As Orlando construction attorneys, we partner with many successful contracting businesses on lucrative projects in the construction sector. However, this success doesn’t happen overnight. In this six-part article, we are offering advice to contractors with an entrepreneurial spirit. In the first section, we discussed conducting market research and creating a business plan. In this section, we will discuss financing your business.
Financing Your Construction Business
If you have the urge to start your own contracting business, the next step is financing your business. Contractors must always plan in advance to access new sources of capital. Contracting work requires a significant investment in equipment, materials, labor, machinery, and other critical components. Working capital is critical for a business to not only stay afloat, but to also generate more income down the line as well.
Before you venture into projects, you need to first explore your financial situation. How much capital will you need to start your business? Are there any financial options out there to help you begin such as bank loans, family members, or investors? If you are looking to obtain capital investments, you will be required to produce a specific outline of the financing you need and why.
Bookkeeping and Tracking Expenses
When starting your business, you may be able to handle all of the accounting work yourself. As long as you keep accurate records, organize invoices, and track your expenses with a cloud-based platform, you can save a lot of money. However, over time, you will likely need an accountant to maintain your books as you will have to center your focus on managing your business. Of course, if you hate bookkeeping, you should partner with an accountant before you begin working on projects.
It’s important for contractors to remember that, although the owner of a project may be footing the bill, you may not be compensated for several months when working on a project. Delayed payments are a constant struggle in the construction industry. Of course, despite waiting for payment, you will need to continue to invest in your current projects as well as procure new projects. Many businesses, both big and small, fail because they do not closely track their overhead costs. When beginning a project, you must consider everything from the project expenses to potentially unexpected costs. That’s why many contractors partner with a construction law firm to assist them with their bid proposals. We can help you factor in all of your project expenses to ensure that your business has working capital to complete projects on or under budget.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.