs to different subcontractors, be aware of the tax implications and legal formalities of hiring and paying them.
7. Select The Right Construction Management Software
Over 56% of construction companies use construction management software. Becoming a successful general contractor in today’s era requires the adoption of cutting-edge technology. Modern-day construction management tools will add more efficiency and help automate the daily routine work for faster decisions and swift reaction to the work site exigencies. Hence, select the best construction management software to help you oversee minute details of your project completion and be useful in many ways.
Modern-day construction management software is capable of –
- Real-time communication and collaboration between clients, contractors, subcontractors, and project managers.
- Storing and managing documentation
- Project management
- Cost control and budget management
- Develops accurate cost estimates based on historical data and evolving market prices
- Management of schedules, equipment, and inventory
- Simplified reporting
- Integration into a company’s existing workflows and several other benefits
Hence, take advantage of construction management software and shape it according to the size of your business, the revenue you are earning, the projects you have in your pipeline, etc. See that the software you are using is mobile-friendly so that you can remain in control of your business wherever you are.
8. Network With Professionals In Your Work Area
Networking with experienced commercial general contractors is necessary to share information and learn from them the tricks of the trade. Join industry associations such as the Associated General Contractors and others for networking and developing essential general contractors skills, for example, writing a contract, hiring subcontractors, etc.
Do not forget that every project you work on adds to your experience and makes you a better player in your business. So, be detail-oriented and take care of each part of the project with the utmost care and caution. Learn to be proactive, expect the unexpected, and be ready to rise above situations to complete the projects within the time and budget.
Bonus Tip
Market Your General Contractor Business Online
Now, more than ever, establishing an online presence is important for becoming a successful general contractor. Launch a user-friendly professional website to showcase your work portfolio, share information about your range of services, and contact details, or gather client leads. Optimize your Google My Business profile so that your contractor business appears whenever someone searches locally.
Create an active presence on social media networks like Facebook, Instagram, or wherever your target audience is. Another excellent way to promote yourself as an industry leader in the general contracting business is by publishing knowledgeable blog posts. Hence, online marketing is one of the best ways for general contractors to market their services among the vast competition.
Conclusion
Implementing the aforementioned tips into your daily work life provides a solid foundation for kickstarting your career as a general contractor. Remember, dedication and adherence to these practices will significantly accelerate your professional growth and achievements.
Partner With Us
Constructive Solutions, Inc. prides itself in delivering outstanding commercial construction services to clients the in San Francisco, San Jose, and San Mateo regions. With our tunneled focus on excellence and timely completion, you will get customized services aligned with your unique requirements.
If you are planning to hire an experienced and reliable commercial general contractor for your next project, contact our team today.
FAQs
How to find clients as a new general contractor?
Once you have become a licensed general contractor, start reaching out to colleagues, friends, and family to earn construction clients and projects. These finished jobs will add to your business’s reputation, helping you earn more recommendations and referrals.
How do I provide accurate cost estimates and project bids to my clients?
Thoroughly review the project scope, calculate materials and labor rates, obtain supplier and subcontractor quotes, and include a contingency fund to provide realistic cost estimates to your clients. Leverage the power of construction cost estimating software to make data-driven decisions and place accurate bids on commercial construction projects.
How much salary will I earn as a general contractor?
According to Indeed, the average salary for a general contractor working in the United States is $98,384 per year. Note that contractor salaries vary depending on the level of education, industry experience, specialization, job location, and overtime hours.
Relevant Resources:
The 4 Essentials of Construction Management
How to Promote a Safe Work Environment during Construction
Constructive Solutions, Inc. is a full-service commercial construction company serving San Francisco and Bay Area.
Whatever your vision, we have the resources, experience, and insight to make your concept a reality, and a space where your business can flourish.
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It’s fantastic to learn that you should get licensed as a general contractor before doing any work. My brother has been wanting to learn how to build houses and he was wondering how he could become a home construction contractor. I’ll be sure to tell him that he should get licensed to become a home contractor.