The Pros & Cons of Starting a Construction Company

by Morgan Rush; Updated September 26, 2017
The physical danger involved in running a construction company is a con to take into consideration.

Building homes, hospitals, schools or skyscrapers can be a profitable and rewarding business enterprise, but starting a construction company is not without its drawbacks. Understanding the pros and cons involved with starting a construction company can help you determine whether it’s an appropriate career choice for you.

Pro: Industry Size

Construction remains a growing industry thanks to a growing population and aging buildings, according to the Bureau of Labor Statistics. The number of construction-industry workers is expected to grow by 19 percent through 2018, compared with 11 percent for other industries. Construction is expected to grow for both new work and retrofitting work on older buildings, highways and bridges.

Pro: Specialization

Construction offers the opportunity for specialization in order to compete more effectively with other businesses. While some companies operate by offering general-contracting services, others specialize in new work, “green” construction, civic building or residential housing. Specializing allows companies to streamline production so that workers become more adept and familiar with processes, contributing to efficiency and safety.

Pro: Community

Starting a construction company has another advantage: making a positive impact in the community. Construction companies build homes for growing families, and create large civic structures, libraries, schools, museums and hospitals. They also work to keep bridges and roads safe for commuters. Your successful construction company can help shape the town’s visual appeal, attracting tourists and providing pleasant places for residents to enjoy.

Pro: Start Small

Construction businesses can get started with a small number of employees working on small- to moderately-sized projects, hiring additional labor only when needed to complete larger work. Keeping monthly overhead costs low helps new construction businesses to make competitive bids compared to larger businesses, which must rely on higher pricing to support hefty overhead costs.

Con: Cost

The cost of construction is continually rising, making consumers more discerning when shopping for lower bids, and making it harder for construction companies to turn a profit. Buying raw materials, updating tools and construction equipment, maintaining construction vehicles, buying liability insurance and paying employee salaries can become quite costly.

Con: Legal Issues

The legal issues involved with starting a construction firm can be complex. In addition to a business license, construction companies must maintain a current contractor’s license and other permits. Construction companies working on public projects must also procure performance bonds to ensure that they complete work according to legal guidelines and contract specifications. Understanding local laws governing construction codes can be difficult, and mistakes can result in costly repairs or adjustments to meet compliance requirements.

Con: Risk

Construction carries a large amount of risk. Workers labor in sometimes-dangerous situations and can be hurt due to equipment malfunction, carelessness or hazardous work conditions. Construction companies can also face litigation due to structural imperfections or customer dissatisfaction with the finished project.

About the Author

Morgan Rush is a California journalist specializing in news, business writing, fitness and travel. He's written for numerous publications at the national, state and local level, including newspapers, magazines and websites. Rush holds a Bachelor of Arts from the University of California, San Diego.

Photo Credits

  • construction site. building site. place under construction image by L. Shat from Fotolia.com