How to Become a Contractor: Construction Contractor Basics

If you’re interested in becoming a contractor — general or specialized — you’ll need to have a significant amount of experience in at least one construction trade. Overseeing the planning process and successfully completing each step toward executing the plan requires knowledge that can only be gained through hands-on experience. 

In addition to practical knowledge, contractors also need to have a strong set of soft skills, including great leadership skills, proactive communication, and perhaps most importantly, impeccable organization and time management. In years past, contractors have relied on the tried-and-true — yet often unreliable — method of scrawling notes on the back of receipts using an old carpenter pencil stub. Today, smart contractors are using field management software like VIIZR, a platform that provides contractors with a “home base” where they can access important information with just a few taps. 

Before you choose contractor software, you’re going to have to complete a number of tasks — practical, legal and personal. Let’s get started with a step-by-step look at how to become a contractor.

What kind of contractor do you want to be? 

Your first step toward becoming a contractor is to choose the type of work you’d like to do. There are two primary choices: general contracting or specialty contracting. When deciding on the path you’d like to take, it’s a wise idea to do some research into the types of contractors that are currently in demand in the area you plan to work. Here’s a quick comparison of the two main types of contractors:

General contractor

General contractors are “big-picture” people who work on residential or commercial construction projects and are responsible for overseeing the entire job, including the subcontractors involved in the project. General contractors need to have a deep understanding of a variety of trades. Their main goal is to get the construction job completed accurately, safely, on time and on budget.

Specialty contractor

Specialty contractors do the work that uses trade-specific skills. States and local jurisdictions define the trades in a variety of ways — and the requirements you’ll have to meet are different, too. There are dozens of specialties to choose from, including roofing, plumbing, masonry, HVAC and more. If you want to specialize in a single trade, this might be the right option for you.

Research education, experience and licensing requirements for contractors

Becoming a contractor is a lengthy process, yet well worth the time as construction will always be in demand. Obtaining the necessary qualifications to call yourself a contractor begins with basic education and training, moves on to hands-on experience, and finally, successful completion of a state exam.

Basic education and training might look a little different for everyone, depending on your location. You may need to complete some traditional education requirements (like obtaining a bachelor’s or master’s degree in architecture, project management, or construction management). Or, you may choose to seek out contractor training through a contractor school program. Whatever the requirements of your state may be, contractor education teaches you everything you’ll need to succeed in your trade: financing and budgeting, construction regulations, materials, workplace safety, energy-efficient construction and even business and marketing skills. 

Hands-on experience comes next, typically in the form of a construction apprenticeship or working a construction-related job. This is where you’ll learn the skills that can’t be taught in a classroom. The amount of experience you’ll need before you can take the licensing exam varies, but it’s generally three years or more. During this time, you’ll work side-by-side with experienced contractors who have real-world experience in the inside workings of the construction industry. 

Finally, you’ll study for and take your licensing examinations. Get in touch with your state’s contractor’s licensing board and figure out what you need to do to get certified. In the typical case, you will need to undergo an application process that involves completing an application form. The contractor license requirements that you can expect might include:

• Business entity documents
• Personal information for all owners and stakeholders
• Contractor license bond
• General liability insurance
• Worker’s compensation insurance

Many contractor licensing boards will provide prospective licensees with a wealth of information, including an explanation of the process, who’s required to take the exam and even online study guides. Proper contractor’s licensure is a must — in some states, you can face steep fines or find yourself unable to obtain a legitimate license later on.

In addition to meeting the licensing criteria, you will have to pay licensing fees. They may be required on an annual or biennial basis, depending on the period of your license. The typical yearly amounts are between $50 and $200. At regular intervals, you will also have to renew the license and provide all paperwork to extend its validity. 

I’ve got a contractor license — now what?

