Starting your own construction business is a fantastic way to delve into the construction industry. There are some considerations to explore however, as starting a building business is no simple task. You must be prepared. This blog will give you five things to keep in mind when aiming to start your own building business and act as a guide for your endeavours.
Running your own construction business is no doubt a time consuming endeavour even compared to other businesses. It will require you to have a range of skills in different areas and most likely there are things you should have some adequacy in before even embarking on this adventure. Sales, negotiation skills, accounting and more will be mainstay skills you must have to some degree. This is if you want to grow and sustain a successful building business.
Leading your own construction business can be time consuming compared to other businesses and requires a host of skills in a variety of areas. Sales, negotiating, budgeting and various other skills are needed if you want to grow and create a sustainable construction business.
The first point and arguably most important one to consider when entering the construction industry or aiming to start your own construction business is the educational qualifications that are required of you to actually be a part of the construction industry. You need to ensure you are fulfilling satisfactory outcomes. Doing this makes it easy to pursue your chosen path in construction including building a business of your own.
The construction industry follows the Australian Qualifications Framework (AQF), which specifies the standard for educational qualifications in Australia. The framework comprises 10 levels, each building on each other in terms of quality of information and difficulty. The levels are as follows:
- Certificate I
- Certificate II
- Certificate III
- Certificate IV
- Advanced Diploma, Associate Degree
- Bachelor’s Degree
- Bachelor Honours Degree, Graduate Certificate, Graduate Diploma
- Masters Degree
- Doctoral Degree
It is highly recommended that as you are aiming to start your own construction business, levels 4 and 5 are where you want to start and finish. At level 4 and 5 you have the Certificate IV and Diploma respectively. The course at both these levels that you must complete is the Building and Construction which we will touch upon.
The Certificate IV in Building and Construction comprises 9 units, with 11 of them being core and the other 8 being elective you can choose from. Some of the topics included are:
- Applying building codes and standards to construction processes
- Managing occupational health and safety (OH&S)
- Conducting on-site supervision of projects
- Reading and interpreting plans and specifications
- Arranging for building applications and approvals
The above topics are a glimpse of some of the key areas covered in the course which are extremely helpful for builders to complete. However, not limited to benefitting builders, these topics and more will give someone looking to start their own building business a strong understanding of the industry and the basics.
Apart from the Certificate IV in Building and Construction there is the Diploma in Building and Construction, which is the natural progression or step up from the Certificate IV. For someone looking to start their own business, going beyond this point to complete a bachelor’s is absolutely not necessary. The diploma however, is highly recommended to complete for all the benefits it will yield.
The Diploma of Building and Construction contains 27 units, of those 27 there are 24 of them that are considered core units with the other 3 being elective units. Numerous areas are covered in the diploma such as:
- Applying principles of OHS risk management
- Controlling project quality and risk
- Applying building codes and standards to construction processes
- Applying site surveys and set out procedures
- Managing environmental and energy conservation practices and processes
The Diploma of Building and Construction is a continuation of the Certificate IV course mentioned in the previous level. As you can see there are similar topics being covered.It is worth noting the concepts are taken to a higher level in the diploma as they serve as a means of deepening one’s expertise and knowledge in these areas.
Researching and Preparation:
Another thing to keep in mind before jumping into your own construction business is the existing market. Simply put, is there a market for my construction business? If there is, you will want to look at the current players in the market and how they are serving it. Most importantly, you are doing this to know if starting a construction business based on the market and the location you are in is a financially feasible option. This is something worth thinking about before starting your venture.
Are there a small portion of large companies adequately serving people’s needs or is the market too saturated and hence too difficult to position yourself against competitors? This is all something to take into account before starting a company as you might not receive the results you were hoping for.
Once you have a strategy for entering the market, and you are keen on getting started, the next step is the business plan. It is a must for anyone starting a business regardless of what it is to have a business plan. Forging a solid business plan is the first step in starting your journey into your construction business.
Another thing you can do in preparation for your construction business that goes beyond looking at the market, is to start small. Starting small with your construction company has benefits to it. You can start with one project a year for instance. It gives you a good base to build off of. Moving from there as you increase in your skills and then you can move onto building more houses ensuring there is quality with each one you build. While there are skills like sales that will be required from the get go, you do not need to be an expert at the beginning. Essentially you are growing with your business. As your business also becomes better, you can take on more projects and more employees.
A tip that might not be commonly given and something crucial to keep in mind is the use of technology. A lot of individuals and companies in the construction industry are behind in technology. There is a general hesitancy to adopt technology at least to its fullest capabilities.
The construction industry is a difficult one and there is a lot that can go wrong. You can also be certain that in starting your business, things will go wrong. Technology, specifically construction management softwares can help with that greatly, reducing the margin for error. Not only that but construction management can save you precious time and help you keep on top of all the different aspects of the project.
Construction management softwares streamline a lot of the aspects of the construction process from takeoffs/estimations, to project scheduling, financials and accounting as well as communication between all relevant parties involved in the project. By streamlining all these processes, the project can run a lot smoother for yourself and your employees.
To expand on that, softwares can include estimation tools, scheduling tools, takeoff software, CRMs, data storage(tasks, documents, supplier and subcontractor price lists) and a whole lot more. Some builders may opt to stay with tried and tested techniques such as using a spreadsheet for construction estimation. Despite this, newer softwares out there will undoubtedly save you time and expensive mistakes due to human errors. Investing in technology for your business will save you a lot of hassle in the future.
Maths and Accounting skills:
Skills in mathematics at a basic level is going to help you with the financial aspects of running the business. This includes budgeting and accounting. Even if someone else is hired to manage this part of the business, never underestimate how important it is for you to know the financial state of your business at any time.
You are solely responsible for the money coming in and out of your business as its owner and leader. It is not hard to find yourself out of business through poor money management. It might be worth utilising an accountant. If they utilise accounting softwares such as Xerox, this can be combined with technologies such as project management softwares in your business.
Attain the required licences:
Licences are a very important thing to keep in mind before starting your business. Otherwise, how will you operate without one? You can’t go around building houses and structures out of the blue without the proper licence, that would be comical indeed.
Before starting your construction business, it is imperative you can demonstrate you are able to build structures.This is done with the proper licences. Licences ensure you are qualified to do what you are doing. The necessary licences must be obtained which includes your individual contractors licence and company contractor’s licence. The individual contractor’s licence enables you to work on residential/commercial construction. A company contractor’s licence is required for making contracts and subcontracts with others. These are just two licences, to find out more about what licences are required see here.
Now, with all of this in mind you are ready to get stuck into starting your building business. There is a lot that will go into building your construction business as well as starting it including the factors we have covered in this article. Education, accounting skills, building licences, research and preparation and lastly construction management softwares are all really important things to consider before embarking on starting your business.
Parker Brent is an accredited provider of courses in building and construction. We currently offer the Certificate IV in Building and Construction (Building) and the Diploma of Building and Construction (Building). Enquire for more details here.