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    How to Start a Construction Business

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    how to start construction business Canada

    Starting your own construction business can be an exciting and highly profitable venture. Even if you have significant experience in the industry, a lack of planning for the future or your finances may cause your new company to fail within the first couple of years.

    It’s also easy to get lost in the amount of paperwork and administrative details you’ll need to complete before launching your new business. However, if you get the necessary help planning how it’ll grow and have the right plan for how to run your business, you’ll be successful. So, where do you start?

    In this article, we’ve compiled six steps that you need to take to start a new construction business and become a business owner.

    1. Research your local market and the construction industry

    Doing market research early will make the process of starting a new business more smooth. Thanks to the internet, there is no shortage of free data available to you.

    You’ll want to begin researching not only the construction industry itself but also your local target market. This helps you gauge your consumer base and help you with the next step, writing your business plan.

    2. Write a business plan

    To start a business, you’ll need a solid business plan that will help guide you through the process and raise investment funds. There are a few things you’ll need to include in your business plan, such as a comprehensive overview of the company, the services being offered, funding goals and financial highlights, past successes, and any future plans for the business.Remember that the goal of a business plan is to explain how each structural element contributes to your business’s future success.

    3. Incorporate/register your construction business

    The next step will be registering your business. Since the construction business is a medium-to-high-risk industry, it’s recommended to incorporate your business. This provides limited liability protection of personal assets on top of your business insurance. You will need to register your business name with local and provincial governments.

    Need Builder’s Risk Insurance?

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    4. Secure the right licensing and permits

    Business permits and licenses will vary from city to city across Canada. The size of the company and the type of construction you plan to do will affect the types of licenses and certifications you’ll be required to have.

    You can either visit your local municipality and ask which business licenses and permits you’ll need or you can also go to bcbizpal.ca to find out this information. You’re going to need to have these legal requirements in place before you can start your first job.

    Related: How to become a preferred contractor for insurance companies

    5. Get funding for your company

    If you can’t use your savings to finance your new construction business, you can find funding from other places. These include bank loans, credit unions, government funding, and private lenders. Make sure to check the interest rates on any loans and that you’ll be able to continue to cover those costs as you begin projects.

    In addition to basic funding to get your business started you will also need to have a cash flow to finance your construction projects. The irregularity of the industry means you’ll need a solid business plan and tight financials to be profitable.

    6. Invest in the necessary insurance policies

    Insurance is one of the most important assets of your new construction business. Securing the proper business insurance, WorkSafe coverage, and liabilities insurance protects not only your company but the people who work for you against claims for personal injury and property damage claims.

    Related: How much does builders risk insurance cost

    There are several different types of insurance that any owner of a construction company should invest in. Below are some of the policies you’ll need to invest in.

    • General Liability Insurance: This comprehensive insurance protects you in case of worksite accidents, injuries, property damage, and third-party lawsuits. General liability insurance will cover the legal expenses related to any lawsuit brought forth against your company. It will also cover the resulting costs from any accidents or falling debris that causes injury to people passing by a site.

    • Professional Liability Insurance: If an error, a perceived error, or a delay occurs, this policy covers your business in the event of any mistakes or issues with the project. It also covers all damages stemming from a lawsuit up to your policy limit.

    • Property Insurance: If you have a physical office, having property insurance covers you in case of property damage, natural disaster, theft, and if a client is injured while at your office.

    • Builder’s Risk Insurance: This policy covers repair and replacement costs of any incomplete structures should they become damaged. It also ensures your business will not have to pay out of pocket for any losses stemming from unpredictable environmental factors like high-speed winds, floods, or general bad weather.

    • Cyber Insurance: Should your company suffer a data breach where your systems are hacked, cyber insurance will protect you from any lawsuits about lost data, and cover any lost income while you rebuild your reputation.

    • Pollution Liability Insurance: Canada has put in regulations to protect the natural environment against sudden or gradual pollution from business operations. This insurance protects your construction business and covers legal costs from any mistakes or claims related to waste disposal, cleanup costs, chemical waste mishandling, and medical bills if anyone was affected by the pollution.

    • Unemployment Insurance: If one of your employees loses their job for reasons beyond their control, like company layoffs or closure, unemployment insurance provides them with monetary assistance until they find a new job. This also pertains to general contractors.

    • Commercial Vehicle Insurance: The majority of construction companies require the use of at least either a fleet of vehicles or some heavy machinery. If you own any additional vehicles or equipment, they’ll need insurance in case of theft or vandalism.

    • Workers Compensation Insurance: If one of your employees becomes injured on-site, then general liability insurance will cover the immediate consequences of the accident. However, if this injury causes lost wages or in the worst-case scenario, a long-term injury, you’ll need workers compensation insurance to cover any liability claims or costs. This policy helps protect the health and safety of all employees,

    These kinds of insurance policies will protect you against any types of claims that may arise out of your company’s day-to-day operations.

    Related: What is builder’s risk insurance & what is covered?

    Get your business insurance with APOLLO

    APOLLO Insurance makes buying your insurance needs easier and gets you the right insurance plan for all your needs. We have vast experience serving all businesses, small and large, across a variety of industries.

    Get a free quote and buy online in under five minutes with our digital portal. Our expert advisors and insurance agents are available over live chat and phone to help you with your application form and every step of the way.

    APOLLO Has You Covered

    We can help you understand the benefits of Business Insurance, and get the kind of protection you need in minutes.

    Learn More

    Originally published January 28, 2022, updated August 25, 2023

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