Launching your business can feel daunting, especially in the early days. If you want to build a thriving business as a home builder or contractor, it’s critical that you take the time to think through your plans and establish the steps you need to achieve success. If you’re wondering how to start a home builder business, take these nine essential steps.
1. Research the Market
Take the time to get to know the market and consider how you fit into it before you start a home builder business. The better you know the market, the better you can ensure that your brand fits the needs of your community. You need to know:
- Who your competitors are.
- What they offer, including what services they provide.
- Who they market to, including their general target audience.
- What sets you apart from your competitors, including who your target audience is and what services you offer that your competitors may not.
- How your competitors handle their marketing, including what channels they use.
- General competitor pricing.
The better you understand the market and potential competitors, the better you can create a unique business plan and strategy that will allow you to start a home builder business and achieve your long-term goals.
2. Develop a Business Plan
With any new business, you need to start with a solid business plan. A business plan lays out what you intend to accomplish with your new home builder business, who you want to target, and how you will reach your goals. A comprehensive business plan will include:
- A description of your company: who you are, what sets your business apart, and what you intend to focus on. Do you want to build luxury homes, or do you want to build affordable housing? Do you want to tackle renovations, or focus primarily on building from the ground up?
- Your goals for your business. How big do you want your business to be? What do you want it to do?
- Your products and services.
- Your place in the industry. How does your business compare to your competitors? What do you have to offer that they don’t?
Your business plan should include clear goals for the first three to five years of your home builder business.
3. Get the Right Documentation Before You Start a Home Builder Business
In order to work in construction, you will need to secure a contractor’s license. Most states do not have reciprocal licenses, which means that you will need to secure a license in each state where you intend to work. You’ll also need a general business license. Furthermore, make sure you do your research into what your specialty requires. For example, if you intend to take care of tasks like electrical work or roofing, you’re going to need to have specialty licenses that will allow you to conduct that type of work.
Make sure you do your research into the permits you will need in order to do work in your target geographic area. Some regions will have specific requirements about the permits you will need before you begin any type of work. Failure to follow those requirements could lead to expensive fines and penalties.
In addition, you will need insurance to help take care of any potential challenges that arise on your sites. Insurance can cover workers’ comp if a worker is injured on the job, the cost of a disaster that ends up requiring more work on a property, and more.
4. Determine Your Financing Needs
Break down your business plan and determine what funds you will need to get started. Launching a new business means you will need to secure startup capital. If you do not have the funds already, you may need to secure a business loan or get investors to provide you with the funds you need to start a homebuilding business.
Take a careful look at your budget before you take your next steps and make sure you have adequate funding to carry you through to those goals. Without those funds, you may find it challenging to keep things moving smoothly as you figure out how to start a home builder business. Evaluate things like the equipment and tools you need as well as your administrative costs and overhead.
5. Secure a Location
Often, when you first start a custom home building business, you will work out of a shared office or even conduct much of your business from home. However, you may need a location just for work tasks, especially as your business grows. Determine where you’ll be working. Set up an office where you can showcase your work and bring potential clients. Keep in mind that your office is a reflection of you. While you may not be able to start with your ideal premises, you should make sure that your building is as polished and professional as possible to showcase what you can do and appeal to potential clients.
6. Establish Your Business Entity
As a new home construction business, you need to clearly establish a business entity. Even if you’re planning to work as a handyman, you want your business to be separate from you personally and from your personal finances. An LLC is the usual preferred choice for small businesses, including your new construction company. In establishing an LLC, you protect your personal finances from any challenges that you may face with the business, including financial and liability issues. If the business doesn’t go according to plan, having an LLC will make it easier for you to keep yourself and your family out of those challenges.
7. Learn About Local Subcontractors
You need a clear list of local subcontractors who can come in and take care of specialty tasks. Subcontractors are an essential part of the team for your home construction business. Often, they are the ones who will come in and take care of tasks you may not be licensed to do yourself: electrical work, for example, or finishing off the roof on a property.
Start a list of subcontractors that you want to work with. Include information about their reputation, the quality of work they do, and the type of work they do. Then, when you have needs in their areas of expertise, you can easily narrow down the right subcontractors and get in touch with them. Over time, you can modify that list as you get a better idea of which subcontractors you enjoy working with and which ones may introduce challenges into the process.
8. Hire Your Staff
You cannot run a new construction company all on your own. While some home builder businesses focus on jobs that can be completed by a small crew, others will need large rotating crews to take on the many jobs that may come in. In addition to other construction workers, you may need an office staff: someone to answer phones, take care of paperwork, and make sure that everything is in order. Check references carefully and be clear about what you can offer staff members when you bring them on board. In the early days of your homebuilding business, you may not be able to offer the same benefits you will be able to provide in the future.
9. Create a Marketing Plan
A critical part of launching your homebuilding business is making sure you have a comprehensive marketing plan that will allow you to reach out to people who need your services. Without a marketing plan, you may find it difficult to bring in business, which can mean that you struggle to launch your home builder business and get things moving smoothly. Your marketing plan should include:
- Online marketing, including capturing your business listing in Google Business, Yahoo!, and other major search engines.
- Creating a comprehensive website that will make it easy for interested people in your local area to get in touch with you. Make sure you focus on local SEO, since your goal is to bring in people from a specific geographic area.
- Social media marketing, including establishing a strong social media presence.
- Physical marketing, including options like billboards and participating in community events, that will allow you to get the word out about your brand and showcase what you can accomplish.
- AI-based marketing solutions, including chatbots that can help you connect with your customers.
A solid marketing plan, including utilizing all the tools at your disposal, can make all the difference as you launch your construction brand.
10. Learn From Successful Home Builders
There are many home builders who have gone before you: both successful businesses that have maintained their place in the market and less successful businesses that have failed. Take the time to learn from both types of companies. Consider:
- How do successful home builders in your market handle their marketing and outreach? How do they connect with the local community?
- What are local home builders offering, and how do you fit into those needs?
- How do successful home builders in other geographic areas manage their business, and what insight can they offer you?
Following other home builders can help provide you with ongoing insight that will allow you to set yourself apart and help you improve your overall successes as your business grows.
Launching a home builder business can be a challenge. However, by following these steps, you can get your brand off the ground, increase
