8 Considerations For New Construction Companies
As reported by Forbes, 20 percent of small businesses fail in their first year, with roughly half failing to pass the five-year mark. Starting a business and successfully growing it is an incredible gamble, and construction companies are no exception. In addition to the challenges that all fledgling businesses face, construction companies must contend with an assortment of challenges that uniquely impact the industry, such as severe injuries, rising material costs, and skilled labor shortages.
In this article, a Florida construction attorney with Cotney Attorneys & Consultants discusses eight considerations that emerging construction companies should take to heart. Hopefully, with these tips, your company will be better able to survive its first five years and thrive in our competitive industry — one that is truly like no other.
1. Start With a Plan
No business ever got anywhere without first formulating a cohesive strategy. A business plan is your company’s plan of attack; it creates a vision and lays the groundwork for bringing it to fruition. Well before your company breaks ground on its first project, you should create a business plan that includes:
- Budget and Goals
- Business Strategy
- Business Structure
- Employee Responsibilities
- Marketing Strategy
- Mission Statement
- Preferred Jobs
- Training Program
Without a plan in place, your company would be completely rudderless. In such a cutthroat industry, your company must find its niche in order to stand out and obtain lucrative jobs. Will your company specialize in roofing, excavation, or masonry? Now is the time to decide what your company is all about.
2. Register Your Business
Now that you know what your business is, it’s time to share that information with your state and local government. Contractors working out of the State of Florida can register their business by filing Articles of Organization with the Division of Corporations. Once approved, your construction company is considered a limited liability company (LLC), allowing your company to operate without the looming threat of personal liability. But while an LLC is legally separate from its owner, it must remain lawful nonetheless, especially when it comes to permits and licensing.
3. Permits and Licensing
When last we covered project permits, we discussed how it can take the Federal Highway Administration over six years to complete the review and permitting process. While your new company likely won’t be taking on projects of such a large scale anytime soon, you must nonetheless be mindful of the federal and local permitting process. Companies can register to become a government contractor in the U.S. Small Business Administration’s (SBA’s) website. For contractors looking to work on private projects, they will need to register with their local government.
Take it from our Florida construction attorneys, licensing is yet another consideration that can land contractors in legal hot water if they choose to ignore it. Florida contractors can submit an application to the Construction Industry Licensing Board, or apply for a license through the Department of Business and Professional Regulation. Be prepared to pass an examination and submit proof of your experience, financial stability, and insurance.
There are numerous types of insurance for contractors; however, it’s vital that your company obtains the policies required by the State of Florida. In order to obtain a general contractors license in Florida, you must first obtain general liability insurance — the minimum being $300,000 for bodily injury and $50,000 for property damage.
Beware: you could be issued a stop-work order and penalized for failing to obtain workers’ compensation insurance. The coverage requirement for workers’ compensation in Florida is one or more employees, including the owner, so there is no justifiable excuse for not having workers’ compensation insurance, even if you’re an out-of-state contractor.
It takes money to make money, especially in an industry notorious for cash flow issues and minuscule profit margins. For funding, USA.gov has a number of useful links that can direct your small business to the loans it needs. Of course, you can always turn to a bank to acquire a loan. Banks know when they’re taking a risk on a new company and project, so we recommend finding a bank that will be as invested in your company’s success as you are. Furthermore, your point of contact should be a personal banker, not a nameless face. As with all interactions in the industry, you should focus on building a relationship with your bank and banker, so that you are seen as trustworthy and reliable when you turn to them for funding.
6. The Right Team
A construction company is nothing without a solid crew. With widespread labor shortages plaguing the industry, companies are doing everything they can to prevent their skilled workers from being snatched up by competitors. Our recommendation? Provide workers with everything they’ve been searching for: a career path, good pay, flexible hours, and a safe work environment. Surround yourself with successful and capable people who will stick by you no matter what.
A team includes more than just laborers. Be sure to staff your office with qualified professionals who can manage bookkeeping tasks. A legal advisor, such as a Florida contractor lawyer, can also go a long way towards securing your company for the long term. Remember, fostering a good relationship with your team will only help as you build relationships with the customers, material suppliers, and owners who will help your company rise to the top.
Taking care of your team also means keeping them safe. As mandated by the OSH Act of 1970, you are required to provide a place of employment that is “free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” Construction is a tough, demanding, and often dangerous industry; there’s no doubt about it, but there is no excuse for failing to provide your workforce with a hazard-free work environment.
Related: Important OSHA Facts for Contractors
Falls, electrical hazards, struck-by-object hazards, and caught-in/between hazards are not only hazards your team could face but also the most lethal hazards in the industry. Personal, protective equipment (PPE), ladder safety, and hazard communication are only a few considerations that construction companies both established and emerging must account for. In order to stay ahead of injuries and Occupational Safety and Health Administration (OSHA) regulations, your business will need a partner that is dedicated to the industry and its hard-working professionals.
8. Legal Assistance
As you’ve read throughout this article, success in this industry depends heavily on surrounding yourself with a talented team and remaining compliant with local and federal laws. Both are difficult to accomplish, but they are nonetheless necessary if your business is to survive past its first five years. By partnering with a Florida construction attorney, you will gain a team member who can protect your company from improper licensure, OSHA violations, legal disputes, and the other pitfalls that have claimed so many other businesses that were just getting off the ground.
At Cotney Attorneys & Consultants, our team is dedicated to helping contractors and construction companies find and keep their footing in an often unforgiving industry. From license defense to dispute resolution, our services can benefit your business for years to come. Set yourself up for success by partnering with the team of Florida contractor lawyers from Cotney Attorneys & Consultants.
If you would like to speak with one of our Florida construction attorneys, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.