How to Start a Contracting Business in 9 Simple Steps

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đź“ťKey Takeaways:

  • Go through the best steps that can help you unlock your business goals.
  • Get a complete overview on how to start a contracting business that helps you stand out from your competitors.
  • Consider these detailed business stages to overcome the initial barriers you will be going to face while starting a contracting business.

Are you looking to start your new contracting business?

But do you know the nitty-gritty aspects of starting a contracting business?

The average income of a general contractor is $80,000; if you run a larger firm, you can earn more than that.

Our team has filtered the best result-oriented steps to help you start your contracting business and achieve your desired business outcomes with finesse.

So, without further ado, let’s learn how to start a contracting business.


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How to Start a General Contracting Business?

There are 9 simple steps involved in starting a contracting business. Let’s explore each of them one by one:

how to start an independent contractor business

1. Know the Pros & Cons of Owning a Contracting Business

Being a professional contractor, you need to manage and organize different phases of the service in your industry. You should know the industry in which you are stepping into. 

Analyze the business operations, list the pros and cons of starting a contracting business, and make an informed decision before kickstarting your business.

You can leverage your experience and skills and set the hours and projects you want to work on. Consult with a few industry leaders or professionals who have the skin in the game that can help you get the insights that the general audience doesn’t have.

Know the pros & cons

Ask a few customers what they think about the industry and what they want to improve in the contractors delivering the service.

Having a 360-degree perspective before starting your own business can help you set the foundation strong and ensure that you can unlock better business results in the business.

For example, if you are considering starting a construction business, you must develop essential business skills to strengthen the business structure.

Analyze the pros of starting a construction contractor business and focus on the cons that can negatively impact your service business operations.

Here are a few basic requirements for running a successful contracting business.

  • You must have a drive and passion for running a professional business.
  • Understand your business industry and figure out the essentials to kick-start the business.
  • Horn your skill set and have strong managerial experience.
  • You need to be aware of the risk of running a business.
  • You should acquire the right tools and equipment to complete the service task.

2. Pick Your Niche

Choosing a preferable niche in the contractor business is essential. You must focus on selecting one industry where you can build a solid business plan and kickstart business online.

List your interests and expertise in different contractor industries and select one to start your own company.

From landscaping to handyman, construction to HVAC, you can select one based on the preference that can help you earn great profits. You can also focus on starting a general contracting business that includes different services and caters to a wider target audience.

Once you have filtered the pros and cons of the contracting business, you’ll find it easy to select one niche. Choose an industry where you think you can bridge the industry gap and deliver a stand-out customer experience that every competitor is failing to provide.

Once you finish the filtration process, it’s time to enter the industry. You can start the process by performing a SWOT analysis that can help you get a bigger picture of your business’s strengths and weaknesses. You can explore the opportunities and different threats that the industry possesses.

3. Register Your Business

how to start a construction company

Register your business with the concerned authorities that can help you legally kick-start your contractor business operations. Different states have different rules and authorities that you need to consider and apply for the required registrations.

You need to choose your new business to be registered as 

  • Limited liability company (LLC)
  • Corporation
  • Sole proprietorship
  • Partnership

Different small business owners choose to start a sole proprietorship or partnership business because of the simple and smooth approach to operating the business.

You can also start as an independent general contractor without employees or partners. Once done, you must register for the business licenses and certifications that can help you avoid different legal issues in the future.

4. Know the Industry Rules and Regulations

According to the area of your operation, you must follow the rules and regulations of the industry. You need to acquire the contractor’s license necessary for your business operations.

Ensure that you comply with the rules and regulations of the industry and don’t bend them for your benefit. Operating a fair and professional contractor business can help you achieve new heights.

Follow your competitors and perform a competitor analysis that can help you better understand the standard operating procedure that your desired contractor industry follows.

You can always focus on improving the existing industry ecosystem, but you must abide by the basic rules and regulations to help you stand out from the best.

Train your customer support team to answer and address different client queries based on the set industry protocols that can help you deliver a quality customer experience.

You should send professional job estimates and invoices that can positively impact your clients or prospects. You should sign the legal documents that can help you maintain complete transparency.

Understanding the nitty-gritty aspects of operating a contractor service business can help you get a head start to avoid future errors and issues.

5. Get Licenses and Permits

You should acquire all the documentation and skills required for getting the license and complete the requirements of the local governing authorities.

Also, based on your services, different jobs require specific permissions or certifications. You should thoroughly check the details to avoid future issues.

General contractors without licenses generally don’t taste business success and restrict themselves from undertaking large-scale professional projects requiring proper documents’ verification.

You should restrict your services to the limits of your contractor’s license and permits to avoid breaking the laws and ensure a professional brand image in the industry. 

6. Open a Business Bank Account

Open a bank account that can help you quickly process your payments. You must provide the required business details and proof to the financial institutions to help open up the required bank account.

Maintain the business cash flow and ensure you remain on top of your finances by checking the bank statements regularly. Keep your personal and business account different to avoid misunderstanding the instability in managing your personal assets.

Small businesses should avoid dealing in cash to effectively handle the capital flow and ensure that they get tax advantages for being in complete transparency with the government.

You can get quick approval for different licenses and registrations because of having a business bank account. You can deal with suppliers and clients professionally and keep track of your expenses, profits, and other capital-related issues.

You can manage your employees’ salaries and ensure financial balance control. 

7. Get Your Business Insured

how to start an independent contractor business

Get general liability insurance that can help you bypass different business problems and mishappenings. Business insurance is important in today’s modern era, where uncertainty is rising because of the changing demands, high pressure, and rising competition.

You can cover your business assets, employees, vehicles, and other important business elements in the insurance coverage. You can also manage workers’ compensation insurance claims, client damage, business risk, and other liabilities. 

