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How to become a general contractor
Want to know more about how to become a general contractor? Use this handy guide to learn more.
- March 31, 2020
Without construction companies—and, more specifically, the general contractors who manage and oversee construction projects—we would, quite literally, have nowhere to live. (Or at the very least, homes wouldn’t be very safe places to live.) The importance of professional construction companies is reflected economically, too: According to The Construction Association, the construction industry erects almost $1.3 trillion worth of structures each year.1 Put more simply, there is never a bad time to join the construction industry—and if you have the right motivation and leadership skills, becoming a general contractor is a great way to get started in the industry.
General contracting involves managing projects start to finish and troubleshooting problems along the way, no matter how complex. Overseeing an entire construction project requires an understanding of all aspects involved, from the workers on the ground to staying within the development budget.
Think you have what it takes? (Hint: you do). Here’s how to become a general contractor.
How to become a general contractor: an overview
Becoming a general contractor is a multistep process. Most GCs start by gaining experience on the ground for several years (this is actually a requirement in most states), and eventually reach a point where they’re able to manage an entire project from end to end. Some have a higher degree in a relevant field, as well.
While hands-on experience is arguably the most important rung on the ladder toward becoming a GC, there are a few more key steps you’ll need to take:
- Choose the type of contracting you’re interested in
- Research your eligibility and requirements
- Gain hands-on experience
- Get your contractor’s license
- Create a business
- Purchase insurance
Now, let’s get into more detail about each of these steps.
Step 1: Choose a type of contracting you're interested in
While you might think you want to be a general contractor, there are actually a few different types of contracting fields out there. A few for your consideration:
A mechanical contractor – This type of contractor works specifically in mechanical fields, 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 other contractors don’t have the skills to do.
A general contractor – This type of contractor manages residential and commercial construction projects, including constructing, remodelling, renovating, and developing. General contractors oversee the project, rather than carrying out physical work (that would be the construction workers’ jobs!)
By pinpointing which type of contractor you want to be, you’ll be able to hone in on the specific requirements you need to fulfill in order to reach that goal.
Step 2: Research your eligibility & requirements
There is not just one way toward becoming a general contractor, especially because there are so many kinds of GCs out there. Eligibility varies state by state, too. But at a fundamental level, you’ll likely need to fulfill the following eligibility requirements to become a licensed GC:
- At least 18 years of age
- Have a high school diploma
- Have a few years of experience working for construction companies
- Be able to legally work in the United States
- No criminal background, as some states perform background checks prior to issuing licenses
As we mentioned earlier, some GCs decide to earn a bachelor’s degree in a relevant field, such as architecture, project management, or engineering. While you don’t need a higher degree, having one will only give you a leg up in the industry.
Importantly, you should research licensing requirements in your state, city, and county. Each state and locality requires certain credentials prior to issuing a license, such as having a specific number of years of experience in construction, or shadowing a general contractor. Other states require that you pass a general contractor exam. And most require that you buy contractor insurance in order to operate your own general contracting business.
Step 3: Gain hands-on experience
We said it before, but it bears repeating: The first real step toward becoming a GC is gaining hands-on experience in construction.
What skills do I need?
To be a successful GC, you’ll need a combination of innate strengths—like leadership and listening skills—and learned experience. But here are just a few, non-negotiable areas of expertise you’ll need under your belt:
- Budget planning and execution
- An understanding of permits and building and safety codes
- Hiring and managing employees
- Basic construction and design skills
- Effective communication with your team and clients
- Attention to detail
- Problem-solving
- Navigating problems and delays calmly
How long do I have to work for?
This depends on your state. For instance, in California, you have to work for 4 years prior to obtaining a license.
Do I need to complete an apprenticeship?
Not necessarily. However, an apprenticeship with a reputable GC is an excellent 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 or enroll in a vocational training program prior to starting in the field, either of which you can find by searching online.
Step 4: Get your contractor's license
Once you’ve gained relevant experience, you’re ready to apply for your contractor’s license. Typically, you’ll need to send certain documents to your state or locality, including proof of insurance (more on that below) and a contractor license bond—a type of surety bond that assures the project owner that the GC will perform their duties in accordance with their written agreement.
Other documents are required in order for the licensing board to run a background check. Of course, you’ll also need to check basic eligibility boxes (like the ones we listed before), and likely pass a written exam. Exams differ state by state. To go back to our California example, you’ll need to pass two, separate exams: One on law and business, and one on trade.
Regardless of where you live, you can find plenty of test-prep materials online, if you feel you need some help with the preparation process.
Step 5: Create your business
With all those prerequisites complete, you can now go ahead and make your GC business official.
The first step? Creating a business plan. There are tons of templates, outlines, and guides available online that show you how to write a formal business plan. But here are some essential elements for your preliminary business plan:
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 your upfront and ongoing expenses? Some considerations include your registration fee, management and accounting software, insurance, and employee salaries. List them all out, and plan your budget 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 and incentive you can create in your community will start bringing in clients. Additionally, you need a strong web presence (even if it’s just for your local community). Building a website is basically required these days, but dedicated social media profiles are incredibly helpful, too.
To legalize your business, you’ll need to choose a business entity type—such as an LLC, corporation, or sole proprietorship—and register your business with your Secretary of State.
Step 6: Insure your business
Not only is proof of insurance required in order to obtain your license and take on clients, but it’s also plain good sense. You work in an industry that’s inherently risky, so you need to make sure you and your business are protected while on the job. This is where Thimble can help.
First up, we offer general liability insurance policies that help protect your business against third-party claims of bodily injury or property damage. Thimble’s Contractor Insurance covers professions and activities specific to your industry, such as finishing contractors, deck building, upholstering, tiling, and window installation (and lots, lots more). You can choose policies by the hour, day, or month, so you’re only paying for insurance when you’re on the job.
Getting insured via Thimble couldn’t be any easier: Just click “Get a Quote” at the bottom of this screen, or download the Thimble mobile app, and answer three quick questions. You’ll have your policy and Certificate of Insurance (COI) in under 60 seconds.
How to start a general contracting business: A quick recap
We hope we hit the nail on the head (sorry, had to) in this guide, but let’s recap. Here are the six, essential steps toward becoming a general contractor:
- Decide which type of contracting you’re interested in
- Research your eligibility and requirements
- Gain hands-on experience
- Get your contractor’s license
- Create your business
- Purchase insurance
Becoming a general contractor takes time, diligence, and tenacity. But we know you’ve got what it takes—and we’ll protect you when you land your first client (and second, and third…).
Sources:
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.
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