Do you harbor entrepreneurial ambitions? Owning a contracting business is one of the hottest business ideas right now.
The U.S. government spends over $4 trillion every year through contracting some of its functions to businesses. If you know how to start and run a successful contracting business, this is a huge market to tap.
While government contracts can be a lifeline for businesses, they can also be a source of red tape. But if you’re willing to learn the ropes, you can build a prosperous business working on government and other contracts.
Here’s a useful guide to help get you started.
Create a Business Plan
You need to have a business plan before anything else. A business plan is the road map for your business. Be sure to include a list of all the services your contracting business is going to offer.
Conduct extensive market research to get realistic financial projections on the capital needed to start a contracting business. Your service rates must be based on competitive analysis.
A good business plan acts as a solid foundation for your idea. It’s from this foundation that your business will grow and spread. Get a business plan wrong and your business will lack a sense of direction.
A business plan is what defines the scalable systems and procedures that will run your operations.
Raise the Needed Capital
How much capital do you need for your business?
There are multiple ways to raise capital for your business, and you are the very first source of capital. Besides yourself, consider other sources of financing such as banks, friends and family, crowdfunding, and investment companies.
Your business plan should provide a comprehensive breakdown of your financial requirements. This makes it easy to approach equity investors or seek loans from the bank if you have the collateral needed.
Get Your Business License
To run a contracting business, you’ll need to obtain all the required licenses from the government. Without proper licensing, you cannot legally operate as a contractor. Research about the legal requirement to avoid repercussions.
Decide how your contracting business will be legally structured. Will you run it as a sole proprietorship or incorporate it? If you are looking forward to incorporating your business, do so before engaging any clients.
You need to buy the right insurance policy to protect yourself from business risks that may lead to financial losses. Research about the different types of insurance and find the most suitable coverage for your business.
Hire the Right People
Before hiring anyone, you should conduct background checks on them. You need employees who are talented and qualified, but most importantly trustworthy.
Your employees should be able to handle the tasks assigned to them with minimal or no supervision. This allows you more time to focus on other important business matters that require your attention.
Outsource Some Business Functions
Although you’re trying to make the best of every dollar, you can’t do everything yourself. It makes good sense to outsource some things.
When done right, the money allocated to outsourced functions can generate a higher ROI. An example of such functions is marketing (blogging, web design, building maintenance, email marketing, social media, and PR).
Outsourcing can also relieve some stress while helping you to focus on growing your company.
Market Your Business
Marketing plays a significant role in business growth. When starting a contracting business, one of the major challenges is to attract clients. You need to create a marketing plan that will get your business noticed. Reach out to family, friends, and strangers.
As a startup, implement simple inexpensive marketing plans to avoid financial strain.
Your marketing shouldn’t only focus on getting new clients. Market to communicate your business’ value proposition in a way that your target market doesn’t just appreciate, but embraces it.
As part of marketing, create an attractive website that lists all the services you offer, the fees related and the sales process involved. Make sure your website has updated contact information.
As a startup, take time to document everything. You can save money on accounting fees by becoming your own accountant. Consider using accounting software to make your bookkeeping tasks easier.
With the help of accounting software, you can easily track your expenses, manage invoices and generate reports for quick tax reporting. Avoid manual record keeping if you can. It’s cumbersome and may take up too much office space as your business grows.
Providing adequate physical security for your business will be critical to securing important documents stored in the office computers. In this regard, learn more here about choosing the right door for your business.
Professionalism is key when it comes to contracting business. You must respect your clients, and employees as well. Potential clients who don’t know your brand will likely be turned off if you don’t dress or behave the part.
Having bad reviews on your website will tarnish your professional image.
Take Time to Grow Your Contracting Business
Don’t be in a hurry to see your contracting business grow. Instead, focus on creating a favorable environment for business growth. Expansion may require employing additional staff to handle the increasing workload.
Hiring additional employees is a tough call and many contractors chose to remain solo for a number of reasons.
The more specialized your line of work is, the more challenging it is to find qualified personnel. There is also paperwork involved with hiring employees.
Unless extra employees generate more income, there’s no point of expansion.
Operate Your Business with Honesty and Integrity
The best client is the one you keep for life. You need to build your business reputation based on honesty and integrity. Don’t over-promise or under-deliver. Treat every customer well. Genuinely thank them and charge fair prices.
Don’t give your clients any reason to feel uncomfortable.
Always Have a Plan for Growing Your Contracting Business
You need to thoroughly examine your current financial situation, lifestyle, and future plans before you decide to start a contracting business. Being your own boss has many advantages, but it also means the success or failure of your investment depends on you.
Check out our blog post to learn about the complete business infrastructure for your startup.