Construction Startup Costs:
How Much Does It Cost To Start a Construction Company?

construction startup costs
Starting your own construction business can be a costly endeavor. There are many one-time and ongoing expenses that must be considered when budgeting for your new business. The cost of starting a construction company will vary depending on the size and scope of your business, but you can expect to spend anywhere from $50,000 for a small construction company to $500,000 on initial costs for a larger construction business.

In this article, we will detail the average startup costs for a new construction business. We’ll discuss the one-time expenses that are necessary to get your business up and running, as well as the ongoing costs that you’ll need to budget for on an ongoing basis.

 

One-Time Startup Costs

There are a number of one-time costs that you’ll need to consider when starting a construction business. These costs include:

  • General business license and permits: Based on your chosen business structure, you’ll need to obtain the necessary business licenses and permits from your local government in order to operate your business. The cost of these licenses and permits will vary depending on your location, but you can expect to spend anywhere from $100 to $1,000 on this expense.
  • Insurance: You’ll need to purchase general liability insurance for your business in order to protect yourself from lawsuits and other damages. The cost of this insurance will vary depending on the size and scope of your business, but you should budget for at least $3,000 per year.
  • Workers Compensation Insurance: If you have employees, you’ll be required to purchase workers’ compensation insurance in order to protect them in case of injury. The cost of this insurance will vary depending on the number of employees you have and the coverage you purchase, but you should budget for at least $1,000 per year.
  • Construction Equipment: You’ll need to purchase or lease the necessary equipment for your business, such as vehicles, tools, and office equipment. The cost of this equipment will vary depending on your needs, but you can expect to spend at least $20,000 on this expense.
  • Website: You’ll need to create a professional website for your business in order to attract customers and market your services. The cost of a website will vary depending on your specific needs, but you can expect to spend at least $500 on this expense.

 

Ongoing Costs

In addition to the one-time startup costs listed above, you’ll also need to consider the ongoing costs of running a construction business. These ongoing costs include:

  • Employee salaries: You’ll need to pay your employees a competitive salary in order to attract and retain the best talent. The cost of employee salaries will vary depending on your location and the type of workers you need, but you can expect to spend at least $250,000 per year on this expense.
  • Company vehicles: You’ll need to maintain a fleet of construction company vehicles in order to transport your employees and equipment to job sites. The cost of maintaining these vehicles will vary depending on the number and type of vehicles you have, but you should budget for at least $12,000 per year.
  • Marketing and advertising: You’ll need to invest in marketing and advertising in order to market your business and attract customers. The cost of marketing and advertising will vary depending on your specific needs, but you should budget for at least $20,000 per year.
  • Rent: If you’re leasing office space or storage space for your business, you’ll need to factor the cost of rent into your budget. The cost of rent will vary depending on your location, but you can expect to spend at least $1000 per month on this expense.
  • Utilities: You’ll need to pay for utilities such as electricity, water, and gas for your business. The cost of utilities will vary depending on your location and the size of your business, but you can expect to spend at least $100 per month on this expense.

 

Ways To Save on Your Construction Startup Costs

One of the best ways to reduce the cost of starting your own construction business is to find creative ways to save money. There are a number of ways you can save money when starting your business, such as:

  • Negotiating with vendors and suppliers for lower prices
  • Leasing rather than purchasing equipment and vehicles
  • Hiring employees who are willing to work for lower salaries
  • Renting office space instead of purchasing it
  • Utilizing free or low-cost marketing channels such as social media

If you’re careful with your spending, you can start a successful business on a shoestring budget. By following the tips above, you can minimize your startup costs and maximize your chances of success.

 

Get The Funding You Need To Get Started

Many small businesses in the construction industry need to take out business loans in order to get started. If you’re planning on starting a new construction business, you’ll need to factor in the cost of a loan into your budget. The cost of a loan will vary depending on the amount of money you borrow and the interest rate you’re charged.

Besides small business loans, there are other funding options available for construction businesses including government grants, angel investors, and private equity.

💡Learn more aboutconstruction company funding.

 

No matter what funding option you choose, you’ll need to have a solid business plan in place in order to get the funding you need. Your business plan should include information on your expected startup costs, revenue projections, and marketing strategy.

 

As you can see, there are a number of costs that you’ll need to consider when starting your own construction company. The exact cost of starting your business will depend on a variety of factors, but most construction companies spend at least $50,000 on initial costs and $200,000 per year on ongoing costs. With a solid construction business plan and a healthy dose of perseverance, you can start a construction company with the funding you need to succeed. 

 

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