Creating a Construction company.....how to begin??

[nil_nirajhalai]

hii everyone
basically my family is in business and sell alot of construction materials.
my best friend has decided he wants to start a construction company with my help. However we are both only 20 but hes a trainee civil engineer.
Is the age an issue?? What are the steps we should take??
How can we market to find potential customers?

 

[Techy]

Not wishing to put your off your ambitions but been there, done it and my advice to you is....

1. Get a job with a construction firm for about 5-10yrs to learn the ropes and make contacts.
2. Get involved in PM, QS, QA and H&S as well as technical engineering.
3. Work closely with the foremen / gangers and learn about actual physical construction opposed to how it should be done in an ideal world.

Could go on for ever but these are the fundamentals.

All the best!

 

[Printnpackage]

Age is not question, The question is your decision. Once you decide, you should go.
and get as much as expeirence from others

 

[JamesCartwright]

You may want to get some more experience in the construction industry before you start.

Have you thought about how the current downturn in the housing market will affect your business?

If you do go ahead, our website (Wisteria Formations) may be able to help with some of the limited company formation issues you may have when setting up.

Good luck with your new business!

James.

 

[vvaannmmaann]

As has been said.I don't think anyone becomes a builder overnight.Years of apprenticeships,labouring,learning from builders,not books.Good luck.


Have either of you done the Tea Drinking Foundation Course,Parts 1,2 and 3 ?
(Don't forget Part 3,everyone forgets that.)

 

[Chris Kaday]

Yes first learn your learning then apply it
Chris Kaday
Business Coach

 

[nil_nirajhalai]

yes those are pretty much all things I had in my head.
Well he has general knowledge from his degree and my dad owned a construction company for 15years so he has taught me some basic knowledge but I still believe not enough for the foundation of a construction company.
What my initial plan was that I know several builders so I could find the customer quote a price and sub contract it out at a lower price. So this way I have a more experienced builder helping and by me staying on site I could gain experience.

I still want to know about the marketing. I understand a lot of construction is marketed by word of mouth, but initially it must begin some other way. How would I use brochures??? Target a market area and post to all in that area???

 

[estwig]

As has been said.I don't think anyone becomes a builder overnight.Years of apprenticeships,labouring,learning from builders,not books.Good luck.


Have either of you done the Tea Drinking Foundation Course,Parts 1,2 and 3 ?
(Don't forget Part 3,everyone forgets that.)

Don't forget the NVQ in tutting and sucking air between your teeth, plus
the add-on modules...

White van man, how to.

and

Builders bum, how much.

Are also very valuable additions.

 

[Techy]

Nil,

I do my own marketting, no expert at it but it works for me!

I work for quite a few of the uk's largest PLC construction companies and unless you have the following they or LA's won't entertain you:-
- A proven reputable history of quality and cost effectiveness
- A robust company management system
- Accreditations (ISO9001, ISO14001, CHAS, Constructionline etc)

As James C says the UK construction industry is falling to bits with companies going bust every week, but if you identify a niche you should be ok.

My method of marketting is:-
- Identify all companies who may vaguely possibly need your skills, including the key people if possible
- Send them an introductory letter / brochure and politely and professionally follow it up

In my line of work a lot of tenders are sorted between associates before contracts are let, which I imagine is quite common in all sectors at every level.

With larger companies getting in touch with the right people is hard but getting past their assurance people is equally hard. You need to focus on the people who deliver the work, as they will get you past the assurance bods.

I wouldn't go down the route of taking on jobs you cannot deliver and using a subby to do it for you, as you will only end up with egg on your face when the client eventually finds this out. You would then have no chance with that client for a good few years. I appreciate a lot of large companies do this but they don't normally sub-let everything. Another risk in this is that the subby would catch on that you are using their efforts to make a few bob and they would most probably end up stiffing you somehow.

 

[nil_nirajhalai]

thanks techy,
great advice. I do understand the current economic situation and construction is majorly effected by it at the moment. How I am still only at a research stage. I figure looking up possibilities does not cost anything. I believe the size of projects you are thinking of are larger then I had in mind. I was planning on starting with small refurb and decorating jobs. Gain experience and develop a company name.

You really seem to know what your talking about. What is it you do??
what kind of work did you do for those large plc construction companies??

 

[Matthew_28]

Well, not sure where to start with this one.

I am 28 years old and have been in the construction industry for approx 8 years. I started off working for a materials supplier/manufacturer in the role of estimator and cad technician, and about 6 years ago i got involved with contracting -both subcontracting and main contracting.

I worked as estimator for a small subcontractor for around 2 years, then subsequently moved on to a £20+ million turnover main contractor / project management for 2 years before being head-hunted to the position which i am now in, working for a smaller main contractor and project management firm.

I have worked for both M&E and building/construction companies and have limited knowledge of M&E, but i'm mostly proficient in building.

I have had good fortune to earn what i consider to be decent money, my salary is circa £40k although i have recently taken a 10% pay cut due to downturn in business, another office worker has been made redundant and three of our site men have been made redundant, the overheads were just too much to sustain.

