If you’re an experienced contractor, then starting a construction company can be incredibly exciting. However, there are also many tricky, time-consuming steps required for getting a new construction company off the ground.
Like starting any business, you’ll need a solid business plan, funding, and the right team. In construction, you’ll also need a fairly long list of licenses, permits, and unique requirements. We’ll cover everything you need to know about starting a construction business in the guide below.
How Do I Start a Local Construction Company?
The first step to starting a local construction company is establishing a need for your services and finding a gap in the market. Construction can be a highly competitive business, so it’s important to specialize in an area where there is enough demand for your services.
While there’s a lot that goes into starting a local construction company, the process can be broken down into five main steps:
- Perform market research: The first step to starting a construction business is to perform thorough market research. Understand the local construction industry, gather information about your competitors, and establish a unique market positioning for your business.
- Create a business plan: Spend time writing a detailed business plan. This should cover how your business will operate, what your startup costs, operating expenses, and financial projections are, who will run the business, how you will market the business, and so on. This is your roadmap for how you will launch and manage your construction firm.
- Register your business: It’s important to register your business and set up the correct business structure.
- Get all the right licenses: Starting a local construction business requires the right licenses, permits, and insurance. It’s important that you get all of this covered so that your business can operate legally and safely. Some essential licenses, certificates, and legal steps for South African construction businesses include registering with the CIDB and NHBRC, VAT registration, tax clearance certificate, and registering with the CSD.
- Fund your business: Starting a construction business requires capital for equipment, staff, marketing, and getting your business off the ground. You’ll need to use your business plan to help you attract and gain funding.
These are the basic steps to starting a South African construction company. However, it is possible to start small with minimal capital. As long as you have the right team, knowledge, and documents, you can start by taking on small projects and renting any equipment you need.
What Documents are Needed to Start a Construction Company?
When you register your construction company, you’ll need to ensure you are set up with the right documents. This includes:
- COID Registration
- MBSA Membership
- VAT Registration
- CIDB (Construction Industry Development Board) Registration
- Letter of Good Standing
- B-BBEE Affidavit or BEE Certificate
- Tax clearance certificate
- NHBRC Registration
How Much Does it Cost to Start a Construction Company in South Africa?
The cost of your construction company depends on the size of the company and what you will be investing in. It could cost millions if you plan to invest in heavy machinery, vehicles, office space, and a large team. However, if you start small and rent your equipment, it could only cost you a few thousand rands to get your business registered and set up. This will let you start bidding on small construction projects.
Is Owning a Construction Company Profitable?
Owning a construction company can be highly profitable – especially if you are able to win large contracts and tenders. However, construction can also have thin profit margins and tough competition. The profitability of your company depends on the jobs you win and how efficiently your business is able to manage each project.
How Long Does it Take to Get NHBRC Certificate?
Registering at the NHBRC includes various enrolment requirements. While registration can take five working days, there are 16 steps to the registration process, including a test. This means it could take weeks, or even months, to get an NHBRC certificate.
Starting a construction business can be incredibly rewarding. You just need to make sure that you put in enough planning to make it a success. Ensure you meet all of the right legal requirements, and that your team is properly equipped to take on any projects you bid for. The good news is that construction is always taking place, so there is plenty of demand for quality construction services.
Looking for more business inspiration? Check out our complete guide on how to start an agribusiness in South Africa.
