There are many opportunities for people who are going into the construction business, from public infrastructure projects, project management, ground-up development to residential renovation. Every business size stands to gain from the different business opportunities offered by the construction industry. Even micro-businesses with ten or fewer employees are busy doing business.
Knowing how to properly set up your business
However, you should not rush in setting up your construction business as there are some pitfalls that you need to know and avoid.
Here are some risks and errors that you should steer clear of if you want to start your construction business on the right path.
- Not identifying the services you will offer
You are setting up your business because you want to earn from it and the best way to do that is to start with a good business plan. The services you will offer your clients are critical. Likewise, it is vital to determine your prospective customers, as well as your pricing structure.
Although it is tempting to take on every available job, it is better to offer the services that you know and what you are good at. Further, you should identify the skilled people you need to perform the job. To help you along, make a list of trades who you can call when there is a project, with a view to offering them permanent employment as your business grows.
- Forgetting your business structure
It is vital to separate your personal and business finances. Therefore, you should think about what kind of business structure you need when you’re starting your company. Will you be a sole trader and hire a skilled workforce when you have a project? Companies like Lancashire Plant Hire suggest that whatever size your business is going to be, you should include renting the required construction machinery in the business plan because it will provide many benefits to your company.
If you have partners in the business, you should set up a partnership, but make sure that you have a partnership agreement that details the obligations and rights of each partner.
If there are more people involved in your business, set it up as a limited company. This is more prestigious than a partnership and gives your business a more professional appeal. To make everything legal and compliant, hire a lawyer and other consultants.
- Not having access to financial support
Understand that the running costs of the business should be paid even if the project is over. You need to understand cash flow management from the start. Thus, it is important to open a business account, especially one with an overdraft and loan facility, so that you are assured of having funds available when you suddenly have cash flow problems.
- Not understanding the requirements of Her Majesty’s Revenue and Customs
You should understand or ask your accountant to explain the essential things you should know about business taxation, as outlined by Her Majesty’s Revenue and Customs (HMRC). There are specific guidelines for builders, which outline VAT charges for different types of construction work.
Make sure that you seek help from professionals so that you can start your construction business without incurring mistakes that can derail you from accepting your first construction project.
