Eric Weisbrot is the chief marketing officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.
What you need to know before you take the leap into starting your own company
The construction industry is continuing its climb out of prerecession lows, meaning there are several opportunities for those in the field to create their own career path. While the industry is broad, many interested in starting or growing a business in construction should consider becoming a qualified contractor. This offers several benefits, but caveats also exist. Before making the leap toward a qualified contractor position, it is helpful to understand the benefits, the downsides, the traits necessary to be successful, and the requirements for getting qualified.
There are a handful of inherent advantages when making a move to become a qualified contractor, with the most notable including:
- Higher earnings–As a contractor, you are likely to have a more unique skill set than what large construction companies may have within their ranks. Because of this, customers may pay a higher amount per hour for your work. Additionally, because there is no need for clients or a company to pay some of the expenses associated with having a full-fledged employee, such as sick leave, vacation pay or benefits, you can negotiate a higher rate for each project.
- More flexibility–Qualified contractors are their own bosses as part of their own business, and this offers more freedom and flexibility than working for a construction company or another contractor. You have the option to create your own hours, take on the projects you truly want, and take time off when necessary, all without running it past a superior.
- Increased variety–Because qualified contractors have full control over the projects they choose to work on, there is often more variety over the course of a career. Qualified contractors can also mix things up when needed in regards to subcontractors selected, the location of the work, and the types of residential or commercial projects they complete over time.
While there are clear benefits to becoming a qualified contractor, there are downsides as well. They include:
- Less financial security–Like other freelance workers, qualified contractors have to find the projects they want and are able to complete. This can lead to slower seasons, which may result in a less stable financial footing. Being diligent about saving money and have steady work is necessary to reduce the risk of financial instability as a contractor.
- Increased costs–Qualified contractors may take on additional costs compared to those who work for a construction company. Common additional expenses include a licensed contractor bond, business insurance, and covering your own taxes and work benefits. However, having the opportunity to earn more over time helps level out these potentially higher costs.
- Business ownership–As a qualified contractor, you essentially own your business. While exciting, this comes with many more responsibilities, from accounting to marketing to project completion. Having the right team of advisors and professionals on your side can help make business ownership as a contractor less daunting.
Necessary Traits for Success
In most cases, the advantages of becoming a qualified contractor far outweigh the downsides. However, not everyone is built to take on this opportunity. Individuals need more than experience in the construction industry to succeed. First and foremost, being a reliable, trustworthy person will create several opportunities for work as a contractor, as potential customers will want to work with you because of these traits. On a similar note, having the ability to maintain business relationships over time is crucial as a contractor. Relationships extend past customers to vendors and suppliers, as well as others in the industry.
Becoming a qualified contractor also requires an understanding of basic business management strategies. You do not need to be an expert in accounting or recordkeeping, but you do need to be willing and able to learn how to operate a successful business over time. Finally, successful contractors are proactive when building their business. They take a positive, forward-looking approach to getting new clients, completing current jobs, and planning for many years of success in the future.
After reviewing the advantages and disadvantages of becoming a qualified contractor, along with the traits necessary to create success, it is essential also to recognize that there are qualification requirements that must be met. Each state has its own licensing guidelines for qualified contractors, which may include a background check, an exam and bonding or insurance minimums. There may also be different guidelines for residential and commercial contractors. If you’re ready to take the leap into contracting on your own, be sure to check with your state’s licensing board to determine what steps you need to take to become qualified where you work.