written by | October 11, 2021

How to Start a Contractor Business in India? Beginner's Guide

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Table of Content


It doesn't matter if you want to become the next big contractor in your local area or think you have what it takes to build a small business in a niche. Getting into construction is possible.

You can apply for licences, training courses you may need, and equipment you need to purchase. You can still start your own construction company once you have a solid construction business plan for a construction company and know where you want to go.

Although there are ups and downs in construction companies, it is an industry that will always be in demand. And where there is demand, there is opportunity. 

Did you know?

There are nearly 1,75,000 plus construction companies actively operating in India and more than 10,00,000 construction companies worldwide.

A-List of Excellent Construction Business Ideas

Many construction companies are grossing billions per month. Still, if you have a question about how you can initiate a construction business in India, here is your answer. The following section will help you start a construction business without investing much of your time.

Also Read: 200+ Small Scale Business Ideas with Low Investment

How to Start a Construction Business in India?

1) Create a Business Plan

Do you require a business plan? If you're lucky enough to leave your full-time job to be rehired as a contractor or begin a business with existing clients, and there are no financial requirements, you won't require a business plan.

For the majority of startups, there are many good reasons to create a business plan:

  • To assess the viability of your business concept, you must conduct market research.
  • How do you plan to promote your services and products to your customers?
  • To predict future expansions, like purchasing new equipment, hiring subcontractors/employees, etc.
  • To secure financing or to attract investors.

A solid business plan that you can update regularly provides a framework for success.

The following section explains performing deep research while starting a construction business. 

2) Conduct a Thorough Research

Business owners should also conduct an exhaustive study of the market to understand the needs for construction in the area of interest. Rules and guidelines that apply to beginning a construction business differ between states or country to country.

The construction regulations are area-specific and based on residential or commercial property. Certain sites require new homes or flats that are constructed. In contrast, others require the construction of commercial buildings like office complexes, malls, shopping centres and other kinds of properties that will only require renovation and remodelling.

3) Name, Register and Insure Your Contracting Business

Before you can open your doors and begin taking on customers as a contractor, you'll have to:

  • Determine whether your business is legally organised. Do you require incorporation, or can you operate in a sole proprietorship? In many fields, incorporation is necessary. If you plan to incorporate, make sure you do so before signing any agreements with your clients.
  • Choose the business name and apply for registration in case needed.
  • Ensure your business is in the manner required. For instance, do you require General Liability insurance? Omissions and errors? Professional liability? An action against your business that isn't insured by insurance can be financially devastating, particularly if your business isn't incorporated. Be aware that insurance for your home does cover business operations. 
  • Open an account for your business banking account.

4) What Are the Necessary Documents to Establish a Construction Business in India?

  • The form must be filled in and accompanied by passport-sized images
  • Identity proof of the applicant
  • Business plan
  • The applicant's Aadhar card
  • The last 12 months' bank statement
  • Business PAN card
  • Water and Electricity bills
  • Company's establishment certificate
  • Other documents that the bank requires
  • A copy of the GST Registration & Rent agreement

It is also essential to build a network of people who can help you scale your business and help you when you are stuck. Additionally, you would require a smart workforce who will help you expand your business faster.

5) Building Network and Hiring Workforce

Owners of construction companies must build strong relationships with builders, brokers, agents, suppliers, contractors and partners to expand and grow their business. Also, they are the only source for a business owner who can expand their construction business.

The owners of companies in the construction industry rely mainly on workers and labour. Construction companies employ workers through the following organisations, including subcontractors, brokers, mediators, etc. It will help if you stay aware and attentive to your workforce.

6) Market Your Business

If you are starting a new consulting business, the biggest challenge is often acquiring the first few clients who will pay. Also, if you've transitioned from working full-time in the same field or industry, you might have prospective customers already. 

If not, contact your family members, friends and business contacts before opening your business. Word-of-mouth advertising will help you get clients faster and provide feedback on your business concept's potential. 

If you're starting from scratch, you can put together your marketing plan and put some basic, cost-effective marketing methods to begin gaining your first customers.

7) Establish Your Pricing

Once you've conducted your research into the market for services in your local area, it's time to set the price. You'll indeed need to be competitive in your pricing to draw new customers. However, it would help if you also thought about your overhead and how you can earn money. 

Create a budget in which you add your costs like rent material, insurance such as marketing, labour and any other recurring and outgoing costs. Once you've got a sense of your monthly and annual expenses, you'll be able to understand better pricing and the number of clients you'll need to keep your cash flow steady.

Also Read: Top Small Business Ideas to Make You a Successful Entrepreneur

8) Be Professional at All Times

Whatever your occupation, always dress and act like a pure professional. Customers who don't know will be put off by inappropriate attire or conduct on your part.

Professional service also includes answering the phone correctly with a voicemail system and instantly responding to messages or emails. In the age of social media and online reviews, the reputation you build for unprofessional customer service could quickly end up being a disaster on behalf of your business.

If you plan to run a business from home and want to interact with customers, ensure you have an extra, fully-equipped and furnished office at home.

9) Sourcing of Funds or Loans for Construction Business

Being a manager and owner of an enterprise in construction is an investment of significant size. It means that there may be a need for cash to pay for working capital needs or to control the cash flow at any period of business time. 

To combat this cash shortage, business owners can opt to take advantage of various business loans provided by financial institutions. These may include term loans, equipment finance, letters of credit, working capital loans, overdrafts, etc.

10) Get Your Business Listed

After all the fundamentals have been covered, ensure your business is famous. Include your business on the most popular search engines and relevant platforms like Google, Yelp, Bing, Yahoo and Facebook.

If you have plans of listing your business, don't forget to mention your business name, address, website address, contact details and all service offerings. Keep track of where you've put your business if you have to amend your information shortly.

Conclusion

You should be prepared to invest your money to get performance guarantees from banks if you want to become a contractor company. MSME programs are available but require a deeper bonding with bankers.

After receiving your initial bank guarantee, you can apply for tenders at various public and private sector companies. Your chances of success as a contractor hinge on how well you bond with the public/private sector employees where you intend to work.

No matter which business you choose, the calculations must be on point to know the correct profit and loss margin.

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: Which are the best construction business ideas in India?

Ans:

If you're looking to penetrate the construction-related business, these are the most lucrative fields for you:

  • Mirror installations
  • Online building plan service
  • Paint store
  • Paving consulting
  • Reach truck service
  • Roof installation 

Besides these construction materials business ideas, there can be a lot more. Just figure out what suits you the best and with which idea you're more confident.

 

Q: What are the best civil engineering business ideas?

Ans:

Following are the top-notch civil engineering business ideas:

1. Bricks manufacturing

2. Start a construction company

3. Cement plant business for civil engineers

4. Building material supply

5. Chimney repairs

6. Countertop & bathtub refinishing

7. Construction site cleaning business

8. Interior designing service

Q: How to start a construction business in India?

Ans:

To start a construction business in India, here are the steps: 

1. Do your construction business

2. Complete your company registration process

3. Get insurance

4. Get the vital equipment

5. Open a bank account

6. Hire the right workforce

7. Market your business to clients

Q: Is the construction business profitable in India?

Ans:

If you do it smartly and strategically, the construction business can be very profitable. Also, builders can earn even more scores through a single project, but the risk factors are also there. Experience can help you in making more money in a construction business.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.