How to Start a Contracting Business in 9 Steps

1. Choose what contracting services you’ll offer

Before you start a contracting company, decide if you want to offer a broad range of services (general contracting) or stick to a specific area of expertise. 

A general contractor manages and oversees entire construction or renovation projects, coordinating multiple trades like carpentry, plumbing, electrical work, and more. This allows you to offer a variety of services under one umbrella, making you a one-stop solution for clients who need multiple tasks done.

Choosing a specific area of expertise (or “niche”) allows you to focus on the type of work you’re most skilled at and enjoy doing. And it can set you apart from competitors.

You can also specialize in different kinds of contracting work, such as:

• Carpentry
• Electrical
• Painting
• Plumbing
• Roofing

By choosing a specific trade or offering general services, you can better plan your business and target the right customers.

Each trade has its pros and cons. Some trades, like plumbing or electrical, often require more training and certification but may pay higher rates.

Others, like painting or landscaping, might have lower entry costs but could face more competition. Consider what’s most important to you—profitability, ease of entry, or personal interest.

2. Develop a business plan

Creating a solid business plan is one of the most important steps when you start a general contracting business. A business plan helps you organize your ideas, map out your goals, and figure out how your company will operate.

This document will also be essential if you’re seeking financing or investment, as it shows others that you have a clear plan for success. It should include the following:

• Cover page: Include your business name, logo, and the date you created the plan.
• Table of contents: List the different sections of your business plan so it’s easy to navigate.
• Executive summary: Provide a recap of the plan, highlighting key points such as your niche, target market, and financial goals.
• Business overview: Describe your contracting business, including the services you’ll offer and the customers you plan to serve.
• Services list: Detail the contracting services you’ll provide. This might include carpentry, plumbing, electrical, roofing, or general contracting services where you manage multiple aspects of a project.
• Pricing strategy: Outline how you’ll price your services. Consider factors like the cost of materials, labor, overhead, and profit margins.
• Market analysis: Identify the area you’ll serve and the demographics of your target customers. Research local competition to understand the demand for contracting services.
• Competitive analysis: Identify the strengths and weaknesses of other contracting businesses in your area. Explain how your business will stand out—whether through pricing, customer service, or the specific services you offer.
• Marketing plan: Develop a strategy for reaching your ideal customers. This could include online marketing, local advertising, or building relationships with property managers.
• Employee planning: If you plan to hire employees or subcontractors, outline the roles you’ll need and a timeline for hiring. This is important if you plan to scale your business as demand grows.
• Financial projections: Provide estimates for your first year of business, including expected income, expenses, and cash flow. This helps you understand what you’ll need to break even and eventually become profitable.

Don’t need a business plan to get a loan? It’s still smart to create one, and you can find a more complete guide to writing it from the Small Business Administration.

3. Set up your legal business framework

Once you’ve developed your business plan, the next step is to make things official. Registering your contracting business ensures you’re operating legally and can start taking on clients. Here’s how to get started:

Name your business

When you start a contracting business, you probably already have a name in mind. If you don’t, make sure you choose a name that’s unique and that reflects the types of services you offer.

A strong name can help attract clients and establish your brand. Before deciding on one, though, check your state’s business registry to be sure it isn’t taken already.

Choose your business structure

Next, decide what business structure you want to register as. Typical options for small businesses include:

• Sole proprietorship: You run your operations alone and want complete control over your business.
• Partnership: You’re opening your contracting business with two or more people who are still legally considered self-employed.
• Limited liability company (LLC): You run a business that involves risk, and you want to protect yourself from personal liability.

READ MORE: Should I incorporate my small business?

Register your business name

Then you’ll need to register your new name. In the United States, as long as nobody else in your state is using your company name, you can trademark it and register your domain name.

Keep in mind that you’ll need to create a logo at some point, and it should be easy (and fun) to design and advertise. Here’s an example of a great logo in action:

4.  Get licensed and insured

A general contracting business license allows you to run your contracting business legally. You need a license to operate.

