7 Steps to Starting a Successful General Contracting Business

Understanding the General Contracting Industry

Construction contractor

The general contracting industry is a vital component of the construction industry. General contractors are professionals who manage the construction or renovation of a project from start to finish. The project may be a small residential renovation or a large commercial building. The general contracting industry impacts every aspect of the construction industry, from planning and design to the final building construction. General contractors take on the role of project manager, overseeing the contracting, legal, and financial aspects of construction projects.

In understanding the general contracting industry, it is essential to know that projects can vary significantly in size, scope, and complexity. Some projects may involve only one or two trades, while others may require the coordination of many different trades to complete the project. The size and complexity of a project determine the level of management expertise required by the general contractor.

Another critical aspect to know is that the industry continues to evolve as technology advances. Contractors are using innovative, tech-driven solutions to optimize construction processes and enhance project outcomes. Building information modeling (BIM), project management software, and virtual reality simulations are tools that help contractors streamline project management and improve communication among stakeholders.

General contractors are also subject to regulations that vary based on a project’s location. They need to comply with federal, state, and local laws and regulations governing construction sites, labor, and safety. For instance, some states regulate the amount of liability insurance that contractors must carry, while others require contractors to obtain a license before being authorized to work on a project.

The general contracting industry is competitive, and contractors should have a good understanding of construction costs to win projects. Knowledge of construction cost estimation and the ability to accurately predict expenses is vital to remain competitive and profitable in the industry.

In summary, understanding the general contracting industry requires an understanding of the roles and responsibilities of general contractors, the size and complexity of projects, the impact of technological advancements, regulatory issues, and competitive pressures. By understanding these key components of the general contracting industry, aspiring contractors are better equipped to succeed in the field.

Creating Your Business Plan

Creating Your Business Plan

As a general contractor, the first thing you need to do to start your business is to create a solid business plan. A business plan is what outlines and describes your business goals, objectives, strategies, and all other essential information about your construction business. More importantly, it is what provides the blueprint for your success in the industry.

Your business plan should contain several important sections, including:

Executive Summary

The executive summary is the first section of your business plan. This is where you introduce your construction business and summarize all the essential points that will be covered in the entire document. Your executive summary should be brief and concise, but it should also be engaging and compelling enough to entice potential investors or lenders to read the rest of your business plan.

Company Description

The company description is where you provide more detailed information about your general contracting business. This section should include basic details such as your business name, location, and legal structure, as well as more comprehensive information like your mission statement, values, and unique selling proposition.

Market Analysis

The next section of your business plan should be dedicated to market analysis. This is where you discuss your competition, analyze the construction industry in your area, describe your target market, and identify any potential obstacles or challenges that you may face. This section is critical, as it will help you determine how you can differentiate your business from others and what strategies you can implement to become more competitive.

Services and Products

In this section, you should outline the services and products that you will offer as a general contractor. Be sure to describe each service or product in detail and explain how they will benefit your target customers. You can also include information about pricing, packaging, and any additional features that you may provide.

Marketing and Sales Strategies

Your marketing and sales strategies are essential to the success of your general contracting business. This section is where you explain how you plan to reach and attract customers and convert leads into paying customers. You can describe your marketing tactics, such as online and offline advertising, social media marketing, SEO, email marketing, or direct mail campaigns. You should also discuss your sales process and how you plan to close deals and retain customers.

Financial Projections

Finally, your business plan should include financial projections that estimate your company’s future growth and profitability. Financial projections should include estimates of your revenue, expenses, profits, and cash flow for the next three to five years. You can also include different financial scenarios and assumptions, such as best-case, worst-case, and most likely scenarios, and explain how your company will respond to different market conditions.

Creating a solid business plan is the first step towards starting a successful general contracting business. Take the time to research and analyze your industry, develop a comprehensive marketing and sales plan, and project your company’s financial performance. Once you have a well-crafted business plan, you can use it to secure funding, attract investors, and guide your business decisions in the future.

Legal Requirements and Regulations

Legal Requirements and Regulations

If you are thinking about starting a general contracting business, you need to ensure you comply with all legal requirements and regulations. You need to be aware of the specific laws that govern working in the construction industry. You will need to obtain permits and licenses and ensure compliance with state laws and regulations.

Firstly, you will need to register and establish your business legally. You may register as a sole proprietor, partnership, Limited Liability Company (LLC), or corporation. Each business registration entity comes with its own set of legal, financial, and tax obligations. Make sure you do thorough research on the various business entity options and choose the one that suits your needs the most.

Secondly, ensure you meet the bonding and insurance requirements of your state. Bonding provides financial protection to a client if your business fails to complete a project. Insurance protects your business in case of lawsuits or accidents on the job site. Some state regulations mandate contractors carry a certain amount of liability insurance.

Thirdly, obtain the necessary licensing and permits. General contractors typically require a state-issued license to work in the construction industry. Licensing requirements vary by state, so check with your local licensing board to determine the specific requirements in your state.

In addition, you must also comply with zoning laws and obtain the necessary permits from local authorities. Ensure you obtain building permits before starting any construction project. Building permits provide authorization to begin a construction project and ensure the project complies with zoning, safety, and other regulations.

Fourthly, ensure your business complies with Occupational Safety and Health Administration (OSHA) regulations. OSHA sets guidelines and standards for workplace safety in construction. Ensure you provide workers with a safe and healthy work environment. Familiarize yourself with OSHA regulations to avoid unpleasant surprises while operating your business.

