How to Become a General Contractor: Keeping it Lean, Low Cost, and Starting Small.

There’s lots of articles telling you how to become a general contractor. But in this article, we’re going to give you some tips on how to start a contracting business using lean strategies.

Basically, that just means that we don’t want you to drop $100,000 starting a business, and then go on to be in debt for years to come (or even go out of business) and be left with loads to pay off.

There’s smarter ways to start out as a contractor than that. For the purpose of this article, we’ll think about it in 4 main phases. But before we get to that, there’s something you need to understand about this article:

There’s tons of resources and posts written to tell you step by step  how to spend loads of money, or do the right things to “technically” start your business. And they’re great! But the purpose of this article is to encourage you to think about another strategy – a 4 step “lean strategy” for starting a contracting business.

Listen…

Starting a construction company is hard enough. It’s often stressful, and you’re dealing with problems every single day (more on that below). But what if you add into that situation that you quit your steady job with a steady paycheck to try this, you’re learning as you go – never having run (or helped run) a business before, and you have loads of debt because you bought everything you thought you’d need out the gate.

Ah! That can be totally stressful. So we’re encouraging you to think about another way to do things in this post, and here’s the flavor:

-Work for someone for a while (like, 2-5 years)

-Learn not just the trade, but how to run an effective trades business

-Take on responsibility and learn the ins and outs of the business side of things

-Use nights and weekends each month to research what it takes to start a business, the legal, the requirements, the unique stresses

-Stare everything in the face, realize what this will take, then start your company

-But wait! Not “jump out of everything stable and start with loads of debt” kind of start

-Start a “side hustle” ; building a small book of business (friends and family) keeping costs low and lean

-And once you have more work for the next 6 months than you can handle on nights and weekends, see if you can go to your boss and scale back to part time.

-Eventually, take the plunge – with years of experience helping another business grow, and after lining up many leads for yourself.

Sound like an approach you might like? 

Then read on…

Step 1 – Get Experience.

At Construct-Ed, we have one foot in the construction world, and one foot in the “tech startup” world. And you know what advice major tech business owners give aspiring entrepreneurs?

Work at a startup.

That’s it.

If you have no experience, they say, go work for someone who does. Learn on someone else’s dime, get paid to learn and scrape your knees. Well, we believe that’s a great method to apply to residential contracting or build/remodel businesses.

Honestly, even if you have awesome building skills – we still recommend getting some time working for someone else, just to learn the business side of things.

So the first piece of advice under “Step 1- Gain Experience” is this:

TIP #1 – Find a successful business who you’d aspire to be like, get a job, and learn all you can.

Now, if you’re reading this, and you’re really eager to get started, we hear you. But you’ve got to be smart about this. There’s a reason that so many new businesses fail in the first 3-5 years. And while the idea of starting a company sounds great now (because you’re frustrated with your current job, or don’t want to work for someone else out of high school), you could end up putting yourself in a bad position if you don’t do this in a smart way.

If the idea of going to work for someone else (like another independent contractor) to learn how to run a business turns you off, then set yourself a timeline as a goal. Tell it to yourself over and over again. Write it on your wall. Put it as a daily reminder on your phone.

Something like, “I will start my own business in 2 years.”

Honestly, the time is going to go faster than you think – and we promise – you’ll have moments where you’re learning so much, that 1 year in, you’ll say “I’m really glad I didn’t start 1 year ago, I would’ve never learned ___________.”

The idea behind this strategy is to learn how to do the hard parts of running a business, so you’re not figuring everything out as you go when doing your own business. That’s one of the greatest things about Construct-Ed. It allows anyone in construction or trades to learn from experienced Pros who have been there, and done that, and come out successful on the other side, saving pain, money, and time for you.

So, the first step is to find a company to work for, that you respect and can learn from.

If you don’t know where to start, and don’t have any connections, here’s a couple ways you can get some:

–Email/message friends and family. Ask them to refer you to anyone they know who runs a successful business in building/remodeling.

–Do a Google Search for something like, “general contractor [your town/city name]” – then sort through the local listings by rating. Specifically, look for higher star ratings, and those with professional looking websites. Finally, make sure they do the kind of work you’d be interested in doing.

–Go to Houzz, and perform a search for contractors performing the kind of work you want to do, in your local town. Then sort by the most popular / highest rated companies. Again, these companies are probably doing better than others, and would be better to learn from.

 

TIP #2 – Talk to the owner, and tell him/her your aspirations and ask for increased responsibilities.

You might think that telling the owner “I want to leave in 2-5 years and start my own business” would be counter productive.

But actually, it’s our view that good business owners should welcome someone like you. After all, you’re a go-getter, you’re hungry to learn, and hey – if you don’t decide to leave in 5 years (but love working there) then they have a great employee.

