Today we will talk about how to start your own construction business correctly and what pitfalls there may be in this area. The advantage of this service sector is the constantly growing demand. Just imagine, every day potential clients are looking for their contractor to carry out repair work, they are eager to build their own cozy house or install a fence near an already finished house. Some representatives of the stronger sex take on this work, but not every man is able to install a double-glazed window, replace a pipe, or even drive a shelf into the wall. And, when a person understands his helplessness in the field of construction, our task will be to provide the client with all the services he desires. You can’t refuse a person bringing money into your hands, but you shouldn’t think that opening a construction company is an easy task and you’ll already have huge profits in a couple of days. Any business is hard work and now I will explain why.
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First of all, we need to open a company and for this we select the type of registration. The easiest way is to register a company as a legal entity, that is, a limited liability company. To do this, you need to come up with a name for the company, choose its location, create an authorized capital and founders of the company. Let's look at these points in a little more detail. The name of the company should be unique and easily recognizable - if you slightly change the name of a competitor, the situation will turn out to be ugly and clients will most likely refuse your services. The location of the company implies the city in which your company will operate. Authorized capital is the money that the founders invested in the company, that is, the start-up capital that the company needs for its initial functioning.
Let's summarize the package of documents required for registering a company: copies of passports of the company's founders, information about the location of the company and the main type of activity, as well as information about the authorized capital and the method of its formation. You can register yourself, or you can pay a special office and it will do everything itself. The asking price is 3,000 rubles.
You should not think that if you open a construction company, you will be able to build and repair everything at once. Construction is divided into three types - industrial, civil and road, and for each of these types you need to obtain a separate permit, have special equipment and specialists. You shouldn’t immediately rush into a huge piece of work; you won’t be able to handle it anyway; it’s better to choose the simplest and most permanent method of repair work - civil engineering. This branch of work includes the renovation of residential buildings, construction of houses, garages, and saunas. It is worth noting that in the civil construction market every year the number of small firms that do not live up to the year of their work increases. We won't become like that, right?
You can’t just come to a person and start building a house for him; for any type of construction work you need to have a permit. At the beginning of our work, we need to obtain a building permit and a license to design structures. This package of documents does not incur large costs. Also, many are sure that to open a company you need to have SRO (Self-Regulatory Organization) status, but if we are not going to build private houses (cottages no more than 3 floors), the area of which will not exceed 1500 sq.m., then we need this no status needed.
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I would like to say right away that not a single small construction company can provide itself with all the equipment for repairs or construction. The main problem is the high price of specialized equipment, without which the work cannot be completed. The average price of all machinery and equipment for a construction company is 20 thousand dollars and this is the minimum number of all units for the work of one team of workers. If the budget has already been spent, and the company still needs a concrete mixer or other equipment, then you can use the services of leasing companies. Leasing is, in fact, renting something. Sometimes it will be cheaper to rent an excavator than to buy one for one-time use. Let's add 20 thousand dollars to the list of expenses - to buy a car for a team of workers and all the equipment.
Our company is small, so it is not necessary to open a large office and spend a lot of money on rent. Everything a start-up construction company needs can fit in two rooms. One room will be used as a warehouse for equipment, in the second you need to put a table, a computer, a telephone and a girl with a sweet voice. She will be the one who will answer calls, record data and create a client base.
It is worth starting with one work team of five people. In a team, four workers are equal in obligations and rights and perform repair work. The average price for a builder is 40 thousand rubles per month, and this amount should be calculated. The fifth person in the team will be the foreman, who is responsible for the quality of the work performed and drawing up estimates. The salary is 60 thousand rubles. In the future, when the company grows, you need to hire a professional estimator.
As a result, according to the personnel, the following picture emerges: the secretary’s salary is 20 thousand rubles, 4 builders are 40 thousand each and a foreman. The total salary per month is 240 thousand rubles.
