Starting a Contracting Business: Critical Considerations 

Have you always dreamed of being a contractor, building beautiful homes, and making a great deal of money? If the answer is yes, then you may be perfectly suited to starting your very own contracting company. It’s not as hard as you might think, provided you make a solid plan and do your market research. The construction industry is thriving and there’s a huge demand for quality contractors.  

Here, Clean Power USA walks you through the most important ins and outs of launching a contracting business: 

Is starting a contracting business a good idea? 

First, you should double-check whether you’re ready to start a contracting business. The construction market in the US is currently at $1.9 trillion in 2021, according to a GlobalData report, and is expected to achieve an AAGR of more than 3 percent during 2023-2026. What that means, essentially, is that demand for construction and related services will likely be sky-high and starting a business in the niche is financially a sound decision. 

You still need to satisfy some prerequisites before launching a business: 

  • A specialization – What kind of contractor would you like to be? Some examples are commercial, general, or specialized ones (say roofing or HVAC). 
  • Investment – Are you prepared to foot the costs involved with launching a construction business? There will be equipment costs, material costs, recruitment, payroll, operational expenses, and more. It will likely take several thousand dollars to launch a company. 
  • Risks – Being a business owner comes with risks. Are you mentally and emotionally prepared for the uncertainty of doing business? 

Do I need a formal education to be a contractor? 

You don’t need a formal education to be a contractor. Many contractors find practical work experience and knowledge to be a worthy substitute for a degree. However, having a degree in a construction-related field like construction technology or engineering may help you make sense of the technical aspects of the job. A business-related degree will help with running your business. Finally, you may want to look into vocational programs that can equip you with practical skills contractors find useful. 

Do I need a license to be a contractor?

Yes, it’s mandatory to have a license to be a contractor – or you risk attracting fines and penalties, not to mention being unable to bid on certain projects. Every state and local government body has its own licensing perquisites (like years of experience). Depending on the nature of your business, you will need either a general contractor license or a specialty one. 

How do I start a contractor business? 

Starting a construction business is just like any other business. Get your legal ducks in a row (registration, EIN, and more), and then follow these simple steps: 

  1. Make a business plan 

Your business plan helps you nail down the specifics of doing business. It covers critical aspects every business needs to think about, from market research and pricing to customer relationship management and business goals. A solid business plan will give you the vision you need to bring your construction business idea to life. 

  1. Choose an advantageous business structure

 Having a business structure can be advantageous to your business, with every structure conferring different benefits. You can compare C Corp vs. S Corp structures, for instance, and then pick the one best suited to you.  S corps are usually suitable for small businesses, as they offer pass-through taxation, self-employment tax savings, and the ability to claim losses as a tax deduction. C corps offer different benefits – the option to hold multiple stocks, the ability to have foreign stakeholders, and fewer growth limit restrictions – and are typically suitable for larger companies. Filing the incorporation paperwork yourself or using a formation service is much cheaper than paying a lawyer.  

  1. Recruit your team 

You will need a reliable crew to work with. Depending on the nature of your work, you may need all sorts of people on your team, ranging from carpenters and metalworkers to architects and engineers. You will also need to think about non-hands-on business functions like administration, bookkeeping, and marketing. Small contracting companies have a core team of skilled contractors and typically outsource tasks on an as-needed basis.  

  1. Market your business

Marketing will help you find work consistently as well as raise your profile in the market. You can begin by creating your own brand, which will involve defining your values and your goals, and coming up with a brand identity (logos, tagline, and more). Next, make a website and create social media profiles. Finally, spread the word about your business through targeted marketing campaigns (PPC, content marketing, email, offline marketing, and more). 

  1. Use software to get more work done 

Technology can make your life easier and help you save money. For instance, you can stay in better control of your finances by using bookkeeping and invoicing solutions. You can use timekeeping tools to track your team’s work productivity. Finally, you can automate some marketing and customer engagement functions with customer relationship management (CRM) software. The Total Entrepreneurs lists 10 apps every small business needs to try. 


It takes time for any business to find its feet. Make sure you have enough to cover a few months of operational expenses (6 months) and focus on achieving your short-term and long-term goals. Determination, organizational skills, and business savvy will help you become successful – and you can acquire all three on the job if you have to. 

Clean Power USA offers solar real estate, development opportunities, and access to investment funds. Get in touch and help save the planet! 

Image via Unsplash