Construction
Construction Business Plan
Last updated September 25, 2026
Starting a construction or contracting business means passing licensing exams, carrying serious insurance, and managing cash flow across long projects. This plan walks a licensed tradesperson through going from W-2 to running their own crew.
Turn this example into your plan
Answer six quick questions and Stratify tailors this roadmap to your city, state, and stage.
Business overview
A new general contractor or specialty trade (electrical, plumbing, HVAC, remodeling) typically targets $250k–$750k in first-year revenue with a 2–4 person crew, then scales through subcontractors.
Startup costs
- State contractor license exam & application fees$300 – $1,500
- Contractor license bond ($15k–$25k surety)$150 – $500 / year
- General liability + commercial auto insurance$3,000 – $8,000 / year
- Basic tools, safety gear, work truck (if new)$5,000 – $40,000
- Estimating & job-management software (Buildertrend, Jobber)$50 – $200 / month
Launch milestones
1. License & entity (weeks 1–6)
- Confirm your state's contractor licensing board requirements (exam, experience hours, financial statement)
- Form an LLC or S-Corp for liability protection and tax flexibility
- Register with the state contractor board once your entity is active
2. Insurance & bonding (weeks 4–8)
- Buy the contractor license bond your state requires ($15k–$25k typical)
- Get general liability ($1–2M) + commercial auto + workers' comp before hiring
- Open a dedicated business checking account & line of credit for material buys
3. First jobs (weeks 6–12)
- Set up a Google Business Profile and get on Angi, Thumbtack, Houzz
- Standardize your bid template — clear scope, timeline, payment schedule
- Require a deposit + progress payments so materials never come out of your pocket
Entity & licensing
LLC (or S-Corp once you clear ~$80k profit) — liability protection is non-negotiable in construction, and the S-Corp election saves on self-employment tax at scale.
- State contractor license (general or specialty trade)
- Contractor license surety bond
- General liability + commercial auto insurance
- Workers' comp (required before your first W-2 employee)
Marketing playbook
- Google Business Profile with real project photos & video walk-throughs
- Angi, Thumbtack, Houzz for warm inbound leads
- Yard signs on every completed job
- Referral fee for realtors and property managers who send work
Frequently asked questions
- Do I need a license to start a construction business?
- Almost every state requires a contractor's license for jobs above a dollar threshold (often $500–$5,000). Requirements vary — many states require documented trade experience, a passing exam score, and proof of insurance and bonding.
- What insurance does a contractor need?
- At minimum: general liability ($1–2M), commercial auto on any work vehicle, and workers' comp before your first W-2 employee. Most residential and commercial clients require you to name them as an additional insured on your policy.
- How do contractors get paid on jobs?
- Standard practice is a deposit (10–30%), progress payments tied to milestones (rough-in, drywall, punch list), and final payment on completion. Never float material costs out of your own pocket.
- LLC or S-Corp for a construction business?
- Start as an LLC for the liability protection. Once your net profit clears roughly $80,000, ask your CPA about electing S-Corp taxation to cut your self-employment tax bill.
Related guides
Turn this example into your plan
Answer six quick questions and Stratify tailors this roadmap to your city, state, and stage.