Despite the economic crisis, approximately 20% of the country's total population spends money on repair or construction work per year, so it will not be difficult to create a client base. First of all, you should use word of mouth - tell your friends and acquaintances about opening a construction company. You will be able to get a couple of orders, because in every person’s home something is not nailed as it should be or the door needs to be repaired. With this we will ensure an influx of small orders, but we need to grow to greater heights. It is worth advertising your company in places where construction materials are sold - a person comes for a new washbasin and notices an advertisement that they can supply a washbasin very well and of high quality for a small fee.
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Any business is a series of problems and failures that need to be overcome in order to carve out a place in the sun for yourself. At first it will be difficult to find a normal place for a warehouse, professional workers and a foreman, there will be difficulties with the supply of materials and orders. Try to do everything right and don’t be ashamed of small orders, because although they are small, they are money for the company. Paying off the initial paperwork, equipment purchase, rent and salary will not be easy. The equipment will cost 680 thousand rubles, registration of the company will cost another ten thousand. The functioning of the company will take 240 thousand for salaries and 8 for renting premises, and the same amount for gasoline for a working car. Don't forget about advertising. If you have a starting capital of 940 thousand rubles, you can safely open a construction company, but only on the condition that you pay back the salaries of your employees in the first month.
Creating your own company in the construction industry is one of the most profitable ways to earn money today, since people tend to invest large sums of money in renovating apartments, building private houses, and improving their own living conditions.
In the Russian Federation, construction companies of various sizes and turnover are widespread and in demand, which is justified by the fact that modern cities and urban agglomerations are in constant progress and construction. However, there is high competition in this area of business, which significantly affects the activities of many young firms and concerns, so opening your own construction company must be thought through down to the smallest detail, since this is a matter of not only success, but also the survival of the enterprise. What you need and how to open a construction company is further in the article.
First you need to decide on the specific field of activity of the construction company. Enterprises with a narrow specialization will be less in demand on the market than enterprises providing a wide range of services. However, activities aimed at only one area of construction already require considerable financial resources, and several will require a significant amount of material investments, a large staff of workers and a variety of expensive equipment.
The construction industry is characterized by the following types of activities that determine the company’s specialization:
One of the stages of creating a construction company is its legalization, which involves drawing up the relevant papers. A construction company can be registered as an Individual Entrepreneur (IP) or as a Limited Liability Company (LLC). The organizational and legal form depends on what kind of construction - small or large - the company intends to engage in. To register as an individual entrepreneur, you must provide a copy of your passport, which will be certified by a notary, and for an LLC, provide the following documents to the registration chamber:
Also, the construction company must be registered with the tax authorities and purchase stamp forms and seals, which must be registered and filled out by a notary, after which the state fee must be paid and a bank account opened to transfer the authorized capital of the construction organization.
The choice of a specific SRO (self-regulatory organization) depends on the type of construction company itself; a complete list of SROs can be found in the Unified Register of Self-Regulatory Organizations of Builders. After the final selection of an SRO, you must contact its representative, who will inform the company about the required package of documents and application form. Within 30 days, the SRO makes a decision on the viability of the company in the construction services market, while specific criteria are developed by the organization itself (for example, the presence of higher education in the specialty of employees, organizational experience). Joining an SRO involves paying significant fees and contributions, which not every start-up company can afford.
A construction company can do without an SRO in cases where it intends to engage exclusively in repair and finishing work or installation of lightweight fencing structures (doors and windows). SRO is not required for companies that build:
If the company’s start-up capital allows for large expenses, then it is better to purchase the premises immediately rather than rent it. However, if the company does not have significant capital, then renting is perfect. You can rent a company yourself: find it through an advertisement, on the Internet, ask friends, inspect the premises in a business center, or through a special intermediary company.
Personnel should be selected from personnel with a good track record and experience, since the presence of qualified workers at the very beginning of activity creates the reputation of the entire construction company. You can find conscientious performers among friends, students of relevant higher educational institutions, on the Internet, and in recruitment agencies.
Within the company, it is also possible to maintain a staff of employees who ensure industrial safety and personnel selection using the files of the Ministry of Internal Affairs, identifying offenses and criminal records.