Now, to be sure, some employers might feel threatened. But this is why we’re encouraging you to learn at a company that’s big enough or successful enough to not feel threatened by you.

If you can find an owner who appreciates your aspirations, and communicate that you’re hungry to learn, you can continually go back and ask for more and more responsibility.

Tip #3 – Make sure you don’t grow stagnant. 

The one danger with this is that you lose you aspirations, not because you feel more equipped to work for someone else, but because you get lazy.

So make sure that you’re always challenging yourself. If the “building” part is beginning to become easier and easier for you and you’re growing in your trade skills, then see what you can do to learn the business side of things.

Tip #4 – Take initiative.

The last tip here is this: if you’re going to join an existing company to learn how to someday operate your own, then take iniative. Don’t complain, fix things. Don’t whine, take responsibility.

If you see something broken, or a process that could be fixed, or a better way to do things, tell the owner or supervisor. Now, to be clear, you need to stay humble and realize that you’re still an employee at the end of the day. But be hungry to keep learning.

For example, you might ask the owner if he can pay for an online course for you. At Construct-Ed, you can learn from experienced veterans in the building/remodeling industry on everything from increasing profit and productivity, to leadership skills and running  your team more effectively.

In all likelihood the business owner won’t have time themselves to learn new things and keep improving the business. But you can offer to learn business growth for them, then update the team at a later date.

Tip #5 – Attend a trade school (if you can).

If you’re young enough (like, a high school student) or have the money, time, and resources, consider attending a trade school. Actually, even if you don’t have the money, schools like Williamson College of the Trades gives 100%  free tuition. The catch is, they only take a limited number of students, but they have an absolutely incredible trades program and their graduates are among the best in their field.

If that’s not an option, talk to your local vo-tech school. There may be after school or summer classes you can attend.

Tip #6 – Keep building up tools.

We don’t need to tell you that tools aren’t cheap. So why would you dump thousands of dollars on them (and a truck, and equipment, and a computer, etc. etc.) to start your own thing overnight? If you work for someone else, you can keep accumulating the tools you’ll need, over time, without going into debt.

Step 2 – Learn the Requirements.

Ok, so you’ve found a company to work for, and you’re essentially getting paid to learn how to someday run your own contracting company.

That’s awesome!

Not, in the meantime, it’s time to learn the requirements. This means doing some homework. The purpose of this step is to make sure that you have a good understanding of what licenses, permits, legal stuff, etc. you’ll need.

First, find out what licensing requirements there are. 

Here’s a quick way to get started:

Do a Google search of “general contractor license [your state]”. Look first for any address with a “.gov” in the URL. That’s how you know it’s official government documentation from a government website.

There’s going to be lots of websites giving pointers, info, and selling services – some of which you might find helpful, but check your .gov listing first. For example, here’s what we found for contractor licensing in Pennsylvania.

Basically, what we’re saying is – “don’t break the law.” Being lean and scrappy means not spending stupid money, or having tons of overhead out the gate, or going into debt. It doesn’t mean making money on the side, illegally, and not reporting it on taxes.

Another consideration is CEUs.

If you’re going to be a licensed contractor or architect for example, you may need recurring CEUs (continuing education units).

Usually these can be found through online associations like the AIA, AIBD, and NAHB, and more. So make sure you learn whether or not these are required.

Finally, understand what legal setup you’ll need. 

Typically, you’ll either be incorporating as an LLC, or setting up a DBA (“doing business as”). At Construct-Ed, we’re definitely not lawyers, and this is definitely not legal advise, so be sure to do your own research and find out which one is best for you.

Remember, you’re learning all this in your free time, while you’re either 1) in a trade school or 2) working for someone else, and gleaning all you can.

Step 3- Count the cost, and learn from others.

OK. You’re doing it.

You’ve been working for someone for a couple years, you’re really beginning to hone your skills and understand the business. You’ve spent a few hours on the nights and weekend each month researching what legal setup you’ll need, how much it costs, and what kind of licensing you’ll need, and how to get it.

The next step is to evaluate whether or not this is really for you.

Now, of course anyone reading this who feels like they’re an entrepreneur at heart, or who’s eager to work for themselves will say “yes! I already know it’s for me, on to the next step.”

But wait a minute.

Before you take the final step and begin to start your own business, do you have a good idea of what the cost will be? And we don’t just mean financial cost. We mean emotional and physical too.

Don’t believe us? Check out this Reddit thread on emotional burnout and anxiety among construction Pros. Now, we’re not saying “don’t do it!”, we’re simply saying “be aware of how much it’s going to cost, and go in to it with a commitment and full understanding.”

