Have you ever considered starting a home building business? Statistics show that the average completion time of a new single-family home takes around 8.1 months to complete. This can vary depending on geography, permits, weather, contractors, and a variety of other factors.
Are you wondering where to start and how to get a fledgeling idea off the ground? How can you become a successful home builder in the future? Keep reading to learn more about how you can get started.
#1: Make Sure You’re Qualified
This might seem like a no-brainer, but it’s worth mentioning that as with any job, there are qualifications you need to obtain. Just as you can’t become a dental practitioner without going to dental school, you can’t start a home building business without being qualified. Your qualifications can vary from state to state, but as a general rule you will either need a degree or you’ll need to learn on the job. Be aware that learning on the job could take a lot longer than getting a degree. After that, there are a variety of certifications that are helpful and even required in some cases. Making sure that you have the right credentials and experience to start the business can help the whole process go more smoothly. You might be able to start flipping houses without experience as a home builder, but you’ll need a lot more than business savvy if you want to build homes from the ground up. Finally, continuing education to stay current with new processes, machinery, and safety measures will be important once the business is started.
#2: Get Financial Backing
Starting a business of any kind costs money, and this is especially true when it comes to a business that is centered around the construction of new homes. You will need funding to hire employees and contractors, as well as to secure the equipment needed to build. Gaining this funding can happen through investors or crowdfunding efforts. You can also secure this much-needed capital through installment loans, either from a trusted third-party lender or through your local bank. In order to get loan approval, you will likely need to share an in-depth business plan and explain what the loan will be used to accomplish.
#3: Get Insured
Insurance is the security blanket that home builders depend on. There is an abundance of moving parts when it comes to building a home. The risk of injury is very high and being properly insured can save your business thousands of dollars. You can have peace of mind that when you leave the building site at night, you are not held liable for anyone that gets hurt in your absence. Consulting with the builders insurance group first is the best decision you can make. They are built specifically for home builders after the industry faced years of struggling to find good coverage. Talking through the best options for your business and what you plan to achieve will help you get the best coverage moving forward.
#4: Decide on a Niche
Trying to do everything is historically not a good approach for home building companies. There is more success when you pick a specific type or style of home and become the best at building that product. Becoming an expert in a specific area will help draw business in a few ways. First, people will refer others to you simply because they know it is your specialty. For example, if single level farmhouses are what your business specializes in, people will consult you or refer you when they hear that someone is looking to build a single level farmhouse. Rarely will someone that builds model homes for developments be hired to do one standalone farmhouse because it isn’t their specialty.
#5: Build A Team
When building out your team, you will have to decide if you want employees or contract workers. This is important because it will have an effect on the rest of your business. Some builders will have some full-time staff and hire contract workers for certain projects. Finding the right mix for your business can take time. You can hire contractors to see how they work on a project and then offer them a full-time position if they do well.
#6: Start Marketing to Target Customer Base
After you get your business up and running, you need homes to build. Advertising to your target customer base is the next step. Being strategic in this area and making the most of your marketing dollars is key. Don’t spend money advertising to people who just moved into a new home or elderly that are looking to downsize. Find where your target customer is and find unique ways to get your messaging out.
#7: Focus On Quality Over Quantity
While it may look good on paper to complete a high number of projects per year, it won’t matter if they are bad quality. Your reputation as a home builder will be extremely important to future projects and referrals. Putting an emphasis on the quality of your work and making sure that your team and everyone you partner with shares that vision can set your work apart from others. Taking extra time to properly install something will satisfy the customer more than rushing and doing a poor job will.
#8: Get Tax Guidance
Personal taxes can be confusing but business taxes are an entirely new puzzle to navigate. Working with an experienced accountant from day one can help you avoid being in tax trouble as a business. It is important to know the rules and ask questions prior to starting so that you know how to approach different areas of your business from a tax perspective. Having someone on staff that monitors the finances of your business can be the difference in being in the green or red at the end of the year.
#9: Network, Network, Network
As with any type of construction, networking will be very important to the long-term success of your business. People can’t refer business to you if they don’t know who you are or what you offer. Whether you attend networking events or engage via social media, emailing, or other approaches, it is important to connect with others. You never know who will be a future customer, so taking every conversation seriously is key. You and your employees constantly remembering that you are representing your company’s reputation at all times can help prevent you from getting into bad situations.
#10: Find Ways to Stand Out From Your Competition
In order to be successful, you can’t lose all of your potential to customers to your competition. Being new to the industry, your business will need to find ways to stand out in a crowded field. This can be from your marketing approach or your customer service responsiveness and everything in between. Being strategic and thinking creatively is the key to setting yourself apart from the competition. Find new ways to reach customers and educate them on what you do instead of selling them on it. Being different in your approach to bidding on projects could be the difference in winning or losing the bid.
Get Started Today
Now that you have read tips on how to become a home builder, you can begin the process today. Starting a business can be stressful but these tips will help guide you as you begin the journey. Visit our website for more helpful articles like this one.
