For some, the American Dream is to own a home. But your dream may be to build them. You’re drawn to the whole process. Now you might be wondering: Is construction a good career? And are you prepared to strike out on your own?
Let’s explore why now might be the perfect time to turn your dreams into reality. We’ll lay out the blueprint for how to become a home builder or general contractor and embark on your new career.
Let’s get building.
6 Reasons Why General Contracting and Construction is a Good Career Path
It may make sense to become a contractor if you have the skills. But are there other incentives? Here are six major reasons why construction may be a solid career choice:
1. There are more jobs in the construction career path than there are workers available.
According to the Associated Builders and Contractors1, demand for construction workers leveled out somewhat in 2023 but remained high overall. There’s a surplus of construction job openings and not enough workers to fill them. Simply put: the construction industry is experiencing a labor shortage, and workers with your skills are in demand.
2. A machine can’t replace a homebuilder career.
Machines have replaced many jobs in recent years, but they can’t do what you do. Technology might be smart enough to assemble a car, but at this point it’s not smart enough to assemble a house.
3. A general contractor’s salary can be significant.
Money isn’t everything, but it’s certainly something. Luckily, according to research by home services website, Angi2, plumbers, electricians, and general contractors have an average annual earnings of 22%, 29%, and 53% higher than that of the general population.
The study also found that earning tends to grow in the construction career path. As tradespeople move from entry level to more experienced status, wages can nearly double as well, depending on different skill sets.
4. The homebuilder career path can be fulfilling.
Working your own home construction job allows you to exercise the business and creative side of your brain. You may find yourself looking at your work and marveling at it. Or you may walk by your project a year from now, smile, and think, “I designed that” or “I built that.” The bottom line is, if you become a homebuilder, you can experience a unique sense of job fulfillment.
5. A general contractor career offers flexibility.
When you become a general contractor, you’ll get more flexibility in when, where, and how long you work. Calling your own shots can lower your stress level and boost your sense of purpose in your work and in your life. Flexibility in and of itself is one great reason to investigate how to become a homebuilder or general contractor.
6. A construction career offers variety.
Masonry. Plumbing. Carpentry. Roofing. Electrical. Engineering. Architecture. There are few career paths that offer the same degree of variety as general contracting. And even though you may be super-skilled at only one or two of these jobs, you may have input and insight into all of them. As you research how to become a general contractor, look at all of the different types of professions where you may interact. It’s exciting!
How to Become a General Contractor
When you’re sussing out whether construction is a good career option for you, you’ll probably ask yourself:
- Where do I start?
- What training is required?
- What are the essential skills?
- How do I protect my business financially?
You’re in luck. We’ve mapped out how to become a general contractor with all the basic steps to help you get started.
Step 1: Do your research.
First, as you become a homebuilder or contractor, you’ll want to know your competition. Here’s what you should look into:
- What do they specialize in?
- How much do they charge?
- What’s their reputation?
- Is the sandbox big enough for all the contractors to play in?
At the same time, keep in mind who your potential customer base might be. Speak with them directly to share your ideas and understand their needs so you can identify pockets of differentiation and opportunity as you become a contractor.
One good place to start your market research is with the U.S. Small Business Administration (SBA)3. They offer a wide range of free resources that provide hard data on customers and business markets in the construction career path.
Step 2: Write your business plan.
Once you understand your local market, begin drafting a business plan. It’s one of the most important documents you’ll create when first starting out, as it can help you keep your business and goals pointed in the right direction. It’s your North Star for your general contractor career. It’s also what lenders will ask for when you apply for a small business loan.
For more help getting started, check out our free business plan template. You’ll find tips and resources, as well as a customizable PDF template to help you build your business plan.
Step 3: Register your construction business.
Registering your business makes it an official legal entity. To do it, you’ll need a business name and business structure. When deciding on a business structure, it’s a good idea to consult with an attorney or business advisor. However, here are some common ones in the general contractor career path.
Sole proprietorship: A sole proprietorship links you, the owner, to your company. This business structure is easy to form, inexpensive, and offers tax benefits. But it usually does not protect you from personal liability.
Corporation: A corporation model allows the business to operate as a separate entity, which can protect you from personal liability. If you’re investigating how to start a general contractor company, this may be the right choice.
Limited Liability Corporations (LLCs): An LLC offers a combination of tax benefits and personal liability protection for small business owners. For those reasons, many construction owners choose an LLC4.