Based on your services and needs, you can apply for different types of insurance covers that can help you run smooth business operations and ensure that you achieve new business heights.

8. Start Marketing Your Business

Marketing your contractor business is critical to your new business startup. You must analyze your target market and implement professional marketing strategies to help you achieve your desired goal.

You should determine the starting cost and channel your marketing strategies based on the marketing budget.

Focus on the traditional and offline marketing strategies like creating business cards, personalized postcards, flyers, and other referral programs that can strengthen your local contractor business reach.

You can promote traditional word-of-mouth marketing that can help you attract organic traffic and increase your service sales.

You should focus on delivering excellent value to your clients and establish your brand’s credibility and authority in the industry.  

But multiple contractor business owners only use traditional marketing approaches. That’s where you must stand out from them and adapt to the new modern digital marketing era.

Adapt to the new marketing strategies and implement the top result-oriented strategies to help you achieve your desired business goals and numbers.

Here are a few leading online marketing strategies you can implement.

Website presence

You must ensure that you have a professional online presence and a quality business website that can boost your online presence. Create an intuitive and simple website to help you convert your traffic into leads and clients.

You need to create engaging website content and SEO-focused blogs. Also, ensure that the website’s speed is great to increase the domain authority and search engine rankings. 

Search engine optimization

general contracting business

SEO is the most powerful weapon you can use in the organic marketing strategy. You must ensure that you use different blog keywords to help search engine crawlers list your website higher for specific keywords.

Also, check other on-site SEO strategies that can help you increase your domain authority and attract many organic results. Focus on improving off-page SEO by attracting quality backlinks from the leading websites on the internet.

Once you can increase the quality of do-follow backlinks on your site, you can strengthen your online web presence.

Social media

Being a result-oriented business owner, you should focus on an omnichannel social media approach because of its rising popularity. You can attract new customers and convert your potential customers into your raving fans using different social media strategies for different platforms.

Connect with your potential clients using different types of quality content that can help you gain a competitive edge over others and boost your construction industry presence.

Paid ads

You can use paid ads on the web and social to increase traffic and boost your marketing efforts. You can get instant results using professional PPC ads on Google, Facebook, and LinkedIn that can help you bypass the time-consuming SEO efforts.

You must ensure that you plan your paid marketing budget wisely to avoid a costly mistake for your business.

Online listings

You can list your business on Google, Thumbtack, and other online listing platforms that can help you with the lead generation efforts and ensure that you attract more business.

Online listings are a digital alternative to a local newspaper forum that can enable you to list your business for free or for a specific fee that can increase your clientele.

You can provide detailed insights about your business that can help improve online visibility and reach. 

9. Understand the Tax Form

With the increase in marketing results, clients, lead generation, and revenue, you need to focus on your tax implications, filing, and business financial aspects.

Integrate a professional contractor management software or choose a professional financial management software to help you manage your taxes, business loans, cash flow, and other financial aspects.

You must ensure that your software helps you create professional estimates, invoices, purchase orders, and credit memos that can help you create a positive impact on your potential clients.

You can streamline your accounting and financial management to scale your contractor business with software assistance. But out of hundreds of software related to contractor financial management available in the industry, you can find it overwhelming to filter out one ideal for your business operations.

But don’t worry.

Our team of experts has finalized the best financial management software to help you manage and streamline your financial documents.


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Frequently Asked Questions
  1. How much profit can a contractor business make?

    With the rising demand in the contractor industry, you can earn great profit margins depending on your chosen industry. The average profit margins are around 20-30% after cutting out the expenses, taxes, salaries, and other miscellaneous business operational costs. You can optimize your business operations to ensure better profits with minimal expenses.

  2. What is the most successful contracting business?

    Different contracting businesses can succeed based on how well you operate your service operations. ThCTA- Remember All Your Services at Fingertips.
    InvoiceOwl stores all the data of all your services including description, rates, discounts, and taxes.

    e plumbing, HVAC, and electrician contractor businesses can help you drive the most profits because of the technical knowledge required, demand, and profit margins.

  3. How does financial management help in scaling contractor business?

    Financial management is the core of a successful business. You must ensure that you have control over your cash flow that can help you make informed business decisions and ensure that you don’t run out of funds. Financial management can help you create quality financial documents like invoices, estimates, and purchase orders that can create a solid impact and help you stand out from the rest. You can choose professional financial management software to minimize the time and effort of your processing.

  4. How to make money in contracting?

    You can market your contracting business professionally, which can help you generate quality leads that are looking for quality contracting services. You can convert them into clients that can help you increase business revenue and ensure that you can earn a decent amount of money from your contracting business. You can focus on retaining the clients that can help you build a sustainable contracting business and ensure you can outshine others in the industry.

InvoiceOwl Can Manage Your Financial Documents

InvoiceOwl is the leading contractor estimating and invoicing software that can help boost your financial operations and ensure you get central control of your funds.

You can create professional financial documents to help you manage your profits, losses, professional liability, and other important business aspects for smooth operations.

Your account payable team can automate the cross-checking of the financial documents and extract the transactions’ history within a few clicks. The smooth UI/UX can help your team quickly adapt to the new integration and boost your business financial management productivity.

Avail of the FREE trial to start your contractor business with finesse.

Author Bio
Jeel Patel
Jeel Patel

Jeel Patel is the founder of InvoiceOwl, a top-rated estimating and invoicing software that simplifies the invoicing and estimating processes for contractor businesses. Jeel holds a degree in Business Administration and Management from the University of Toronto, which has provided him with a strong foundation in business principles and practices. With understanding of the challenges faced by contractors, he conducted extensive research and developed a tool to streamline the invoicing and estimating processes for contractors. Read More

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