Operating an excavation business within the construction industry allows you to focus on your business building and marketing efforts. For all new job sites, it is necessary to have an excavation crew. When you run your own construction excavation company it requires professional licensing, business licensing, financing, and the proper equipment. Get great value equipment at Surplus.net.
Register Your Business
All businesses must be registered with the secretary of state in their state where they conduct business. Visit your secretary of state’s website and conduct a name search for the business name you want to use. Your business must not compete with any other businesses and needs to be unique. After you have found your business name, go through the online application process, pay your required fees, and then wait for the state to approve your application.
After you have been approved, go to the IRS website to get your tax identification number. All business owners must have this to obtain credit, open bank accounts, and run payroll.
Bonds and Insurance
Check with the local city building department and your state about their requirements for bonds and insurance. All businesses, at minimum, need to have a general liability insurance policy. It is a good idea to have a minimum of $1,000,000 a least although some states may not require you to have $500,000. As you continue to acquire equipment, be sure your business property is covered by the policy against loss including vandalism and accidents.
Your state also might require you to get a surety bond. Surety bonds provide your clients with protection against loss. It is similar to insurance, except that the business is expected to repay the claim amount.. It is common for construction firms to be required to have a minimum $75,000 bond. You will need to have workers’ compensation as well if you have any employees.
Get a Business Plan Developed
In order to operate your business, you must know how you can accomplish your goals. Develop a business plan. Start with your company’s mission and your vision. Get a management team together that shows it is able to execute effectively. Get a marketing plan outlined and include a five-year yearly projected financial statement and startup budget.
Include the size of your company and the total number of employees you have, the kinds of companies you will be partnering with, and the kinds of projects you will be bidding on.
Obtain Your Equipment
The cost of excavation equipment ranges from $10,000 up to $100,000, and specialty items can be even more expensive. Buy the excavators that you will be using the most first and then rent any less frequently used or bigger machines as needed. Most residential and smaller jobs can be completed using a mini excavator.
Check out financing options and leasing options offered by heavy equipment sellers. You will also need to rent or own a truck for transporting heavy equipment to your job sites.
Get Funding For Your Business
In addition to financing heavy equipment, an excavation company will have other costs as well. There will be administrative expenses for payroll services, contracts, basic leasing, insurance, and business licensing. Advertising and marketing are required as well. All detail an overall budget in your business plan.
If you cannot personally finance your business, go to your local Small Business Administration office to consult with a counselor. Once he has reviewed your plan, you will be paired with local banks that offer SBA loans. The most popular program is the SBA 7(a), which offers financing up to $5 million.
Proper Commercial Licensing
To find out which licenses you are required to have, ask your local building contractor association. Usually, permits are required for all jobs. It is the responsibility of the job site manager to obtain the proper permits. A driver’s license is required by most states to drive an excavator. However, a commercial driver’s license might be required to operate large equipment. A driver with a commercial driver’s license and a truck is often required to transport heavy equipment.
Networking and Marketing
One of the most effective ways to build up your client base is to find general contractors as well as other contractors to partner with. Since you are a specialized service, your services complement the requirements of landscapers and other contractors. Join groups and trade associations where you will have an opportunity to meet general contractors.