My current role is estimator / draughtsman / quantity surveyor / and contracts/project manager. Yes, before anyone takes the michael, i really do undertake all those roles, with the current business being a small (£3+ million turnover per annum) family run operation you find you need to be a jack of all trades. I have quite a few feathers to my bow shall we say lol.

My background has been in office based duties, quantities, prices etc and design, part of my knowledge of construction comes from the armed forces where i studied in building studies, i have always been interested in architecture, design and how this actually translates on site. Being a project manager it is good to get out of the office a couple of days a week and get on site with the lads, its certainly an experience. There are more tea breaks than you can shake a stick at so get them on rates not day works lol, you will notice that if a brickie is on a rate £/m2 then the tea breaks suddenly drop from 15 minutes to 5 minutes or none at all as he only earns whilst he's laying unlike day works or hourly lol.

(If i had my way, as part of their training, all architects would spend at least a year of their time out on site to learn the practicalities of what they draw out on paper). (Some) architects will drive you up the wall, literally, they tend to draw out the most loviest creations that cost the earth and simply cannot be built, they just dont understand how a site works or how something physically and practically goes together.

I am currently looking at starting my own business, i know one day this is definately what i want to do, but would it be in construction? -absolutely not.

Regards

Matt.

 

[estwig]

(If i had my way, as part of their training, all architects would spend at least a year of their time out on site to learn the practicalities of what they draw out on paper). (Some) architects will drive you up the wall, literally, they tend to draw out the most loviest creations that cost the earth and simply cannot be built, they just dont understand how a site works or how something physically and practically goes together.

Too true

If the architect won't agree to a year on site........Shoot him before he can cause any upset or damage!!!!!!!

 

[Matthew_28]

Too true

If the architect won't agree to a year on site........Shoot him before he can cause any upset or damage!!!!!!!

lol 100% agree with that one estwig.

 

[newsh1]

I have had 25 years in construction and still don't know everything there is to know. Age can be a barrier as the learning curve is very steep - an architecture degree is 7 years long and is, I believe, the longest degree course. You have had some good advice on this thread and if you are not careful you could really be shafted by sub-contractors and clients who will play on your inexperience.

Business is bad at present and you would be limited to domestic work for reasons pointed out by other forum members. My advice would be to gain employment with a contractor for two or three years, work all the hours, attend meetings etc. and listen and learn whilst planning ahead with a goal in mind. Avoid setting up as a trade where costs are transparent and therefore profits are lower (e.g. plastering, decorating, bricklaying where you will always be trying to beat the lowest cost per sq. metre). If setting up as a general builder surround yourself with the best people such as estimators, quantity surveyors, lawyers - this will pay off for you in the long term. Construction businesses make more money in the office than they do on site. As we say the pen is mightier (and more profitable) than the trowel!!

Oh and in 3 years time you will need health and safety so please get in touch via www.eurosafeuk.co.uk as we specialise in construction safety.

Good luck

newsh1

 

[Matthew_28]

I have had 25 years in construction and still don't know everything there is to know. Age can be a barrier as the learning curve is very steep - an architecture degree is 7 years long and is, I believe, the longest degree course. You have had some good advice on this thread and if you are not careful you could really be shafted by sub-contractors and clients who will play on your inexperience.

Business is bad at present and you would be limited to domestic work for reasons pointed out by other forum members. My advice would be to gain employment with a contractor for two or three years, work all the hours, attend meetings etc. and listen and learn whilst planning ahead with a goal in mind. Avoid setting up as a trade where costs are transparent and therefore profits are lower (e.g. plastering, decorating, bricklaying where you will always be trying to beat the lowest cost per sq. metre). If setting up as a general builder surround yourself with the best people such as estimators, quantity surveyors, lawyers - this will pay off for you in the long term. Construction businesses make more money in the office than they do on site. As we say the pen is mightier (and more profitable) than the trowel!!

Oh and in 3 years time you will need health and safety so please get in touch via www.eurosafeuk.co.uk as we specialise in construction safety.

Good luck

newsh1

Excellent advice, just to touch on a point you mentioned, I 100% agree with the money is made in the office. I can often make some good money on negotiating subcontracts, supplier costs etc, especially in a downturn as everyone is keen just to get the business in to fill up their order books.

The money made often goes nicely into a contingency pot for the architect's cock up later down the line, or christmas beer money, or directors divendends lol (or there's always that thing that everyone thought everyone else was doing, that item that suddenly crops up when everyone points the opposite direction, the mr nobodys item lol).

But seriously some good money can be made in the office especially on extras, just depends how clever you are with figures and the client/client's QS. its all good fun but seriously i only do it because its what i know and i've got an hell of a lot more learning yet to do.

As mentioned above, surround yourself with the important people, perhaps Project Management is the way forward.

