A Guide To Founding A Construction Company

Is it actually worth it?

Well, yes, in fact small independent businesses are the bedrock of the UK building industry. Of the more than 250,000 firms that exist, over half consist either of one-person structures or else have just a single employee. Whether you see yourself contracting on major projects or building up a steady stream of smaller customers, your very own business is a fantastic avenue toward a whole host of new opportunities.

But of course there’s more to being the boss than picking up the lion’s share of profits on a job. From keeping on top of the law to putting people and equipment in place — not to mention ensuring a supply of work — success does not come automatically. Just like any other industry, it takes a lot of hard work and graft to start up in construction.  

Why you need to prepare a business plan

This is essential for any business. It’s where you set out who you intend to provide your services to, how much you intend to charge, and how you propose to make it happen. This is the blueprint for your business, and you can find out more about how to prepare one in our business plan guide.  

In terms of both your business plan and for the smooth running of your business once it’s off the ground, in the construction business you’ll need to consider carefully whether you are likely to require external manpower — and whether you are going to be able to count on that help when required. If you intend to offer a complete renovation service, for instance, you will almost certainly need to source a whole range of external tradesmen to call on when needed. Even for someone setting up a straightforward domestic tiling business, there will still probably be a need to call on help from a plumber or electrician from time to time.

So, relationship-building should be a top priority at an early stage. Contact the individuals you would like to get on board and check their availability and willingness to work with you. It might be that the person you have in mind is willing to get involved, but on a formal basis. In turn, this might determine the best way to structure your construction business. A partnership could be one way forward; setting up a private limited company and allocating shares can be a useful way of enabling outside involvement, while still keeping control of your business.   

Formalising your credentials

In terms of formal certifications, it’s vital to consider what you will need to operate lawfully in your chosen niche, and what qualifications your clients will expect you to have. Although it’s not a legal requirement, bigger clients may for example have a policy in place stipulating that all independent contractors should hold NVQ level 3 or higher before being engaged on their sites.

Certain types of certification can help you to deliver a more efficient service to customers. For instance, obtaining Competent Person accreditation enables you to self-certify certain types of work with reference to the building regulations. This can save your business time and money and can bring reassurance to potential clients that you’re a safe pair of hands.

The HSE website is an essential source of guidance on all aspects of accreditation. If you are getting other parties involved, don’t forget to check that they are in possession of all relevant certification, too.

Equipping your business

Vehicle and equipment costs tend to be the biggest startup expenses faced by a new construction business. In terms of deciding whether to buy or lease, it’s not a case of one option being automatically better than the other. Much depends on what it is that you’re buying, how quickly you’ll need to upgrade and the funds open to you at the time. For further advice on asset leasing and buying, we’ve put together a comprehensive guide.  

Growing your customer list

Reputation and word of mouth is essential in the construction trade. By providing a great service, giving realistic estimates, delivering the work on-spec and on-time, you are effectively marketing your business right from the moment you take on your first customer.

It’s useful to have a basic website setting out your services and contact details, along with a portfolio of your work, and a social media page. Also, focus on online review platforms such as Which? Trusted Traders. Local community platforms are another useful way to build your presence.

From managing a project through to preparing your first set of accounts, check out our help centre for a wide range of resources designed to help you get your business off the ground.