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8 Tips for Building a Successful Construction Business

Thinking of starting your own construction company or branching out as a general contractor? Read this primer first.

It’s the classic American dream: start a company using your talents and expertise, be your own boss, and support your family by doing what you love. Without the right skills, however, running a business can become a nightmare. There are many keys to being successful in the construction industry. The eight tips on this list are critical if you want to get your enterprise off the ground, keep customers (and employees) happy, and make an honest living.

  1. Do all of the prep work and research you can before diving into business ownership: What licenses and permits will you need? How much will insurance cost? Do you have relationships with bonding companies? What regulations will you be obligated to follow? Do you have a sound understanding of OSHA requirements? Don’t get caught by surprise. Learn as much as possible before you sink thousands of dollars into starting your operation.
  2. Hire the right people and delegate tasks: Not only will this help you maintain your sanity, letting your employees do what they do best will enable you to focus on managing (and growing) your business. Putting together a top-notch team isn’t easy, but if you get qualified people in the right positions, provide the proper support and training for them to improve and excel, and then get out of their way, you’ll be impressed by what they’ll be able to produce.
  3. Keep customers satisfied (and coming back) by focusing on quality: Customers who have a good experience with a company will often recommend it to friends, family members, and acquaintances who are in need of similar services. However, disgruntled clients will tell anyone that they can think of about a bad experience, and they will immediately post negative reviews on sites like Yelp to broadcast their opinion for the world to see. If you put the customer first and stay focused on providing a quality service/product, then you won’t have to worry about the effect of negative online opinions.
  4. Price your work correctly: There’s no point in being the cheapest option if it means every project is unprofitable. Recognize the costs of doing business and create estimates accordingly. Know what your work is worth. Factor in potential delays, mistakes, or other issues. Keep an eye on your overhead – many small construction companies went under during the recession because they allowed expenses to grow during the market boom and were not able to regain control of their costs once the good times ended.


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  1. Make tough personnel decisions: Sentimentality and blind loyalty have killed many small businesses. It may break your heart to let someone go, but if you don’t have the volume of work to keep them on board, you must lay them off. You can always rehire someone if work picks up, but if the whole thing goes under it will affect more than that single employee and their family.
  2. Know your limits and don’t bite off more than you can chew: Have you been hired for a major bathroom renovation, but don’t consider yourself a plumbing expert? Find a subcontractor to take care of what you can’t do yourself. Sure, you’ll have to shell out some money to pay for their services, but that outlay pales in comparison to the revenue or profits lost due to substandard work. Rather than trying to do everything yourself, farm out some of the work to guarantee quality, efficiency, and customer satisfaction.
  3. Watch your money (or have someone watch it for you): This advice goes hand in hand with knowing your limits. If you are particularly savvy when it comes to money, then feel free to handle the accounting for your small business. However, if managing payables and receivables is not where your skills lie, then you need to enlist outside help. The money your company brings in must be closely monitored not only for tax purposes but also to gauge success, forecast profitability, and guard against unscrupulous partners or employees.
  4. When the time comes to expand, be smart about it: Make sure you don’t overextend yourself. If things are going well, clients are happy, and money is rolling in, then you may consider branching out and expanding your operation. This will require a significant commitment and capital investment on your part, so take your time and make sure you are making the right decision. Similar to starting a company from scratch, expansion requires patience and research.


Building a business is difficult, intimidating, and stressful. Avoid the pitfalls that trap many other professionals and maximize your chances of creating a profitable enterprise by performing as much research as possible, bringing the right people onboard, maintaining a firm commitment to quality, pricing jobs correctly, making difficult decisions, knowing your limits, keeping a close eye on company finances, and being smart about expansion.

by: Freddie Rohner, iHire
March 09, 2015

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