How to Start a Construction Company Without Seed Money? [Article for Entrepreneurs]

Victoria

7 years ago

How to run a construction company
About terms and prices
How to build a house
About advertising
How to create a website for business
Conclusion

Got a great business idea and you want to start the business with no seed money? You’re not alone. “I want to run a construction company, but I do not know where to start”, - this question is often asked by beginning entrepreneurs. Today, the construction business is one of the most promising and rapidly developing industries and respectively - very profitable. This is explained by the fact that people always want to live in beautiful houses, modern apartments and need periodic home renovation and improvement. In addition to the large monetary attractiveness, we should not forget about the high competition in the market, which can complicate the work of young construction companies. It will take a lot of effort to open a new one. Where to begin? What will be the costs? How to make a company profitable? If you solve these questions with your mind and responsibility, then success is assured to you. Moreover, this material will help you to understand and focus on the main advantages and disadvantages of this venture.

How to run a construction company

Seller in the past and founder of the company Comfort Building Service now, Jacob Salinel started the construction business without seed capital and received two dozen orders for residential houses without advertising.

“We find a suitable plot of land, help with design, start communications, and build a miracle,” smiled Jacob.

Comfort Building Service builds houses in Chicago, Illinois. For now, they are engaged in building wood-frame houses. Their annual revenue in 2017 was 618 thousand dollars. At the same time, net profit was of about 267 thousand dollars. In 2018, they plan to increase revenues to a million dollars.

"Life itself brought me into this sphere. In 2013, I was looking for a plot of land to build a house. Then I realized with horror that this is a very complicated procedure and not everyone can solve it by themselves. To get a building permit, to find and connect to the communications you need to do the system work, having spent a lot of time. It is almost impossible for an ordinary family without any experience in this matter. American citizens do not engage in the construction on their own. They think it's troublesome", - explained Jacob.

Then he realized that he wants by himself to create a solution that will help people solve these issues with a minimum of effort. It was an idea of running a specialized construction company that fully take care from the initial designing and making changes to the project, taking into account all the wishes of the customer before completing all necessary approvals and permits.

Starting a business in the US seems to be a super complicated task only at first glance. However, fear not.

“Of course, there are licenses to apply for, equipment to buy, and maybe even training you’ll need to complete. However, once you have a solid construction company business plan and know the direction you want to take, you can start your own construction business. Also, now most of the operations required for business registration are made through various online services. Also, if you do not have sufficient funds, but there is a huge amount of ambition, energy, and confidence that this is exactly the business you want to do, you can find investors who will invest money for you”, assured Mr. Salinel.

In general, anyone can start his or her business in the United States. If you are a resident and you have SSN, it's easy. There is very little paperwork, and in two or three days, you will get signed documents with the stamp of the state. If you want to make some changes to the company's charter, for example, to change the director, there is no need to notify anyone about this.

Everything occurs quickly and without unnecessary bureaucracy because most of the actions are committed online. The process and cost of registration are slightly different from state to state, as well as the amount of taxes. For example, in California, they are not the lowest, but there are huge investments and big business incubators, and it's much easier to interact with them when your activities are regulated by the laws of one state.

In order to pay taxes, be able to open a bank account and hire employees you need the identification tax number (EIN for residents or TIN for foreigners) which can be received for free at the Internal Revenue Service (IRS). Therefore, the final verdict about the type of enterprise, its structure, and the location is taken individually, specifically for each enterprise.

Regarding the company registration process, you have several options: register the company yourself, apply to specialized Internet services or register with the help of a lawyer. All information on the registration of the company (check the name of the future company, necessary forms of documents, cost of services, and so on) you can find on the website of the Secretary of State in which you live. The company registration in the usual mode takes approximately 25 working days, but on the condition that you have all the documents ready.

Besides, you will need to open a bank account. Typically, to open an account with an American bank, you need a personal presence, but it is possible that based on your specific situation, some banks will allow you to open an account online.

About terms and prices

“In 2015, my partner and I founded the company Comfort Building Service. Almost a year we were engaged in preparation for the auction, choosing of construction technology, and planning. Systematically, things have begun from 2016. The first contract for construction was concluded in early 2017”, shared Jacob.

Now, in 2018, Comfort Building Service helps people with obtaining all building permits.

“Moreover, our company always firstly studies what energy resources the house will be connected. Whether the supplying organizations will be able to connect the house to water, electricity, and sewage. When people do this on their own, they often get permission for construction, forgetting that the issue of communications should be addressed in the first place. Our clients don't need to do it. Customers just come to us and make a deal; they get a plot of land. Then we start communications, solve problems with officials and build a house. And the cost of all procedures is about 93$ for one square foot of the house”, added the owner.

Comfort Building Service feature is that they offer a payment by installments without interest:

“Customer's money comes to us gradually, which helps us to systematically build a business and build houses.”

According to Jacob, finding first customers wasn't too difficult.

“It was enough to tell our acquaintances about our proposal - we chose 10 families to start. Then it worked through the grapevine. They told their friends, they advised relatives, others shared with colleagues and so on”, told Jacob.

