How to Start a General Contracting Business? [10 Simple Steps Guide]

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

There will be more housing demand for business office space and business efficiency looking at the number, especially for retail buildings. So, if you are finding an opportunity to step into the construction business, being a general contractor is the one.

You might be wondering how to initiate your own business, what are the costing parameters, and what to include in the business structure for starting a business. There are many roles and responsibilities of the general contractors that you need to know, and so we have an expert guide on how to start a general contracting business from scratch.

Who is a Contractor? What does a General Contractor do?

A contractor is someone who completes work for another person or business. Construction contractors specialize in managing the construction of buildings and other structures, such as roads and bridges.

A general contractor is responsible for managing all aspects of the building process and ensuring that all aspects of construction are completed according to plan, timeline and budget. The general contractor manages all subcontractors, suppliers and other professionals involved in the project. 

The general contractors have several responsibilities, including:

  • Hiring subcontractors who will provide various elements of construction services.
  • Laying out the project site.
  • Providing labour and materials required to complete the project.
  • Inspecting construction sites to ensure compliance with building codes and specifications.

Types of General Contractor Businesses

When it comes to general contracting business, there are more than 25 types of businesses to select from.

General contractors deal with all the

How to Start a General Contracting Business? – 10 Easy Steps to Follow

To establish a successful general contractor business, you need to complete various milestones. So, we have made and listed 10 steps that you should follow while setting up your business.

1. Choose services

Before starting your own business in general contracting, it is crucial to list out all the services you are going to offer to your customers. It helps you get clarity of the further steps. 

Deciding the number of services enables you to filter your customer base, and they get a direct way to get in touch with your business. You will need essential business skills, workforce, tools, and theoretical and practical knowledge per your chosen services.

Basically, a general contracting company offers the following services

1. New construction

2. Repair

3. Renovations

4. Consultancy

2. Get necessary licenses, permits, and bonds

One of the important steps of the contracting business is to get a general contractor’s license. You will find that many states ask business owners to provide them with their contractors’ licenses or business licenses. 

Not having the contractor’s license may negatively impact your company’s reputation, and you might also end up involved in legal procedures. So, it’s better to have a business license for contractors; 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.
  • Your financial status is checked to determine whether it is adequate to start a new business or not.
  • You will be expected to show proof showing your on-the-job expertise.

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 get surety and protection from your customers if they do not fulfil the contractual obligations. A third party will provide your surety bonds, and it becomes mandatory for both the parties to follow state regulations, which vary from state to state.

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. Make up a business plan

Another step you need to take is to make a business plan to start 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 work as a proof of concept.

A business plan plays a significant role when a general contracting company or a general contractor applies for small business loans. 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 defines your business idea.
  • Essential information, including goals and vision to start your business.
  • The list of your service offerings.
  • Complete data and analytics about the target market.
  • The number of employees working in your business.
  • Details on startup costs like maintenance, licenses, permits, and others
  • Financial projections like expected yearly or monthly profit margins.

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.

4. Choose a business name and register your business

To get recognition in the local market, it is important to develop and establish a unique identity. For that, all you need to do is decide a name for your contractor business and register it into your state’s record.

This will help you know if there’s any company already established by the same name or prevent any other company from opting for the same name.

Registering your business will create your unique identity and enhance your business’s reputation compared to other small business owners.

5. Open a business bank account and take business insurance

Opening a business account is essential in managing your business expenses. Many construction businesses are making a common mistake of using personal accounts to manage their 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 in case your company faces any legal actions.

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

  • Perform payment processing under the business name
  • Personal assets’ protection
  • Get business loans

Along with essential documentation, you must have business insurance. Many insurance companies offer different policies depending on several factors. Insurance’s primary role is to provide your employees coverage against physical and financial risks.

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

6. Know Your construction industry regulations

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

As a business owner or contractor, you must have basic business knowledge. In simple words, you must know various business operations like handling multiple resources, the industry’s ins and outs, the latest trends, and changes.

