How to Start a General Contracting Business? [8 Simple Steps Guide]

As per the recent IBISWorld survey, it has been predicted that the next five years will be more favourable towards robust growth for commercial construction companies.

There will be more housing demand for business office space and business efficiency by looking at the number, especially for retail buildings. So, if you are ready to move your first step into the construction industry, trust me, it’s a perfect time.

You might be wondering how you can initiate, what the costing parameters are, and what to include in the business plan for starting a business. Don’t worry! We are here to clear all your doubts as we have an expert guide on how to start a general contracting business from scratch.

Who is a Contractor?

A contractor is a person or company that works on a contractual basis, negotiating deals with different clients to work on specific jobs or projects. For example, a general contractor is responsible for overseeing a construction project and entering into a prime contract with the property owner. In simple words, general contractors or construction contractors are the only people who manage the general contracting businesses.

A contractor plays a vital role in the construction business, whether residential or commercial structures. The general contractors have a team of employees, labourers, carpenters, and other workers and play the role of a project manager and construction superintendent.

Moreover, contractors also involve multiple specialty subcontractors (SC) who complete 80-90% of the work.

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How to Start a General Contracting Business? – 8 Easy Steps to Follow

Let us start our journey to see the step-by-step guide to starting a new general contracting business from scratch.

8 Steps on How to Start a General Contracting Business

  1. Write Your Business Plan

    One of the first things you need to perform is making a business plan for starting a general contracting business.

    A business plan is beneficial for small businesses or large businesses as it defines a roadmap to your business’s success. It also helps you gain a better understanding of goals and works as a proof of concept.

    When a contractor business company or a general contractor applies for small business loans, a business plan plays a significant role. The financial enterprise and investor ask for a business plan for loan approval.

    When you create a business plan for the first time, make sure the following components are mentioned in the plan.

    • The overall structure defining the business idea
    • Essential information, including goals and vision to start your business
    • The list of service offering
    • Complete information about the target market
    • Number of employees working in your business
    • Details on startup costs like maintenance, licenses, permits, and others
    • Financial projections like expected profit-margins yearly or monthly

    So, the business plan is nothing but the blueprint that highlights all the essential information about your business in a well-defined and straightforward manner.

  2. Obtain Necessary Licenses, Insurance, and Bonds

    The most exciting part about the contracting business is that you need to get a general contractor license. You will find that many states may ask the business owners to provide them with the contractors’ license or business license.

    By not having the contractor’s license may result in a massive disaster in your business. So, it’s better to have a license for contractors and the process to apply for the same may differ from state to state.

    Generally, the process goes something like this:

    • A written exam is taken to make sure the contractors can deal with various contracting fields.
    • By assuring that your financing condition is adequate to start a new business.
    • By showing the authorized person the reference letters from previous employers, banks, financial institutions, customers, and even colleagues.
    • Finally, by providing proof that you possess on-the-job expertise.

    General building contractors, general engineering contractors and specialty contractors are some of the contractors’ classifications.

    The specialty contractors are suitable for working on departments like insulation and acoustical contractors, concrete, drywall, fire protection, flooring and floor covering, building moving and demolition, plumbing, earthwork, and paving fencing masonry, roofing, and even structural steel.

    Apart from licensing requirements, make sure you have legal surety bonds. For example, construction bonds are mandatory for every general contracting business to operate.

    The main aim of having surety bonds is to give your customers protection if they are not fulfilling the contractual obligations. Like insurance, a third party will provide your surety bonds, and it becomes mandatory to follow state regulations, which vary from state to state.

    Last but not least, you must have business insurance. There are different policies available by many insurance companies to purchase, which depends on several essential factors. The primary role of insurance is to offer coverage to your employees or customers.

    In addition to general liability insurance, a contractor must have property insurance and company vehicle insurance. If your business has more employees, you have an option to opt for insurance to protect your workers for:

    • Workers’ compensation
    • State disability insurance
    • Unemployment insurance to protect your workers.

    Also, a Certificate of Occupancy (CO) is essential. It confirms that all building codes, zoning rules, and government regulations are considered, and your business runs out of a physical location.

  3. Open a Business Bank Account

    Opening a business account is the essential step that you need to perform. Many construction businesses are making a common mistake of using personal accounts for managing the finances whether it is for small businesses or large businesses.

    It is better to keep separate personal and business accounts; otherwise, there are more chances of risk when your construction industry is sued. Sole proprietorship has also high risk. It is referred to as piercing your corporate veil. It is also necessary for personal assets protection, which in turn makes accounting and tax filing.