For an additional fee, a construction company can hire a professional PR employee, but with some activity and a desire to save money, you can do everything yourself. There are the following effective measures for advertising a construction company:
Even a construction company with highly qualified employees and an excellent office can fail if it does not have a client base. Among the ways to attract clients are the following:
A new entrepreneur has to overcome a number of difficulties:
When starting their own construction business, the founders need to have solid funds, the so-called “start-up” capital; you can also find an investor (sponsor) who will be interested in a clear and well-written business plan. On average, investments in a construction business can amount to:
The construction business is very profitable from the point of view of making a profit, so ultimately the company’s profits will recoup and increase all the financial investments of the founders. The approximate profitability in the construction industry is about 50-70%.
The construction process in any locality does not stop for a minute. Some companies build multi-storey buildings and cottages, others build shopping centers and factory workshops, while others are engaged in the renovation and finishing of apartments. Therefore, many entrepreneurs think about the possible prospects for such activities and the income that accompanies them.
But where should a beginner start a construction business? To answer this question, you need to consider all stages of creating an enterprise, including a preliminary assessment of demand and competitor activity, searching for a free niche, recruiting personnel and purchasing equipment. But the most important thing is to understand the structure of the industry, the ways construction companies interact, the principles of division of labor and responsibility, as well as the mechanisms of legislative regulation. Without this knowledge, a novice entrepreneur risks repeating the mistakes of his predecessors and even losing money invested in the business.
The number of possible lines of business in the construction industry is in the dozens; even a novice entrepreneur will be able to find a suitable option among this variety, based on personal preferences. The scale of the projects being implemented in this case is determined by the volume of capital investments in the enterprise:
An entrepreneur creating a new construction business must first determine the priority areas of the enterprise's activities. Of course, it is somewhat more difficult for companies with a narrow specialization to find customers, but attempts to excessively expand the range of services without proper experience will lead to unjustified expenditure of funds and resources. Therefore, it would be more appropriate to focus efforts on one of the main types of construction business, including:
How to start a construction business from scratch if the amount of start-up capital is limited? In this case, the most affordable direction may be to carry out repair and finishing work in apartments and commercial premises - an enterprise with such specialization does not need heavy construction equipment, a separate office, or a large staff. Business ideas in the construction industry with minimal investment include:
Of course, the construction business in 2018 is also characterized by certain disadvantages, which sometimes significantly limit the freedom of action of the company owner:
In the construction business, the path from scratch begins with the registration of an enterprise and the preparation of various permits. This process includes:
The process of registering a new enterprise is standard: before opening a construction business from scratch, you need to choose an organizational and legal form, types of activities according to OKVED, and a taxation system. Highly specialized companies and entrepreneurs engaged in repair and finishing work may give preference to individual entrepreneurs using a simplified taxation system at a rate of 6% or 15%. Expenses accompanying the registration of an individual entrepreneur - payment of a state fee in the amount of 800 rubles.
For larger-scale activities, an LLC is suitable: of course, the legislation imposes increased requirements on this legal form when preparing documentation and submitting reports, however, such inconveniences are compensated by a simplified procedure for obtaining various permits and licenses, the high status of the enterprise, as well as the possibility of attracting investors as co-owners of the business. The expenses accompanying the registration of an LLC are the payment of a state duty of 4,000 rubles and the formation of an authorized capital (10 thousand rubles).
To date, work related to design and construction is not an activity subject to mandatory licensing. However, an entrepreneur learning how to open a construction business may want to pay attention to the existence of a system of permits to carry out critical or dangerous work, issued by self-regulatory organizations.
SRO is a community of experts in the field of construction, working professionals and owners of existing enterprises, whose professional training allows them to determine which of the newcomers has sufficient qualifications for such activities. To obtain admission, you need to find a suitable SRO, contact its representative and give him:
Joining an SRO is a rather expensive procedure for an entrepreneur starting a construction business from scratch.
It should be noted that not all construction work requires obtaining SRO approval. For example, the official list does not include:
To open a construction company from scratch, a business plan does not have to be developed taking into account the need to rent an office: in many cases this is not required, since all negotiations and work are carried out on the customer’s premises. If the scale of the enterprise requires its own premises, then a suitable option can be found on the outskirts of the city or in an industrial zone.