Now it’s time to create your business plan. Opening a new contractor business involves a lot of moving parts, which is just one reason why you need to have a carefully-considered business plan in place. Your business plan is a formal record that spells out your contracting business’s goals and the metrics that will define your business’s success. Your business plan will be tailored to your unique situation, but most business plans include information such as:

• The name, address, owner or representative and other basic information about your contracting business
• The names, titles and duties of the leadership team
• The purpose, goals, unique selling proposition and overall mission of your business
• A customized strategy for advertising and marketing 
• Financial plans and projections, including an itemized list of startup costs and future operating expenses

If you feel like your business plan is missing any information, take the time to go back, do some research, consider your options and find solutions. Your business plan is the blueprint for your new business, and it will guide you as you grow your business, help you get in front of problems and let you take full advantage of new opportunities.

Put your business plan into action

You’ve got a lot of options when it comes to becoming a contractor: general contracting, specialty contracting, and more. That’s why it’s important to have a rock-solid business plan to establish a strong foundation. Here are some additional details on the things you’ll need to build a successful business:  

License and register your new contractor business

Now that you’ve got your contractor’s license, you can start to get your company set up. Your city or state might have additional criteria you must meet, such as requiring you to provide workers’ compensation insurance, meet certain financial requirements or pay applicable fees and surcharges.   

In addition to your city and state business licenses, you’ll also need to file for federal tax status. When you file for federal tax status, you’ll receive a unique employer identification number (or an EIN) from the IRS. Your EIN acts as your company’s official identifier, and you’ll use it to open business accounts, file taxes and more. 

Get insured and bonded

Insurance is a must when it comes to contracting. You’ll be working on clients’ residential and commercial properties, and unfortunately, accidental damage does occur — it’s part of the nature of the business. While we all hope that there won’t be any mishaps during the construction process, doing demo and working with heavy-duty equipment carries undeniable risks. Having a great small business insurance policy keeps you, your company, your employees and your assets safe. A business owner’s policy usually covers: 

general liability, covering property damage and bodily harm 

commercial property coverage for damage to equipment or your place of business 

business income insurance that provides continued income after unexpected disasters 

Because it’s likely that you’ll be moving from site to site in a vehicle designated for work, you’ll need commercial auto insurance coverage. Workers’ compensation insurance is a must if you have employees other than yourself, too. 

Prepare yourself financially 

Finances are one place where you really don’t want to mess around. Many contractors choose to use the services of a financial advisor. A financial advisor knows how to help you make wise decisions when it comes to setting up your business’s finances. Your financial advisor can give you additional guidance on the funds you’ll need, how to get them, and how to best use them.

Your first move will likely be to establish a business bank account that’s separate from your personal account. This serves to protect your personal finances, and it also makes things much easier when tax season rolls around. In general, new business owners are encouraged to put at least 90 days’ worth of operating expenses in savings. This provides a safety net in case anything happens, like cash flow issues, difficulty obtaining a line of credit or invoices that remain unpaid. 

Stock up on the supplies you’ll need to get going

After your legal paperwork gets the green light and you’ve got your business accounts set up, it’s time to sit down and make a list of the items you’ll need to purchase. When it comes to purchasing equipment, think “less is more”. What do you already have? What do you still need? (And remember, now that you’re an “official” business, your new equipment is tax-deductible. Save your receipts! Here are just some of the items you might need as a general contractor:

• Basic hand tools (hammers, screwdrivers, wrenches)
• Small power tools (drills, saws, sanders)
• Plumbing equipment (pipe cutters, pipe wrench, sealants)
• Electrical tools (crimpers, voltage tester, wire strippers)
• HVAC equipment (temperature gauge, refrigerant-measuring gauge, channel locks)
• Finishing tools (paintbrushes, ladders, spackle)
• Personal safety equipment
• First aid kit
• Field management software
• A reliable work truck

Of course, if you’re working as a specialized contractor, your list will vary according to the type of work you do. And although it may seem like a lot of equipment to buy all at once, you can keep your costs down by looking for sales, contractor discounts and other money-saving moves. 

Research your competitors and activate your advertising and marketing plan 

Your business plan will help you navigate this part of setting up your business since you’ll already have an outline for your advertising and marketing plan. However, taking the time to flesh out this plan is critical, helping you to target your customers more accurately. For example, would you like to focus on commercial renovations? You should be focusing your efforts on older office buildings. Interested in new residential construction? Get cozy with local developers. The more specific your marketing is, the more likely it is that you’ll find the clients you want.