    If you open a business bank account, then you can easily do the following activities:

    • Perform payment processing under the business name
    • Personal asset protection
    • Generate credit

    Also, a Certificate of Occupancy (CO) is essential. It confirms that all building codes, zoning rules, and government regulations are considered, and your business runs out of a physical location.

  4. Develop and Define Your Brand

    To be on top of the competition, branding your business is very much essential. The branding explicitly represents your company’s value, services, goals for customer satisfaction, and most importantly, business success.

    For developing a strong brand for your construction industry, there are some essential steps that you need to follow.

    First of all, you must create a business logo. It is essential not only for marketing strategies but also to create a strong impression on customers. In short, your logo should define what your business is and what you offer.

    Once your brand is ready, start promoting your construction business. The promotional activities help you to get more customers as they remember your business. You promote by using the following best practices:

    • Distributing flyers and brochures
    • Referral programs by sharing business information to friends and family members
    • Making professional business cards as it is easy to carry wherever you get-go
    • Email marketing to promote services to thousands of potential customers
    • Building vital networking to enhance customer base and customer service
    • Using word-of-mouth technique
    • Using social media platforms like LinkedIn, Facebook, and Instagram
  5. Create a Responsive Business Website

    Once your branding awareness is done, the following essential thing you need to do is develop an effective website for your business.

    Nowadays, a website is a powerful tool that helps customers view detailed information about every service you offer. Also, the life of many small business owners has become smoother and more effective.

    Now, let us see the primary reasons for building a business website:

    • First, you can easily manage all your business operations with ease, regardless of the business size or industry you are into.
    • You have more chances to deal with lead generation techniques using websites.
    • The customers can easily see the ratings and reviews of the services you offer.
    • You can also make marketing efforts by including social media accounts like Facebook pages or LinkedIn profiles.
    • You can use GoDaddy Website Builder to create an essential website simply.
    • You can also post a newsletter sharing additional information about the services.
  6. Get to Know Construction Industry Regulations

    As we know, a construction company is equitably balanced. However, the company needs to learn multiple federal, state, and regional rules and regulations before starting a business.

    Business owners or contractors must have basic knowledge about the business. In simple words, they must know business tips like handling multiple resources, the industry’s ins and outs, latest trends, and changes.

    Remember that you must have essential business insurance, business licenses, and permits to make a limited liability company on the bottom line.

  7. Define Your Pricing Structure

    Now, it’s high time to price your services. This is one of the most challenging tasks for both business owners and a contractor.

    Remember that your services’ pricing should satisfy the customers, and even it should not include overhead pricing plans.

    When planning to set the pricing model, consider rent contracts, insurance, materials, labor, marketing, and any other recurring, outgoing payments for the running projects.

  8. Ask for Reviews

    The last step that you or a contractor needs to consider is considering the reviews that your customers leave for your business.

    Nowadays, people who want to take your services, first they approach to see business reviews. So, it becomes mandatory for you to generate reviews as quickly as possible.

    As you receive more positive feedback for the construction projects you are handling, there are more chances of getting new customers.

    You just need to make sure that your customers are delighted with the services before leaving the site. Also, you can send them a text message or email to take regular follow-up by informing them to leave a review of the projects undertaken.

These are the main steps that can help you start your general contracting business with ease and make your business be on top of your competitors’ rest.

Have any questions related to the contracting business? Don’t worry. We have highlighted some of the frequently asked questions in the next section to clear all your doubts.

Get On The Right Track With Contracting Software

FieldCamp is a field service software that allows you to schedule your crews, organize work orders, and run a better general contracting business.


On average, the costs to start your general contracting business ranges from $15,000 – $20,000. But it entirely depends upon the workers you include, the equipment you purchase, and small businesses loan for your business.
  • Visit Potential Customers
  • Title Page Method
  • Hire an Estimating Company
  • Audition Method
  • Interview Method
  • Exposure Method
  • Always Demonstrate Expertise
  • Commercial and Residential Lead Generation Services
  • Add the Government as a Client
Most inexperienced contractors typically start to do work as an apprentice just to grab qualified certificates and experience. But if you work under an apprenticeship, you can achieve great success in the contracting business by learning a skilled trade and the ins and outs of the company. So, just by visiting multiple job sites, it’s pretty easy for you to become a contractor.

Starting a general contracting business is one of the unique ways to help you deal with construction knowledge and essential management skills.

By following the steps mentioned in this article, you can quickly improve your skills and move your own company towards colossal success. In short, you must have an appropriate business plan, a team of reliable contractors, and subcontractors, and essential legal papers.

When it comes to managing our contracting business digitally using software, FieldCamp is one of the best software that allows you to track all the contractors with their current location, work, and more.

With FieldCamp, it becomes easy for you to manage your business with just a few clicks. Not only this, there are many other benefits of using field service management software.