To accommodate administrative personnel (director, accountant, estimator), an area of 20–25 m² is sufficient, but another 150–180 thousand rubles will have to be invested in the purchase of office equipment:
The requirements for warehouse space will be determined by the size of the enterprise’s material and technical base: if a regular garage is suitable for storing hand-held power tools, then for heavy equipment and building materials you will have to rent hangars or specially equipped areas.
Due to the high cost of special equipment, few large companies can afford to maintain a full fleet of machines. Therefore, the practice of renting bulldozers, excavators and cranes has become widespread in the construction industry. When considering how to develop a construction business, you can envisage their gradual acquisition in the future: in order to recoup such investments, the equipment will have to be used daily. The minimum list of heavy equipment includes:
However, you can start a construction business with small investments - it’s enough to have at your disposal:
Equipping the brigade will cost 450–500 thousand rubles. In addition, to transport workers, equipment and construction materials, it is advisable to have your own vehicle - a minibus or a small truck.
In the construction business of 2018, many types of work that do not correspond to the profile of the enterprise are subcontracted. For example, when constructing a private house, drilling a well or connecting the building to utility networks is easier and more profitable to entrust to a third-party contractor. Thus, it is enough for a small construction company to have on its staff:
Both piecework and fixed wage systems are used for working personnel. The staffing table of the enterprise in the second case may look like this:
The amount of initial investment in the construction business is to a certain extent determined by the list of necessary equipment, which, in turn, depends on the chosen field of activity. The minimum level of investment is about half a million rubles: with such capital you can engage in repair and finishing work or low-rise construction. It is impossible to determine the maximum limit: for example, the value of the assets of the PIK company (the largest Russian developer) is 117 billion rubles. Costs of starting a small business may include:
The main part of the company's current expenses is remuneration of employees. Therefore, at the initial stage, only the most necessary specialists should be hired, and last but not least, personnel not directly related to the production process.
To determine the approximate amount of income, you should take into account the average market cost of construction work. For example, a company specializing in apartment renovation may set the following rates:
In order for an entrepreneur’s net profit to amount to 100 thousand rubles, at least 130 m² of residential premises must be repaired within a month, which is equivalent to two or three medium-sized apartments: with parallel work on several objects, this is quite possible.
When studying how to create a construction business from scratch, where to start preparing for the launch of an enterprise, you should understand that the main factor determining the success of a company is the presence of a client base. The most effective methods of attracting customers are:
Many existing companies have been in the construction industry for decades, making it incredibly difficult for a newcomer to break into this market. Such problems are especially relevant in large cities, where the winners of tenders and executors of orders are usually known in advance. In order to find your consumer in such a competitive environment, you should:
Being in the construction business helps not only to save, but also to increase money. Depending on the amount of money the founder has, the direction in construction that the company will develop also depends.
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At relatively low costs, a small company can carry out finishing work without obtaining SRO approval. If funds allow, you can carry out construction work on the construction of large objects (residential buildings and structures).
In order to start your own business, it is not enough to simply say to yourself: “I want to open a company.” The work of any organization begins with the registration process with the tax office.
If you decide to register a limited liability company, you will need the following documents:
To register as an individual entrepreneur, a copy of your passport certified by a notary is sufficient. You can learn how to properly open a construction company from any law firm that provides assistance in registering businesses.
Most of the work performed by a construction organization requires obtaining permission from the SRO - Self-Regulatory Organization of Builders.
The choice of SRO is made by each company independently. The list of such associations is published in the Unified Register of Self-Regulatory Organizations of Builders. This registry can be easily found on the Internet.
Having chosen an SRO, you need to contact its representative in your region, who will send by e-mail a list of required documents and an application form.
To join the SRO, the following documents are required:
Without joining a self-regulatory organization of builders (SRO), you can carry out the following types of activities:
A construction company can operate in three main areas:
Each line of activity means that the company can engage not only in construction work, but also in the dismantling of buildings and structures, as well as in preparing the construction site for work.
In addition to the main activities, the company can master a number of additional ones:
The construction services market is quite developed, so all niches are occupied. In order to successfully engage in a certain type of activity, it is necessary to analyze the positions of competitors. The first option for entering the market is based on this.
