Running your own construction company

Running Your Own Construction Business: The Honest Truth

Running your own construction business can give you freedom, independence and the chance to earn more than you might working for someone else. However, it also brings responsibilities that many people do not see until they become self-employed.

I have worked for myself in the plumbing and heating industry since 1998. During that time, I have learned that being good at your trade is only one part of running a successful business.

You also need to find work, price jobs, manage customers, control costs and deal with problems when things do not go according to plan.

Start with a trade you understand

The strongest construction businesses are normally built around genuine experience.

Before taking responsibility for complete jobs, you should understand how the work is completed, how long it takes and what can go wrong. Practical knowledge also helps you recognise good workmanship when employing or subcontracting other trades.

Qualifications are important, particularly for regulated work such as gas and electrical installations. However, qualifications alone cannot replace experience gained on real jobs.

Learning how to price construction work

Pricing is one of the hardest parts of becoming self-employed.

If your price is too high, you may lose the job. If it is too low, you could work hard and make very little profit. A quotation needs to include more than your time and the obvious materials.

You may also need to allow for:

• Travelling and collecting materials
• Fuel, parking and congestion charges
• Waste removal
• Insurance and professional fees
• Tools, repairs and replacements
• Time spent quoting and completing paperwork
• Unexpected problems
• Tax and business administration

Turnover is not the same as profit. A construction business can put a large amount of money through its account while the owner earns far less than people imagine.

Cash flow can make or break the business

You may need to purchase materials and pay subcontractors before receiving the final payment from your customer.

Deposits or staged payments can protect your cash flow on larger projects. The payment schedule should be agreed in writing before work begins.

Keep business and personal money separate, save towards your tax bill and maintain a financial reserve. One unpaid invoice or unexpected van repair should not bring the business to a stop.

Your reputation is your greatest asset

Construction is built on trust. Customers are allowing you into their homes and may be paying you thousands of pounds.

Turning up when agreed, communicating clearly and keeping the property tidy can be just as important to a customer as the finished work.

Problems sometimes happen, even when you have taken proper care. Your response to the problem will often determine whether the customer recommends you or leaves a poor review.

Do not disappear when a job becomes difficult. Explain what has happened, provide a sensible solution and keep the customer informed.

Choosing the right customers and jobs

Not every enquiry is a good opportunity.

Warning signs can include customers who constantly change the specification, refuse to discuss deposits or expect you to reduce your price before you have even inspected the job.

It is better to turn down unsuitable work than accept a project that could cost you money and damage your reputation.

Stay within your experience and use properly qualified tradespeople where necessary. Taking on work you cannot confidently manage can quickly become expensive.

The positives of running your own construction business

The biggest advantage is control. You can choose the areas you cover, the services you provide and the direction of the business.

There is also the satisfaction of building something of your own. A strong reputation can produce repeat customers, recommendations and a steady source of local work.

With the right systems and reliable people, the business may eventually grow beyond the amount of work you can personally complete.

The negatives of working for yourself

Self-employment does not always provide the freedom people expect.

You may spend the day working on site and the evening answering calls, preparing quotations and ordering materials. There is no automatic holiday pay or sick pay, and your income can vary throughout the year.

You are also responsible when materials arrive late, subcontractors let you down or a customer changes their mind.

The pressure can be considerable, particularly when several jobs overlap.

Lessons I have learned

Keep your overheads under control and do not buy equipment simply to look successful. Put agreements and changes in writing, photograph your work and maintain accurate records.

Answer customers honestly. If you do not know something, say so and find the correct answer.

Most importantly, protect your reputation. A reliable tradesperson who works safely and treats customers properly will always be in demand.

Is starting a construction business worth it?

For the right person, running a construction business can be extremely rewarding. It can provide independence, a good income and something valuable to build over time.

But success rarely happens overnight. It comes from experience, sensible pricing, good organisation and consistently doing what you promised.

Being skilled might win you the first job. Being reliable is what brings the customer back.

Dales Boiler Services provides professional boiler installations, repairs, servicing and heating services across Brighton, Hove and the surrounding areas.