The license you need will vary from state to state. Contact your local Chamber of Commerce or the Small Business Administration (SBA) to find out what you need.

Licensing and registration can cost between $75 and $400 per year, depending on your region. You’ll need to display your business license in your office or when asked to provide proof of registration.

Then there’s business insurance.

Insurance protects your business and employees from losses caused by injury, property damage, or other unexpected incidents.

There are different types of insurance you can choose from, depending on the coverage you need:

• General liability insurance covers you financially if someone is injured on the job site or a customer’s property is damaged.
• Commercial property insurance protects you in the event your office, storage space, or equipment is damaged.
• Commercial auto insurance covers your company vehicle in case of collision or other damage.
• Workers’ compensation protects your business if an employee is injured on the job.

5. Open a business bank account

Open a business bank account and get a business credit card to keep your contracting finances separate from your personal ones. And it happens to be a requirement if you decide to incorporate your business.

You can use accounting software like QuickBooks Online to track expenses, run payroll, and organize your finances.

Pro Tip: Use Jobber’s QuickBooks Online integration to manage your accounting in the same place you schedule and manage your work.

6. Build your team

As you start a small contracting business, building a strong team will help you deliver quality work and scale. Whether you’re hiring subcontractors or employees, plan carefully so you have the right people in place.

READ MORE: Hiring your first employee: when and how to do it successfully

Hire subcontractors or employees

In the early going, you’ll need to decide whether to hire employees or work with subcontractors. Subcontractors are independent workers who handle specific tasks for you, while employees work directly for your company.

Since you’re just starting out, hiring subcontractors might be more flexible and cost-effective. You only pay them for the jobs they finish. Make sure you’ve read your local subcontracting laws before hiring a subcontractor.

On the other hand, employees give you more control and can help build a consistent, long-term team. You’ll have a team you can train and grow with.

READ MORE: Subcontractors vs. employees: a complete overview

Join an industry association

Joining an industry association is a great way to find skilled people to join your team, stay updated on the latest trends, and gain credibility.

Associations like the ones below often provide training opportunities and networking events that can help you grow your contracting business:

• Associated General Contractors of America (AGC)
• Associated Builders and Contractors (ABC)
• Regional groups like the California Building Industry Association (CBIA)
• Local builder exchanges and contractor associations

Create a training plan for new hires

As your contracting business grows, you’ll need to train new hires to understand processes and meet your quality standards.

Develop a training plan that covers safety protocols, company policies, and job expectations. This helps everyone get up to speed and work efficiently.

Pro-Tip For more advice on building your team, hear from home service experts in this episode of Ask a Business Mentor:

7. Get your essential tools and equipment

Naturally, you’ll need the essentials when it comes to equipment for starting your contracting business.

If you’ll be doing general contracting work, here are some tools or equipment you’ll need to get started:

Measuring tools:

• Carpenter’s square
• Chalk line
• Laser level
• Tape measure

Safety equipment:

• Ear protection
• Hard hat
• High-visibility vest
• Safety glasses
• Steel-toed boots
• Work gloves

Hand and power tools:

• Adjustable wrenches
• Circular saw
• Cordless drill with bits
• Hammer
• Impact driver
• Pliers
• Power sander
• Pry bar
• Reciprocating saw
• Screwdrivers (various sizes)
• Utility knife

Other essentials:

• Extension cords
• Heavy-duty ladders or scaffolding
• Tool belt or tool bag

Tools can be expensive, but there are financing options available:

• Loans: Many banks and credit unions offer small business loans to help you cover the cost of tools.
• Financing: Some lenders specialize in equipment financing, where you can borrow money specifically to buy tools. The equipment acts as collateral for the loan.
• Leasing: If you’re not ready to commit to buying upfront, leasing is an option. Use the tools for a set period of time while making smaller payments.
• Credit cards: In some cases, you can use a business credit card to buy tools and pay them off over time.