The tactic is this: since the market for construction services is vast, it is necessary to compete with existing companies by offering the strongest positions of your enterprise.
For example, when performing a certain type of work (improving the local area), construction waste is removed by the company free of charge.
The second option to gain a strong foothold in the market is to offer consumers materials or technologies that are not available on the market or are poorly distributed. This includes the use of new materials in construction. For example, low-rise construction from twin blocks is carried out by few companies, since this is a fairly heavy material. Meanwhile, twin blocks are environmentally friendly building materials.
These types of activities can be considered one of the highest paid. This means that existing enterprises in this segment are unlikely to want to share a tasty morsel with a newcomer.
Typically, large construction projects are supervised by government services. They most often hand out orders for such work.
If you have set your sights on this industry, you will benefit from well-established connections in these authorities and the impressive amount that will be required to complete the work. Therefore, these options are not very suitable for starting.
Opening a construction company in a metropolis is a very attractive, but also troublesome prospect. Firstly, the competition is huge and it will be very difficult to make yourself known. Secondly, starting a business will require an impressive amount. But if you manage to gain a foothold here, then the profit can be quite high.
Small towns do not promise such earnings, but they can provide stable orders. You can start producing your own products: this will reduce the cost of purchasing building materials. The most profitable type of production is the production of scaffolding, as well as blocks or log cabins.
As an option, you can try to start a business in a suburb or small town, gradually moving closer to the metropolis: notify potential clients, look for orders in the capital.
Apartment renovation and finishing are the most popular services in construction. It makes sense to try to act in this direction. However, the abundance of companies performing this type of work will not allow you to immediately become a noticeable figure. This takes time.
You can occupy a niche in the construction market by reducing prices for services, but within reasonable limits. As long as the proposed prices allow covering the company's expenses, there is no risk of ruin for the company.
At the initial stage of activity, it is not necessary to recruit ordinary workers; construction teams can be hired under a contract.
This option will allow you to save on payments to employees - contractors are paid upon completion of work, and not monthly, as with full-time employees.
To open a construction company, you need to clearly understand how much money you need to invest in the enterprise. The main items of the cost part are the costs of registering an enterprise, obtaining SRO approval, rental costs, logistics and wages.
To operate the company requires the following staff:
If your type of activity requires mandatory membership in an SRO, you will have to pay the following amounts:
Costs for creating the material and technical base:
Tool type | Unit | Price | Qty | Total (rubles) |
Hammer drill Skil 1755 AA | PC. | 3000 | 1 | 3000 |
Screwdriver Interskol Sh-700 ER | PC. | 2000 | 1 | 2000 |
Laser level | PC. | 1400 | 1 | 1400 |
Jigsaw Casals | PC. | 1200 | 1 | 1200 |
STERN Toolbox | PC. | 1200 | 2 | 2400 |
Manual tile cutter | PC. | 1800 | 1 | 1800 |
Drill BE 600 R | PC. | 2900 | 1 | 2900 |
Hammer | PC. | 200 | 5 | 1000 |
Specialist. cloth | PC. | 1500 | 10 | 15000 |
Vehicle (cargo Gazelle) | PC. | 150000 | 1 | 150000 |
Computer | PC. | 16000 | 2 | 32000 |
MFP with phone | PC. | 9000 | 1 | 9000 |
Total | 220700 |
Thus, the costs of opening a construction company are:
As for the remaining costs associated with opening a construction company, these include the cost of renting equipment (only if you do not have your own material and technical base).
By the way, renting equipment is much more profitable for a company that is just starting out. This allows you to save money for the subsequent purchase of construction equipment on lease or on credit. We are talking about large equipment - trucks, construction cranes, bulldozers.
The normal rate of return in construction is 10–15%. This indicates that the planned, estimated and actual levels of the enterprise’s work are built correctly.
Currently, among construction organizations, the rate of profitability has noticeably decreased and averages 7–9%. The decrease in profitability occurs due to the fact that the amount of overhead costs does not change, at the same time, the cost of building materials and personnel costs are growing every year.