Here’s a few ways to do that…

Tip #1 – Search Reddit and other forums to hear from real Pros.

Don’t let it scare you off (necessarily), but do be aware of the daily stresses contractors deal with: clients not paying, materials are delivered late, a leak behind a wall that totally undoes all the work you just did, a late night repair job, writing up bids and bills at 8pm (or midnight), too much work to handle, too little work to handle.

Some of these things aren’t unique to construction, they’d be true of anyone operating their own business. But for sure, some are unique stresses to contractors who operate their own business. Again, don’t let this scare you! But do let it make you sober up and really understand what you’ll be getting yourself into.

Tip #2 – Learn from experienced Pros to overcome pains and advance your business.

If there’s Pros who are willing and passionate to teach you things like getting more leads, increasing profit, how to build green, and how to market your company, why wouldn’t you learn from them? That’s why we built Construct-Ed – it’s a way to find on-demand ( = watch whenever you want) video courses published by experienced Pros, so you can learn from them and either avoid pains by doing things right the first time, or overcome pains (if you’re already in the thick of it).

Tip #3 – Put together a simple spreadsheet listing all needed (and potential future) costs.

This doesn’t have to be absolutely exhaustive, but try and carry the “lean” mentality into this.

What do you absolutely NEED? What’s the most cost effective options of getting it?

For example, a laptop (if you don’t have one), a website with a low monthly cost, tools (which you’ll hopefully have been saving up), etc. Once you have a good idea of the cost, you can better weigh that into the decision of when to branch out on your own and have a more thorough understanding of how much it will all cost.

 

Step 4- Do it.

After all these things, seeking council from Pros, your employer, and friends, at some point  you do just need to “take the leap” and do it.

But that doesn’t necessarily mean dropping everything, burning bridges, and going off on your own. We think there may be a more “lean”, smart, efficient way.

**Slowly build up a book of business and start a side-hustle.

Here’s a couple options for you to start “slowly” or “cautiously” that may save you some money and headaches…

Tip #1 – Start to reach out to friends and family, and let them know that you’re starting to take side jobs.

Feel free to tell them you’re working at a reduced rate, or that you only have narrow hours, but that you’re working towards starting your own business, and you’d be happy to take them on. Here’s a tip – use Calendly, a free calendar scheduling app that lets you determine what days/times you’re open to “take meetings”. All you need to do once you have you’re availability set, is share the link out with prospective first clients (again, friends and family). When they click the link, they can choose a time 1) that works for you (since you programmed it that way) and 2) that works for them. It automates the back and forth for you!

You can either throw up a free website with Wix or Squarespace (no coding required!), or just keep it to a social media page! Here’s the KEY thing…

1. Get HD photos of your work (that phone in your pocket will probably work fine, or get a friend with a DSLR to take some shots) – these will be used later for your website, portfolio, etc.
2. Get referrals. If they loved your work, ask if they can give you the names/numbers of some potential friends/family who might want some work done.

If you can manage the extra hours (nights and weekends) to build up a few clients this way, you can actually start a nice little side hustle. We recommend running this way until you get too busy and simply can’t handle it anymore, and have yourself booked out for months and months in advance.

Then…

Tip #2 – See if you can scale back slowly at your existing company. 

Here’s one of the bigger risks with starting out…

You take the leap, you have 2 jobs lined up, so you leave your company. You didn’t burn the bridge or anything, but you’re done – and now it’s up to you. What happens after those first two jobs are done, and you don’t have any  more lined up? So begins the daily anxiety and stress so many contractors experience.

But maybe you can try something different?

Assuming you’ve followed the strategies laid out here, and you’re committed to starting a company in a lean, fast, efficient way. You might be able to go to your employer and tell them:

-How grateful you are for all they taught you

-What an amazing experience working with them has been

-That  you’ve always aspired to own your own business and work for yourself

-You’re getting a lot of requests for work

–So, is there any way you could swing down to 20 hours a week or so?

Now, this approach will totally depend on your boss, your relationship with them, and your situation. But we just want to state that it is an option. If you’re able to do it this way, and it turns out that 6 months later you hate working for yourself, you can always go back and ask to get back into full time again.

Finally, when it’s the right time – part ways with your company and move to full time.

Listen, at the end of the day, it’s always going to be stressful and hard. Anything in life worth doing is! The thing we’re urging is:

-Do it with as little debt and overhead as possible

-Do it in a healthy, sustainable way

-Do it knowing the costs that will be required and what’s involved so you don’t get blindsided

-Do it by learning from experts who want to help you through the process

Was this helpful? If so, or if you have other advice you’d like to give up and coming tradesman/tradeswomen, leave a comment below!