Maintenance

Once you’ve secured the tools you need to do most projects, maintaining them will be just as important. Proper maintenance extends the life of your equipment and helps you complete jobs on time.

Set some type of schedule to inspect and clean your tools. Look for signs of wear and tear, and address issues before they become major problems. Track the maintenance and repairs of each tool to get an idea of when it might be time to replace old equipment.

Business software

In addition to equipment, you’ll need contractor software to keep you organized. Here what you can do with Jobber’s general contracting software:

• Quickly create professional estimates that include suggested add-ons or optional packages. Jobber helps you set the right price every time with quote markups.
• Add jobs to your schedule quickly. Jobber lets you visualize your visits for the day and automatically generate most fuel-efficient routes.
• Manage customer details, work orders, and communication—from the office or on the go. Jobber makes it easy to keep track of the information you need to complete jobs smoothly.
• Instantly convert a job into a professional invoice that’s ready to send to clients. Then set up automated payment reminders to get paid faster and improve your cash flow.

8. Price your services

You need to set the right prices for your contracting services to be successful and profitable. Consider these common pricing strategies:

• Hourly rate: This method charges the customer based on the amount of time spent doing the job. It’s useful when the job is less predictable, or when the amount of work needed can vary. For example, a general contractor might charge $75 per hour because the time needed can vary depending on the scope of the project and challenges like material delays.
• Flat rate: This involves charging a fixed price for a job or service, no matter how long it takes to finish. It’s useful when the tasks are standard and can be easily estimated. For example, a plumber might charge $200 flat for a basic faucet replacement, including removing the old faucet and installing a new one.
• Cost-plus: Calculate your expenses (labor, materials, and overhead) and add a markup percentage. This ensures you cover all costs while maintaining a consistent profit margin.

When determining your pricing structure:

• Research competitor rates in your area.
• Calculate your overhead costs and desired profit margin.
• Consider the complexity and duration of different project types.
• Factor in your experience and expertise.

9. Get your first contracting customers

The first step to attracting clients for your contracting business is creating a brand and establishing an online presence. This helps people find and contact you.

Try these marketing tactics to get new clients:

Build your brand

Your brand is the face of your business. It’s how people recognize and remember you, and it should reflect what makes your business unique. To develop your brand:

• Clarify your value proposition. What sets your contracting company apart? This could be your target customers, your business ethics, or a standout quality you’re proud of. Summarize it in a catchy, memorable statement.
• Design a logo and choose brand colors. You can use a tool like Looka to create a simple, recognizable logo. Be sure that your logo and color choices represent what makes your business distinct.
• Get a business phone number and email. Many email services offer free options, or you can use a custom domain name if you bought a website address.
• Decide on uniforms. This can help present a professional image while working. Consider ordering branded t-shirts, hats, or other gear in your company’s colors.
• Print business cards and add vehicle signage. Include your logo, company name, phone number, website, and email on both.

Build your online presence

Your potential clients are searching for services online. By building a strong online presence, you make it easier for them to find you. Here’s how to get started:

• Create a Facebook business page. Share project photos, client testimonials, and promotions.
• Set up profiles on Instagram and LinkedIn.
• Claim and optimize your Google Business Profile so you show up in local searches.
• Build a basic website using tools like Wix or Squarespace.
• List your business in online directories such as Angi, HomeAdvisor, Houzz, and Yelp.

READ MORE: How to build an online presence for your business: 4 low-cost steps

Promote your services

When starting out, you’ll need to be proactive. Here are some marketing strategies to help you grow:

• Post tear-away flyers on bulletin boards in local coffee shops, libraries, or community centers.
• Launch a referral program to encourage your happy customers to recommend you to others, offering them an incentive for each new client they bring.
• Hand out business cards at local businesses, community events, or even the hardware store.
• Use pay-per-lead services like Porch or Thumbtack to connect with people actively searching for contractors.
• Run Google Local Services Ads so your business appears in search results when someone nearby looks for contracting services.