Fifthly, ensure compliance with tax laws. General contractors are required to file taxes and comply with tax laws. Register with the Internal Revenue Service (IRS) and obtain an appropriate tax identification number. Determine whether you need to collect sales taxes for your services. Seek guidance from a certified public accountant to understand tax requirements for your specific business entity.

Finally, familiarize yourself with labor laws. As a general contractor, you will likely have employees or subcontractors. Ensure you comply with labor laws, including minimum wage and overtime requirements, employee benefits, and worker’s compensation. Failure to comply with labor laws can result in penalties, lawsuits, and the loss of your contracting license.

Starting a general contracting business requires diligent attention to the legal requirements and regulations governing the industry. Ensure your business complies with all these requirements to operate legally and avoid penalties and legal troubles that may arise if you do not maintain compliance.

Securing Funds and Financing Options


Starting a general contracting business requires a significant amount of capital investment. Without proper financing, you won’t be able to finance your essential expenses, such as purchasing equipment, hiring employees, and marketing your business. It’s important to explore your funding options available to ensure that you’re choosing the most suitable option for your business’s needs. Here are some ways you can secure funds and financing options for your general contracting business:

Personal Savings


If you have substantial savings that can fund your business’s initial costs, then it’s worth considering using them. Using your savings is an excellent way to avoid potential financial stress and ensure that your business is financially stable. However, keep in mind that investing your savings in your business means you’re putting your personal finances at risk. Make sure you carefully evaluate your business plan and future expenses before making this decision.

Bank Loans

bank loans

One of the most common ways general contractors start their businesses is through bank loans. Banks offer various loan options that can help business owners acquire capital funding to start their business or finance their operational expenses. Before applying for a bank loan, make sure you have a solid business plan, good credit history, and collateral. These factors play a crucial role in getting your loan approved. It’s also worth exploring different bank loans and interest rates to make sure you choose the most suitable option for your business’s needs.



If you don’t have enough savings or don’t qualify for a bank loan, another option is to seek investors. Investors are individuals or companies that invests money in your general contracting business in exchange for owning a percentage of your company. Typically, this type of financing is ideal for businesses with significant growth potential. However, finding the right investors can be challenging. It’s important to create a detailed business plan, have realistic revenue and growth projections, and have a solid marketing and sales strategy. Make sure you do your research and explore different investors’ options to identify the best fit for your business.

Credit Cards

credit cards

In addition to bank loans, credit cards are also an option for financing your general contracting business. Credit cards are easy to obtain and can be used to finance expenses such as equipment, supplies, and even employees. However, be cautious when using credit cards as the interest rates are usually high. It’s worth exploring different credit card options and choosing the one with the lowest interest rates. Additionally, make sure to pay your bills on time to avoid accumulating debt and negatively impacting your credit history.



Crowdfunding is becoming an increasingly popular option for financing startups and businesses. Crowdfunding involves raising small amounts of money from a large group of people through an online platform. In exchange, you offer rewards, equity, or early access to your product or service. Crowdfunding is an excellent way to access capital without going into debt or giving away ownership of your business. However, it requires a compelling business idea, excellent marketing skills, and a strong social media presence. It’s essential to identify the right crowdfunding platform, create a detailed campaign, and provide frequent updates to your supporters.

Securing funds and financing options is crucial for starting your general contracting business. Each financing option has its advantages and disadvantages, so it’s important to thoroughly evaluate each option and choose the option that works best for your business’s specific needs. With proper financing, you can start your business and build it to reach its full potential.

Building Your Reputation and Clientele

Reputation And Clientele

Starting a new general contracting business can be challenging, especially when it comes to building your reputation and clientele. In this section, we will take a look at some tips on how to build your business reputation and attract clients.

1. Be Professional

Professionalism should be the core of your business. From the way you dress to the way you communicate with clients, it should reflect your professionalism. Your actions and behavior will pave the way for your business reputation, so it is important to always be on your best behavior.

2. Connect with Other Contractors

Building relations with other contractors can be an excellent way to gain new clients. When they are not available, they could refer you to clients. Therefore, it is advisable to keep good relations with other contractors within the construction industry. Attend industry events and engage with other contractors on social media.

3. Create a Strong Online Presence

In the era of digital technology, an online presence is a must for every business, including general contracting. A strong online presence can attract new clients and help you build trust. Start by creating a professional website for your business and being active on social media platforms. Responding to clients’ reviews and feedback online is also crucial.

4. Word of Mouth

Word of mouth is still one of the most powerful marketing tools. Encourage satisfied clients to refer your services to their friends and family members. This will help in building your reputation and attracting more clients. Therefore, it is essential to always deliver excellent services that leave your clients satisfied.

5. Have a Portfolio


A portfolio is an essential tool for every general contractor. It showcases your previous projects and proves that you have the experience and skills to handle any project. Therefore, when starting your business, make sure to document all your projects and create an impressive portfolio. Always present your portfolio to clients when bidding on projects. If possible, include before-and-after photos, as these give an excellent idea of how you can remodel or renovate an area.


Building your reputation and clientele is no easy task, but with consistency, hard work, and professionalism, you will get there. Always offer excellent services and go above and beyond for your clients. Never compromise on quality, as it is the foundation of your business reputation. Finally, keep networking, be active online, and showcase your work through an impressive portfolio. By following these tips, you will surely attract more clients and create a reliable business reputation.

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