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

7. Pricing strategy

Deciding the pricing structure for your contracting business is the most challenging task. While setting up the prices as a contractor, remember that your services’ pricing should satisfy the customers, and even it should not include overhead pricing plans.

Also, make sure to consider all types of costs you bear like rent contracts, insurances, material costs, labour, marketing costs, and any other recurring, outgoing payments for the running projects.

Price in every business comprises a net profit after calculating all the costs. So, make sure to consider your profit margin while deciding on your pricing strategy. Also, take care it does not get overpriced.

8. Hire workers and subcontractors

One of the main tasks of the general contractors is to hire and manage workers that are sufficient in fulfilling clients’ needs. Workers include laborers, technicians, plumbers, electricians, and all other field technicians responsible for working at a construction site.

You should also hire subcontractors who hold a specialty in any one service. They do not have to deal directly with clients and just have to report to the general contractors. 

Subcontractors are responsible for hiring workers & designers and gathering construction materials. After hiring, all you need to do is deal with your clientele and manage the works of your subcontractor.

9. Market your business online and offline to get contracts

While running a general contractor business, it is necessary to stay in the public’s eye both offline and online as it is a competitive business. People should know the whereabouts and progress of your business. For this, you can market your business online and in traditional ways.

Some of the offline ways are advertising in the newspaper, partnering or sponsoring in real estate events, attending industry events, and distributing business cards and brochures to construction business owners.

Online marketing is the most effective and least costly mode of marketing in today’s trends. It helps you get to the notice of people in no time. Some of the modes of online marketing are posting on social media, getting advertised in e-newspapers and e-magazines, creating a responsive website, using SEO tools, and doing paid sponsor ads using Google Ads, Facebook or Instagram, etc.

Online and offline marketing can help you in:

  • Getting a wider reach
  • Increasing your clientele
  • Announcing any business success

10. Use software to manage your jobs

Are you handling a huge contractor business yet not keeping up with technological advancements? This is where all companies lack. In the 21st century, clients need instant services, and most of the time of business owners is spent scheduling and managing jobs. 

If you automize these processes, a lot of time can be saved, and you can use this time productively in other business operations. You can use general contractor software like FieldCamp that helps you automize these processes. 

FieldCamp is a field service management software that helps you schedule jobs, dispatch workers, make customizable invoices, receive payments, generate reports, and know your company’s statistics.

FieldCamp eradicates the use of pen & paper, allows you to schedule jobs in minutes, and saves 95% of your time in job scheduling and reporting.

A General Contracting Business Software That Helps You

Save up to 95% of your time Automate 90% of your daily operations Generate and track reports in a few clicks

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There are a few basic steps to follow before you start your general contracting business like:

  • Pass a written exam
  • Manage funds
  • Get a general contractor’s license
  • Get a few years of experience

In the initial phase, you need to focus on broadening your client base and marketing. The general contracting business is indeed a profit-making business, but not in a short time. Once you have a strong client base and a fleet of efficient workers, money flow will surely increase.
As per a survey of comparably, the top 86% of general contractors earn around $339k per annum. At the same time, the median salary is around $62k. So, there is a possibility of high income once your business is set.

There are many contracting businesses, and almost each harvests a considerable amount of profit. But, among all, we consider these 3 contracting businesses as the most profitable ones because of their high demand.

  • Cost estimator
  • Plumber
  • Painter

When giving a quote for materials, contractors add a markup that covers their cut or a profit margin. Generally, the markup proportion differs from contractor to contractor, but the average markup on materials is between 7.5% to 10%. Some contractors markup materials up to 20% also.


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

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 efficient workers, 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, you can easily manage your business with just a few clicks. Not only this, there are many other benefits of using field service management software.

Author Bio

Gaurang Bhatt

Gaurang Bhatt is a techie in himself with an ability to solve problems technically and present solutions in the form of a product. He is one of the pioneers to curate FieldCamp with his 15+ years of knowledge and expertise in providing solutions to home service industries. Gaurang aims to overcome challenges faced by service business owners through software solutions and blogs.