Posted by: Kaplan Real Estate Education
Updated: January 15, 2019
If you are thinking of becoming a residential or commercial contractor, there are a number of factors to consider to set yourself up for success. As with any financial opportunity there is a degree of risk, so it is best to consider your options within the profession as well as research your local market. Then create a business plan. Whether you have never been in business for yourself or are a seasoned veteran, the importance of a business plan is critical for success. By considering all the questions below, you will create a road map for success and ultimately determine your financial opportunity.
Items to Consider When Starting a Career as a Contractor
1. Will you personally be providing physical labor on projects? Is the business dependent on this?
2. Will you be working for someone else, or working for yourself? Self-employment is appealing to many people, and can be more rewarding, but it also often involves more work particularly if you are just entering the profession.
3. If you will be working for yourself, will you be starting a business from scratch or buying a franchise? There are several franchise options in the contracting field.
4. If you will be starting your business, what will be its structure? A corporation, partnership, etc? Consulting a good small business accountant and attorney bank will help you set up good business practices early.
5. Will you be a contractor part-time or full-time? Many contractors are only contractors part-time or seasonally, particularly when they are transitioning into the profession.
6. Will you need anyone to support your business? Many contractors need someone to help schedule appointments while they are on the job site.
Revenue and Expense Considerations
1. How many projects will you be doing each year? Remember that the construction market is seasonal in many areas of the country.
2. What will be your average costs per project type? Largely determined by local labor and material costing considerations.
3. How much will you be able to charge per project type? Research into costs and competition's pricing will be necessary.
4. What will be your start up, annual, and monthly business expenses? Contractors typically need tools, a computer; a printer; business cards; a cell phone; insurance; etc.
To learn more about becoming a contractor in Minnesota, visit our Minnesota Contractor Licensing landing page.