Then they offered their clients to leave an advance payment of 5 thousand dollars and promised that within half a year all the procedures would be completed. People were ready to wait and did not risk anything. In case of failure, Comfort Building Service would just return the money. After a while, they had a large number of people allowing to start their activities:

“We didn’t have any seed capital and worked for clients' money. Just offered people a way out of the situation. They thought this decision was optimal”.

Moreover, for now, Comfort Building Service has already 26 houses ordered.

“Every month we have a new customer. The business is growing because we consider our main task to fulfill all obligations assumed. This is how we create a reputation. We prove to people that they trusted us not in vain. Then they tell it to their friends and acquaintances. Our clients are ordinary families, without impressive incomes. We are aimed at ensuring that these people receive housing not worse than those who can afford premium-building materials. We want to show that you can get a house, not for fabulous money. Moreover, we offer a comprehensive development of the land”, summed up Mr. Salinel.

Jacob told that to hire personnel; he used social network LinkedIn.

“It is worth considering that the labor market in the US is quite full, so job candidates are very active in selling themselves and advertising their skills. Despite the large staff turnover, newly arranged employees do not try to leave their current workplace at the first improved offer, this adversely affects their recommendations from employers”.

How to build a house

Wood-frame houses are very popular because they have many advantages: safer in seismic areas, warmer and better for the environment. Moreover, the foundation, even with a basement, in a wood-frame house is cheaper, because the house is lighter and the walls are smaller. However, the biggest advantage of wood-frame houses is fast building and the ability to change the structure of premises and elements of the facade easily and inexpensively.

The basis of the frame is a board of coniferous rocks 50 mm thick, used for walls, ceilings, and rafter system. After the frame erection, communications such as electricity, plumbing, and air conditioning are laid. Usually, after erecting the outer walls frame, the next step of construction is a roof, which protects the structure from precipitation. Jacob noticed that wood doesn’t like moisture and can deform. Therefore, they do not work in rainy weather.

On the outside, the house is framed with OSB plates or moisture resistant plywood, inside - with gypsum plasterboard. As a heater, mineral wool is used. Much less often - foam or polystyrene foam. Americans are eager for the environmental friendliness of their homes and do not want to live in houses insulated with synthetic materials. Roofing is usually constructed from soft tiles or roll roofing materials.

The average term of erecting a frame house is about 8-9 months:

“We feel calm because we have time to build a quality house. Not for three or four months, to wonder then why something brakes and splits. We spend more time. However, in the process of work, we understand how the foundation behaved, what shrinkage came out. When the company promises you to build a house in a few months, it can’t control such moments. Most often, they fill the foundation and immediately “lift” the box. Well, then the house begins to shrink. All this is reflected on the walls and floors”.

About advertising

Comfort Building Service used advertising on billboards, in local newspapers, and on screens in the streets: “Then one day, we realized that we spend a lot, but the return wasn’t that big. Therefore, we refused these measures”.

The solution was found: “This winter we launched our own website. Now, we together with experts write articles about technologies in construction and tell about our services. We give a clear understanding to customers why they should not be afraid of us!”

How to create a website for business

Today, in the age of information technology, most companies prefer online advertising. For example, by creating a company website, correct describing the entire list of services provided, and illustrating all the examples of already constructed facilities, you can attract a wide audience of customers. If you work conscientiously, and customers are satisfied, they will necessarily recommend you to their friends and acquaintances.

However, creating a high-quality and beautiful site from scratch is a time-consuming task. Not every developing business can find time in a busy schedule to learn the basics of HTML for the independent creation of the site.

Yet, there are ways to create your own website without much effort – using TM template. 70+ ready-made construction company templates are at your disposal, choosing one of which, you simply fill it with your information: description of the field of activity and company news, photos of completed projects or the company's top officials, promotions and special offers. Also, via blog or communication with site visitors through the feedback form, you can get to know your audience and target your content.

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Conclusion

1. The profitability of the construction business is very high. Despite the fact that the investment will pay off not as fast as you would like, in the end, you increase your capital several times.

2. It summarize the features of business registration in each state, it consists of the following stages:

formal application to the Secretary of the State;
registration of the company at the Internal Revenue Service to obtain the taxpayer's registration number;
opening a bank account in the United States.

3. “The only free cheese is in the mousetrap,” respectively, if you want to get a lot of money, you need to work hard. The construction business is not a simple business and has many subtleties and pitfalls. For the rest, all of your success will depend on your grip and determination.

4. Lack of funds, however, should not deter you from pursuing your entrepreneurial dreams. You just need to have confidence in your idea and a clear vision of how you are going to execute it. Once you have that covered, getting the funds to support your dream may not be as difficult as it seems.

5. In the age of information technology, a website for a growing prospective company is a must.

Money is never easy. Whether you have some capital or not, the primary condition for success is the willingness to sacrifice your time and energy. And, of course, love to what you do. Having correctly organized everything, you will not only start to make a good profit but also be able to increase your construction company via opening branches of the company in other states. Moreover, we are always happy to help you in expanding your business on the Internet!