All these factors influence the timing of work completion. In order to return the invested funds, construction companies are forced to reduce prices for their services and offer clients more favorable conditions. Accordingly, cash flow and profit margins decrease and, as a result, business profitability decreases.
For the successful work of a construction organization, it is necessary to draw up an approximate list of upcoming expenses. You can order a ready-made business plan for the development of a company or take an example of a business plan on the Internet as a basis.
To develop your own business, especially at first, special attention should be paid to promoting the brand: you should inform about the company and its capabilities. Advertising events carried out competently always bear fruit.
The main system that allows construction organizations to navigate the services market is marketing. With its help, construction companies have the opportunity to regulate the structure of the enterprise, identify possible risks, improve external and internal communications, which ultimately helps to optimize the work of the construction organization.
The main areas of marketing in construction are:
The Internet plays an important role in developing your own business. It is necessary to create your own website at the stage of obtaining SRO approval. The page must indicate the registration details of the organization; a landline telephone number and a list of contact persons must be prominently displayed. Welcome to the customer reviews page.
Today, an increasing number of customers are looking for contractors (construction organizations) on the Internet.
So the costs of creating a website can pay off quite quickly.
In order to minimize the receipt of all kinds of losses, it is necessary to remember the risks that arise during the activities of a construction company.
The main risks include:
In addition to the main ones, there are a number of indirect risks:
All these risks must be constantly monitored to prevent possible losses. That is why at the stage of formation of a construction company it is necessary to create a marketing department.
The easiest way to get clients is to post advertisements about your services on free boards on the Internet. In addition, it is necessary to advertise construction services in 2-3 of the most popular print media in your area (region). It’s a good idea to send out offers from your company via the Internet.
Many clients like it when, in addition to the ordered services, they receive bonuses.
For example, after finishing work is completed, the premises are cleaned by a construction company. This serves as the best advertising, since most potential clients trust customer recommendations.
Construction companies that have been operating in this field for many years have already adapted to both the variability of external conditions and internal changes. Beginners will have to “get the hang of things” on their own and earn the trust of clients. The personal qualities of the leader play an important role in this. A future construction magnate must have a strong character, steely self-control, and be stress-resistant.
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How to build correctly, find contracts and survive even when the industry is overcrowded with competitors
The idea of organizing a construction company as a large-scale activity with hundreds of permanent employees was inherited by Russians from Soviet trusts. In fact, the success of this enterprise depends on two factors: high-quality personnel and competent selection of clients.
A company that expects to enter the market and compete on equal terms with successful competitors must offer the widest possible range of services, from designing a facility to its construction and finishing.
The tasks of a multidisciplinary organization include:
Starting activities in a specific area of the region will allow you to compete with well-promoted rivals in knowledge of the area, construction conditions, and features of the payback of projects.
A brief plan on how to organize a construction company in four stages:
The business plan for a construction company presented below reveals the above points in detail.
You can purchase an extended business plan for a construction company for only 490 rubles. Find out more
A peculiarity of the activities of a construction company with the transfer of a number of works to third parties is the minimum of initial costs. Monthly expenses are associated with paying staff, office rent, and utilities.
Work is organized simultaneously in three directions:
Can act as partners companies selling building materials, real estate agencies, municipal administrations offering optimal conditions for the development of small businesses and opening transparent tenders for construction and repair services.
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The office for a new construction company is a meeting place with the client.
Basic requirements for choosing premises: accessible location, minimal area, ability to store reference information on completed projects, including on paper, impeccable design illustrating the company’s achievements.
A construction company needs cooperation with specialists in the field of:
Concluding contracts on an ongoing basis is possible with one representative in each area, with the exception of the last: it is advisable to outsource legal support, accounting and other related work to a partner organization.
Permanent employees supervise their areas and are responsible for recruiting personnel for specific projects. During the period of lack of orders, the staff creates standard designs for free sale.
Staff working remotely significantly saves the company's budget
The average cost for paying permanent employees in Russia will be about 50 thousand rubles per month. Employees hired to implement specific projects receive remuneration in accordance with the terms of the contract. This principle of organizing the company’s activities will make it possible to strictly correlate the number of services provided and funds paid to personnel.