Step 4: Get the right licenses and permits to become a homebuilder or contractor.
Licenses and permits are important. You may need them to operate legally. Without them, you run the risk of incurring hefty fees and tax penalties5. You might even be forced to close down if you’re not licensed and insured.
To help you avoid major headaches down the line, we created an easy guide to getting your contractor’s license. It explains why you may need to be licensed and insured, and what the requirements are for your state.
Step 5: Secure insurance and liabilities.
The homebuilding industry can be rife with risks of injuries, accidents, and lawsuits. That’s why it’s important to consider having contractor insurance in your business toolbelt.
Contractor insurance describes a bundle of policies that provide comprehensive coverage for general contractors. This coverage is meant to protect you from the biggest risks you’ll likely face in this line of work. Examples of policies we recommend include:
- General liability. Typically provides coverage against costs associated with third-party accidents, property damage, and bodily injury. In your industry, it’s critical to be licensed and insured.
- Professional liability. Typically provides coverage if your customer sues your business for mistakes in providing your services.
- Workers’ compensation. Typically protects you and your business if your employees get hurt, injured, or sick while working on the job.
- Inland marine. Will typically provide coverage for tools that are damaged, lost, or stolen.
- Business personal property. Will typically include equipment insurance and covers furniture, fixtures, and inventory that you own, use, or rent at your workspace.
It might sound like a lot to absorb. Fortunately, at Simply Business®, we’re here to help.
We work with leading national insurers to help you find affordable insurance coverage tailored to your specific risks. Best of all? We make it fast and easy to get insured. To get a quote, it usually takes just under 10 minutes to find affordable contractors insurance, and we can take it from there. Or if you want to talk to a helpful human (one of our licensed insurance agents), you can give us a call at 844-654-7272.
Get Insured in Under 10 Minutes
Get an affordable and customized policy in just minutes. So you can get back to what matters: Your business.
Step 6: Get funding.
It’s important to consider contractor start-up costs6, expenses, and reinvestments. The construction career path is a good one, but it can take a bundle of cash to get it started.
Covering the necessary costs associated with licenses, permits, business insurance, legal fees, and equipment to start a career as a general contractor could run you several thousand dollars or more.
If your cash savings aren’t enough to cover these costs, you may need credit. If your credit score isn’t up to snuff, you might want to get a secured business credit card. It can be a great way to build or rebuild your credit while driving your small business forward.
If you’re interested in learning how the loan process works, we wrote a guide on how to get a small business loan. In it, we share a few tips that can help get your business started and keep it running successfully. Once this step is behind you, you’re well on your well to become a general contractor.
Step 7: Grow your business.
Home construction is one of those businesses you usually don’t do by yourself. You’ll likely need a team. Focus on acquiring skilled, knowledgeable, and dependable employees to grow your homebuilder career. And be sure to treat them well. If they feel valued, it’s more likely they’ll want to stick around and help you grow your business with you.
Here are some other tips:
Treat your customers well.
Sounds like a no-brainer, but the demands are usually high on the customer side of the construction career path. Your diplomacy skills are likely to be tested early and often.
Clear and active communication is key to preventing and diffusing any potential conflict that might arise. Although you don’t have to give in to every unreasonable demand, it’s important to work hard to fulfill your clients’ expectations.
Keep investing in your business.
The more productive you are, the more profitable you can be in your contractor career. Investing in new technology and equipment can help you on that front.
Boost your construction career path with proactive networking.
Networking is part of the job if you want to hire and retain good employees, create profitable relationships with vendors, and secure new clients. To do this, consider joining and staying active in a local chapter of a trade association. It will help you become a well-connected homebuilder or contractor.
Dream. Reach. Build.
You’ve probably been thinking about how to become a general contractor for a long time. But for some reason, maybe that dream has felt out of reach. Until now.
Although starting a general contractor career can be a big undertaking, it can be hugely rewarding. The opportunity is out there. Build on it.
References:
- Learn more at abc.org/News-Media/News-Releases/abc-construction-job-openings-decreased-by-5000-in-june
- Learn more at Learn more at angi.com/research/reports/skilled-trades/
- Learn more at sba.gov/business-guide/plan-your-business/market-research-competitive-analysis
- Learn more at domyllc.com/the-business-structure-of-a-construction-company/
- Learn more at angi.com/articles/common-problems-when-you-dont-pull-permit.htm
- Learn more at starterstory.com/ideas/construction-company/startup-costs