Guest post by Sara Mackey
As positive as recent economic data has been in the United States, all economists agree that a full recovery is not possible without significant improvement in the residential real estate market. Banking foreclosures and qualifying for a mortgage with an adequate down payment are the obstacles at hand. As a result, the rental and leasing business has grown materially, well above inherent cost structures, and where there is high demand for rentals, the need for residential contracting firms is also increasing.
Is now the time to start your own residential contracting company? The answer is undoubtedly “Yes”. Timing can be everything for a new venture. The key for any new firm is to gather new customers as quickly as possible at low cost and to build on those early successes going forward. You also need to be passionate about being your own boss and be prepared for the time commitment involved. Your relationship skills will be tested every day, as you deal with your customers and with family members that feel that you may have become obsessed with your new undertaking.
Starting a new business can be a very time-consuming effort, but the rewards are worthwhile if you are persistent and determined to accomplish things on your own. Here are a few other pointers when starting a residential contracting firm:
- Self-Assessment: Now is the time to ask yourself and your family if you are ready to start your own company. Time will be in small supply, as well as money for the short-term. You will need discipline and an assortment of skills, although others can perform some of these tasks. You, however, will handle the hiring and firing, new client acquisition, accounting, and advertising. Timeliness and reliability are necessities in this industry, together with honesty. Check your passion and desire, and act accordingly;
- Industry Research: Research building codes, local permit requirements, and learn from other firms how they conduct their businesses. There are no shortcuts for experience, but counsel from industry “mentors” is highly advised;
- Prepare a Business Plan: You can get help for this effort, but you want to estimate in detail your equipment and staffing needs, state licensing requirements, insurance, website, and accounting/billing software needs. Offset these projections with expected customer revenues to arrive at your base-line financial needs. Investment capital will be needed to get started, and once you are up and running, you will also need working capital to cover operating deficits until you reach break-even and the delays in collecting from your clients. Arranging sources of investment and working capital will demand a healthy portion of your overall effort;
- Initial Marketing: Create an attractive name for your business, and decide how you will gather potential customers, prepare estimates, and allocate resources for the work at hand. A commercial vehicle with your information prominently displayed is a “must have”.
There is never a perfect time to start a new business, but the timing now seems appropriate. Good Luck!