The average salary for a general contractor in the U.S. is $87,000 per year. Considering that the construction industry currently brings in over $1 trillion dollars of revenue annually, now is not a bad time to join the hardworking men and women in the industry.
Being a general contractor takes dedication, hard work, and leadership. It involves managing projects front to back and troubleshooting any problem, no matter how complex. Overseeing an entire construction project takes an understanding of all the parts involved, from the workers on the ground to staying within the development budget.
If you think you have what it takes (hint: you do), then welcome to our classroom. Your lesson? How to become a general contractor 101. Let’s get started.
How to become a general contractor
Becoming a general contractor is a multistep process. While many people would love to start at the top, the reality is that most general contractors work their way up the ladder step by step. They start small, gain experience, and then eventually reach a point where they’re able to manage an entire project from end to end.
Thus, when it comes to the steps you need to take, a good framework goes as follows:
- Choose a type of contracting
- Assess the experience needed
- Gain the experience (start working!)
- Get your contractor’s license
- Create your business plan
- Insure your business
Step 1: Choose a type
While you might think you want to be a general contractor, there’s more than one contracting position out there. For instance:
A mechanical contractor – This type of contractor works within specific and niche fields. They work specifically in mechanical rather than building and installing. This can include electrical, plumbing, or HVAC work.
A specialty contractor – This type of contractor works in specialty trades (unsurprisingly) and applies their unique skill set to dynamic projects. From masonry, electrical work, to complex carpentry, they’re called upon to handle jobs that others don’t have the know-how to do.
A general contractor – This type of contractor manages residential and commercial buildings. They remodel, renovate, and develop. The mark of a qualified general contractor is that, instead of doing any of the physical work, they’re the one overseeing the project.
By researching exactly what type of contractor you want to be, you’ll be able to home in on the specifics, thus positioning yourself to get the right experience.
Step 2: Assess the requirements
The path to becoming a general contractor takes many shapes. Some contractors decide to earn a bachelor’s degree (where they might study architecture, project management, or even engineering), while others set out with no more than a high school diploma. At a fundamental level, here are a couple things to consider:
- You will need a high school diploma
- Depending on your state, you’ll need some form of experience (usually 3 years)
- Mathematics is your best friend
- If you want to do commercial real estate, you might need a degree
Quick tip: while you don’t need a degree, those who have one are typically employed more than others of the same caliber.
Lastly, it’s important to research what the laws are in your state. Some states require certain credentials prior to issuing a license (more on this below), while others have a different set of requirements. This could be the difference between having a couple years of experience in construction to directly shadowing a general contractor for a certain amount of time.
Step 3: Gain the experience
Every state has its own contractor’s license board. For instance, this is California’s. We encourage you to use yours as a resource. It will provide valuable information on what is required to become a licensed contractor, timelines to expect, and what kind of exam you’ll need to take.
With that in mind, now you need to go out, get your hands dirty, and start putting some miles on your engine. If you can find general contractors in your area, then reach out to see if you can start working with them. If you’re eager, willing, and ready, you’ll be able to find someone who will take you under their wing.
How long do I have to work?
This depends on your state. For instance, to go back to our California example, you have to work for 4 years prior to obtaining a license.
Does it need to be an apprenticeship?
Not necessarily. However, an apprenticeship is your best option. There’s no substitute for hands-on training, especially in a physical and labor-intensive industry. That being said, you might find that you’d like to go to a trade school prior to starting in the field. If you’d like a more formal education, there are plenty of resources you can use to find your perfect trade school.
Quick tip: once you’ve assessed exactly what you’re going to need to become a general contractor in your state, get out there and start working. Just dive in. Find a vocational program or reach out to local contractors, communicate your ambitions, and start clocking hours on construction sites.
Step 4: Get your contractors license
If you want to operate legally, most states are going to require that you get a contractor license. Typically, this means that you’re going to have to send information to your state, check all the eligibility boxes, and then pass a written exam.
Most commonly, a few of the requirements necessary are:
- No criminal background
- Appropriate work experience (years on the job)
- Proof of insurance (we’ll touch on this below)
- At least 18 years of age
- Passing your exam
- Getting a contractor license bond
What’s the exam like?
It differs by state. In California, it’s made up of 100 questions, needs to be finished in two and a half hours, and you need a 72% or higher to pass. If you want to ensure this process is completed perfectly, you might want to enroll in a contractor license school. These are short programs that prepare you for the test, ensure you’re qualified, and even submit the application for you.
Step 5: Create your business plan
Once you’ve gained the experience, passed your exam, and received your license, now it’s time to actually structure the business. When it comes to how to start a general contracting business, a few things you’re going to want to do are:
Find your edge – What’s the competition like in your local market? How can you differentiate your business and find a niche? Most importantly, what does the current market need? Are there any specific gaps that you’re going to be able to fill?
Establish a budget – What are all the necessary upfront expenses you’re going to have to pay? From structuring an LLC, project management software, to basic hardware, there are costs associated with starting your own general contracting business. Be sure to plan accordingly.
Market your business – Hopefully, by the time you become a general contractor, you have a network of clients you can tap into. If not, then you’re going to have to do some marketing. From local advertisements to promotional deals, any exposure you can create in your community will start turning ears. Additionally, you need a strong web presence (even if it’s just for your local community). Consider building a website and running a local digital marketing campaign.
Step 6: Insure your business
The last part of being a general contractor is making sure that your business is protected. Being that you work in an industry which is inherently risky (especially when it comes to physical injury), you’re going to want to make sure you’re protected while on the job. And your clients are going to want to make sure you have coverage.
Lastly, many states require that you have liability insurance in place when you’re applying for your license.
For this, we can help. Here, we offer general liability insurance policies tailored specifically to you. This policy helps protect you from third-party claims of bodily injury or property damage. With the many moving parts of a construction site, should your client or a third party incur an injury because of the ongoing work, a general liability policy can help protect you. Additionally, if you accidently damage your client’s property, this policy can help cover the costs.
Insurance for the general contractor
As a general contractor, you work on a project-by-project basis. Here, we allow you to choose policies that go by the hour, day, or month, so you’re only paying for insurance when you’re on the job.
Just click “select a quote” or download the Thimble mobile app, input a few details about your general contractor business, and we’ll generate a quote. From there, you can make your purchase. Within 60 seconds, you can go from having no defense against liability to being covered.
We understand the nature of your business. You keep building properties, we’ll build your safeguards.
How to become a general contractor
With this guide, we hope we hit the nail on the head. When starting on this journey, remember the steps:
- Choose a type
- Assess the experience
- Start working, gain experience
- Get your contractor’s license
- Create a business plan
- Insure your business
The path to becoming a general contract takes time, diligence, and tenacity. But we know you’ve got what it takes.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.
Protecting your business with insurance is key but you also need to manage expenses. We’re breaking down the cost of CGL for contractors. Learn more.