Regards

Matt

 

[nil_nirajhalai]

lolll thanks matt i shall take that all into account.
yee my family owns a business selling interiors. Tiles ,kitchens , bathrooms and what not. I figure as I have quite a few years experience with that sort of stuff I could try interior fittings to start off. Company is not huge ( approx £2 million turnover).
My idea is residential construction and refurbs. Seems people have got the wrong idea about the size I want to start.

So matt what kind of business did you have in mind??
or just real estate investments??

 

[hughlss]

Nil,
I'm in east London and have had several years of successful property development, including refurbishments and conversions. That has come to a stop now with the current financial situation.
In my case it was a side-line as I had an unrelated professional background from which I'm retired (I'm now 63) but also run a growing import/retail ecommerce business.

At first I was doing a lot of the refurbishment work myself or with a builder friend and it would take us 6 months or longer to finish a property mostly weekends and odd days but it all changed when I got a local property developer to do the whole job from beginning to end - in and out within 6 weeks with a fully refurbed house (well, ready to market, anyway). He did several for me and my margin was excellent.
This chap is one of the biggest in my part of the world and well-known by all the local agents - and well-known for good standards of work.

My suggestion to you would be to contact such a person in your area - either by asking local estate agents - or via your family business, presumably they sell to property developers. But at the same time make your mark with the estate agents - they're the ones that will find you the 'deals' for a four figure consideration!

Now isn't the time though - the property market is set to dip further and go sideways for several years. Don't listen to the so-called experts trying to talk the market up. But having said that there are always opportunities - a good deal that someone's overlooked. If you're desperate to get into this then if, and only if, you have the finances find a run-down property in the right area and at the right price - get it refurbed and rent it out. That's the only way as I don't think there's scope to turn round properties at present and don't whatever you do mortgage yourself to the hilt.

One thing I can guarantee you though is that if you can be patient then the next property boom should start in around 6-7 years time and you can easily make a serious fortune from that time on. It all goes in cycles - don't listen to anyone who says otherwise!

hugh

 

[nil_nirajhalai]

ok hugh so are you saying to flip properties and only do refurb work on my own properties??? I have considered this as I could also supply myself through my family business. The problem is that due to the current economic situation the lending for mortgages to do this has become very risk adverse. Therefore the deposit money i would need would be alot more then I thought.
Any way around this?? Wow 6 years?!?!?! I never heard that everyone I speak to say 2/3 years of a sideways market.

 

[Techy]

Nil,

Your a lucky chap, not seen so many positive responses to a post since I came accross this site about 6months ago.

In answer to your previous questions I run a very niche civils / HV electrification design / site services company and luckily it is oblivious to the downturn.

You seem determined to go for it, so my advice is:-
- Go for it
- Start small and think big
- Get a short catchy name
- Set us the basics professionally yourself (image, website, management system, assurances, agreements etc)
- Get good people supporting you until you learn enough
- Work your nuts off and delivery the best quality work
- Make a few bob and ignore competitors prices
- Treat everyone like they are your mate, without bumming or being in awe
- Look after employees as best you can and work them to your expectations
- Let subby's know your in charge by proven recognition, if you want to use them

Can't really offer much more positive advice, as the chaps have already very generously covered most things.

Matthew seems a very all-round guy, with a small (or large) company guys like him are gold dust!

Best of luck

 

[nil_nirajhalai]

heyy techy nice to hear from you again lol
yee I am determined, plus I have grown up in business so have learnt alot. I think I have the skills to make it work and everyone seems worried about me subcontracting incase they try to shaft me, but the person I have in mind has done building work for my family for several years and never had a problem with him. However I think it would be unwise to start in the current market condition. Also the age thing doesnt affect me at all, I have great faith in my skills that point was more for my friend.
The marketing tips were one of the main things i needed. Some advice was very helpful. But in order to attract my first few customers should I just post leaflets out to all houses in my local area??

yee matts tips are very insightful

 

[newsh1]

The marketing tips were one of the main things i needed. Some advice was very helpful. But in order to attract my first few customers should I just post leaflets out to all houses in my local area??/quote]

If you are targeting the domestic market get onto your local councils web site and look at the planning applications. When you see a job you fancy simply write to the homeowner offering your services. Ensure that you send a nice letter on a quality letterhead to give it the professional touch. This is a better way of ensuring you target proper leads as opposed to the leaflet drops. Hope this helps.

Regards
newsh1

 

[nil_nirajhalai]

ooo ye great idea. Are all the planning applications open for the public to see??

 

[newsh1]

ooo ye great idea. Are all the planning applications open for the public to see??

Yes - they are available either by going to the council offices or by looking on-line on your local councils web site. Also you can subscribe to the likes of ABI Barbour who collate and send you projects you may be interested in. Cheers

 

[Danny Bluestone]

Have you got a business plan and have you studies benchmarked other construction competitors? What is unique about your services?

Did you register your construction company in companies house? Are you going down the Ltd route?

As well as being able to register a Ltd company for £25 in 10 easy steps Wisteria formations can also offer business advice to startups.

 

[Danny Bluestone]

Just saw your note about marketing - would recommend a marketing plan.