Knowing your competitors will also shape your marketing strategy. Are you competing against big franchises? Frame your company as a locally owned and operated contractor that provides clients with personalized service. Do you do something completely different than your competitors, like using rare tiling techniques? Highlight the unique aspects of your company and you’ll attract customers who are most likely to use your service.

Find (and keep) the right employees

When you’re looking to hire employees, you want to hire the right people. Spend the time to carefully check references, licenses, and certifications. Talk to former employers and get a feel for the quality of service a potential employee can provide. Exceptional employees are well worth the time investment, particularly if they’ve got the magic touch when it comes to customer service. 

General contracting is a trade that requires a great deal of training, so it’s an investment if you choose to hire someone who’s not yet obtained their license. Do all that you reasonably can to ensure that your hiree is someone who’s going to stick around. One way to encourage retention is to offer benefits, provide a consistent work environment and practice proactive management skills.

Provide five-star customer service

Every interaction with a client is another chance to make a great impression. From promptly returning a phone call or email to making sure you say goodbye to the client before leaving the job site, each employee has to deliver top-notch customer service. VIIZR’s easy-to-use platform makes this simple by giving your employees access to customer information. 

Knowing (and putting into use) a customer’s personal preferences is a nice touch that’s noticed and appreciated. Imagine being a repeat customer of your own contractor business. Wouldn’t it be nice if you never had to give contractors directions on things like where to park, the gate code or the areas you can store your tools?

Having access to each customer’s details helps all of your techs to provide the absolute highest level of customer service. While it may not seem relevant to remember to ask about your client’s recent vacation, it adds a personal touch that sets your customer service apart from the rest. 

Leverage professional field management tools designed for contractors

Deciding to move into contracting is a solid decision, especially since construction is a perpetually in-demand industry. But after you tackle the steps required to legally open your contractor business, it’s up to you to manage everyday operations. If you’re running a solo operation, it’s not a bad idea to get some formal sales training of your own, especially if you don’t have any sales experience. Learning how to sell yourself and your services is an essential skill for any business owner.

Another key to success is to take advantage of all the tools at your disposal. Instead of trying to manage important information using different platforms, try software that centralizes your important client information, administrative tasks and other business operations. VIIZR’s web-based platform gives you a leg up with almost any task you can think of. Take a second to learn more about some of VIIZR’s smart tools and how they help you run a stronger, more efficient business:

Job Dashboards

Using VIIZR’s Job Dashboards, you can check the progress of any job you’ve got in the hopper. You can keep an eye on your contractor teams’ progress without having to bug your employees over and over. Job Dashboards provide you with everything you’ll need to keep your company running smoothly while you’re on the go — all the details are stored securely on our web-based platform, so you’ll always be up to date.

Estimates

Draft detailed quotes in seconds to give your customers all the details they’ll need to give you the thumbs-up. Forget scribbling estimates on the back of a flyer — VIIZR’s software lets you create professional PDF estimates on the fly. Plus, you can even add photos to make sure you’re all on the same page. 

Scheduling 

When it comes to construction, you want someone who really knows the ins and outs. Got someone who’s a drywall specialist? Need a glazer to come out and work on some windows? Drag-and-drop scheduling software lets you assign the right tech to the right job. And your employees will never be left in the dark — their schedules will be available online on VIIZR’s web-based platform.

Customer history

Access to customer information helps all of your techs interact with clients like it’s the 100th time, even if it’s their first visit. Whether you’re visiting a new customer for the first time or making a return visit to a regular customer, knowing their history with the company, their special requests and personal preferences and other specifics elevates the customer service experience. 

Work orders and change orders

VIIZR’s work orders eliminate the need to constantly call or text team leaders or individual employees. Detailed, consistently formatted work orders and change orders provide your clients with a confirmation of the work they've approved and give your employees the details they need to get the job done right the first time. 

