What Does It Take To Start And Run A Building Company?
Before we look at all the practical issues involved in starting a building company, or any company for that matter, let’s examine the reasons behind the move to self-employment. The reasons or chances that can motivate people to make life changing decisions are numerous and can have far reaching consequences, in both their business and private life. There are mainly two types of start-up business people; these are the young (between 18 and 30 years of age) and the older person who may be looking for a career change or feels they have all the relevant experiences in the building trade. The older person may have more on the job experience, dealing with suppliers (builder’s merchants and a casting plaster supplier). However the young business person approaches the new challenges with fresh eyes and new ideas that can hopefully solve most problems.
The problems that face both groups to set up the business are very similar. There are two ways to move into your own business; you could either buy an existing company or start your own from scratch. The first option has many pitfalls and raises many potential issues. Buying an existing company can leave you asking whether the business valuation and price is correct, whether the company’s accounts balance and what is the real reputation of the company with its current suppliers of concrete, materials and casting plaster. The true reason for the sale of the company may well not be the one given so make sure you do your research before you buy.
Building your business
If you want your name over the company door in the building industry then the way forward is to start your own company. This is where the serious planning, groundwork and inspiration starts. You and your business partner (if you have one) should have everything planned and these plans must be made as clear as crystal to your financial backers and building merchants such as credit for goods and your suppliers. To do this, a comprehensive business plan must be draw up; this plan must be transparent and concrete and must show that you understand the true costs and returns involved in the business. Remember that whichever bank or financial lender you request funding from will want to examine your business plan closely. The financial plan is the bedrock of your business model so it is important that you take your time over it and make it plausible. Ensure that you are not too optimistic and end up with problems in your model and the lenders will see this as good forward planning.
The company needs both an office and a builder’s yard to store building materials, supplies and company vehicles. If it is a rented property find out what special insurances are needed. To protect the various legal responsibilities that the company has it is advisable to use a good insurance broker. When a business is starting up in the building industry it is a good policy for the builder’s yard to be close to the suppliers and clients.
There are several different ways of trading; these include being a sole trader, creating a partnership or becoming a limited company. Whichever one you choose it must comply with all the relevant laws that are in force. In most cases it is advisable to employ a fully trained legal advisor to set this up. The company will need a competent and reliable accountant to deal with its taxation commitments. The accountant can help the owners with the worries of tax returns, but remember the owners and directors are ultimately responsible for all due fees and taxes.
The company must be and remain in good standing with its suppliers; this means paying credit as agreed and dealing with any problems as soon as possible. All builders employ contractors so it is important that you make sure that they do a proper job and that the company honours their terms and conditions.
The use of contractors can help the financial state of the company as you only hire them when they are needed. If the company has dealt with them correctly, then they will want to work for your company. Also you should always work closely with clients when choosing different materials to match their requirements as these small touches will enhance the reputation of your company.
Nick Thorping is a writer who has a keen interest in the building and construction trades. He recommends insuring your site when you find a new location for your business to ensure that traders such as a caster plaster supplier will want to work with you in the future.