Maps & Routing

Every time your trucks leave the office, it costs money. With gas prices staying high, it’s key to provide your employees with the most efficient routing possible. With effective routing software, you can plan out your days to get your team right where they should be — on time, every time. 

Invoicing

VIIZR can get your invoices settled faster with detailed, professional PDFs that can be sent to customers with just a few taps. Better yet, VIIZR’s invoicing software works hand-in-hand with our work orders and change orders, so invoices are error-free — and you get paid for everything you’ve done. Plus, VIIZR’s software eliminates the need to chase after unpaid invoices manually. VIIZR automatically sends payment reminders for overdue invoices.

Choosing to incorporate field service software into your construction business operations is a smart decision and helps your company get off to a smooth start. As your client base grows, centralizing your important information can make a huge difference in the efficiency of your operations — and can save you a ton of time. 

Get ready to answer the most common questions clients ask a contractor

Whether you’re building a new home from the ground up or leading a renovation, clients will need to make a lot of complex decisions throughout the process. Get ready for lots of questions — and make sure that you and your team can answer each one knowledgeably. Here are 13 questions that are frequently asked of a general contractor that guide clients as they search for the best fit for the project:

1. Are you licensed to complete this type of work?
2. What kind of insurance do you carry?
3. Will you file all the necessary building permits?
4. How many other projects have you completed in this area over the last year or two?
5. May I have a list of references?
6. How long do you anticipate this project will take?
7. Will you use subcontractors to complete this project?
8. How will the job be supervised?
9. What’s a typical workday like for you and your crew?
10. Do you provide a written warranty for your work?
11. Do you foresee any challenges with this project?
12. How do you prefer to communicate with your clients?
13. What are your payment terms?

3 tips for building a profitable contractor service 

Contractors will always be in demand, and the need for services is only increasing as more and more housing and commercial properties are built. However, when you’re first starting out, it’s critical to keep a close eye on your expenses. As you know, there will almost certainly be unforeseen expenses that crop up, but there are a few key ways to keep your company on the profitable side:

• Price your services fairly and know what makes your company stand out. While it’s a popular practice for new companies to offer specials when they first open, many of them get stuck at the introductory price point, unable to raise prices to what the work’s really worth. This makes it harder to turn a profit. Make sure your clients know that you’re providing the best service for a fair price, especially if you provide a specialty service. Know your worth!
• Watch your spending carefully. Although you will need to invest in tools and other supplies, don’t go crazy. Get a general idea of how fast you use your supplies and order accordingly. Take a look at your other expenses, too. Are there extra expenses you can reduce? Any monthly fees you can cut out? Take a look at your bank statements and make sure you’re spending only what you need.
• Market your unique services. Then market yourself some more. While talking up yourself and your services can be awkward, it’s a must if you want your contractor service to gain clients. After all, if you’re not advertising yourself, how will new clients find you? The answer is that they won’t — and you’ll lose business to a local competitor who is actively marketing their services.

Small contractor startup admin made easy with VIIZR

Getting into the contracting business involves a lot more than just setting up a webpage and advertising your services — going about it the right way means you’ll have to follow state and federal guidelines, complete the training and paperwork involved, and get your business set up financially. Plus, you’ll need to take care of practical tasks, like stocking up on supplies, hiring employees and most importantly, building and retaining a loyal client base. While it can be a difficult process, the payoff is well worth the effort.

After taking care of all the setup, it makes perfect sense to take advantage of tech that’s designed to help you run your business smoothly. Choosing VIIZR to manage your contractor company not only increases profitability and efficiency but also lets you keep your focus on giving each client the best customer service possible.

Let VIIZR help you manage the necessary evil of time-consuming day-to-day operations. Our platform is powered by Ford Pro™ and Salesforce. It’s designed for small contractor businesses like yours and makes it a snap to take care of invoicing, CRM, scheduling, project management, and more. Whether you’re running a whole crew of contractors or you’re starting off solo, VIIZR can help. Get started with our 14-day no-obligation free trial and experience all the ways VIIZR can help your new business grow.