Going from employee to owner in civil construction

In my experience working with Varicon customers, many of the most successful businesses were started by founders who had experience working for another business, whether as an operator, supervisor or project manager.

This transition requires the acquisition of some new skills, but it is absolutely doable with the right mindset.

Is owning a business for you?

Starting your own business is not for everyone.  The reality is that for the majority of people, working as an employee is a much better option.  As an owner, the buck stops with you.  You don’t switch off at the end of the day, and you take on a lot of personal risk that an employee doesn’t need to deal with.  You can’t depend on a regular income every week, and often you need to make major sacrifices for the long-term good of your business.  If this sounds like too high a price to pay, you should seriously consider whether starting a civil construction business is right for you.

On the other hand, there are upsides to starting your own business.  You can work on your terms, and (if you run your business well) you can enjoy significant upside.  It can be very rewarding to build something from scratch, provide opportunities to people and reach your own potential.

Have a plan

One truth of getting into business is that either you will decide what direction you want to go in, or others will decide for you.  There’s no “right” choice here, it depends on what you want out of your business and life.  Some things to consider:

• What are your ambitions?  Do you want to stay small so you can just focus on serving a small number of customers and stay on the tools, or do you want to create a big business and aim to be a leader in your area?
• What are your personal circumstances?  Do you have significant personal obligations that affect your ability to take on risk (eg, mortgage, family commitments etc).
• What is your risk tolerance?  Are you willing to accept a higher level of risk to grow larger and faster, or do you prefer to stay smaller and grow slower with less risk?
• What sort of  jobs do you want to do?  Is there a specific type of civil projects that you enjoy / are uniquely qualified to focus on?

Make sure you’re covered

Don’t forget the basics when getting started.

• Make sure you have covered all of your legal and customer requirements before starting
• Ensure you are properly insured (including public and professional liability, work cover, plant and equipment etc
• Ensure you have all of the required certificates and inductions

Start small

Especially if you’re ambitious, it is tempting to go “all in”.  You can significantly reduce your  exposure by starting small.  The reality is that you are going to learn a lot early on, and you will probably make some changes to your business model.  Here are some practical steps you can take:

• To start with, go after smaller jobs, or subcontracts to larger civil contractors.  If these jobs don’t go exactly as planned at least the downside will be limited.
• Rather than purchasing equipment upfront, consider hiring equipment.  You are unlikely to have a steady pipeline of work at the start, and with hire equipment you can return it when you don’t need it anymore.
• Engage subcontract labourers who work on ABNs to start with.  While you will end up paying a bit more per hour, you don’t have the obligations that come with bringing on employees.
• Go after day works / time + disbursements works in preference to fixed price contracts.  While margins might be lower, your risk exposure is also much less.

Leverage your unique skills

If you are uniquely skilled in a niche area, this can be a great place to start!  Very big businesses operate on volume, but at the start you only need enough to keep you going.  You will find it much easier to get your foot in the door if you are focusing on an area where you excel.  It may feel counterintuitive, but by focusing on a smaller subsegment of the market you can acquire a lot more work!

Get your finances in order early on

Poor financial discipline sends many civil construction businesses to the wall.  You simply cannot wing it when it comes to financial management.  Fortunately it doesn’t need to be complicated.  If you don’t have these skills, talk to your accountant / financial advisor – this is a capability that you can outsource early on in your journey.

Not only do you need to ensure you’re making a profit, you also need to make sure that you are managing your cash flow.  If your revenue is coming in too slow, you may find that you exceed your cash in bank to cover your ongoing financial commitments.

Have a (simple) sales and marketing plan

You won’t get any work if nobody knows about you.  This is one area that many new civil construction businesses fall down.  Fortunately it doesn’t need to be complicated.

This will be largely guided by how you want to run your business.  Some things to consider:

• Make sure that you have all of your prequalifications sorted for any organisation that you want to work for (eg, head contractors, local and state government, utilities, property developers, etc).  Check their website or reach out directly to get this information.
• If you want to respond to tenders, ensure that you are signed up to get these tenders (eg, state/territory e-tendering platforms, TenderLink, EstimateOne, VendorPanel, etc).
• Build relationships! Especially with smaller property developers and head contractors it pays to get to know them.  It can be very helpful to just drop by regularly or give them a call.
• If you want to get more advanced, consider engaging a marketing agency, implementing a sales management software and hiring a sales person (these are probably not necessary at the start)
• Think about how else you can make yourself known – you can get creative with this!

Get a mentor

You don’t need to go it alone!  A mentor can help you along the journey, identifying gaps that need to be addressed and acting as a sounding board for important decisions.  A mentor could either be a business consultant, or the owner of a successful civil construction business who is willing to help you getting started.  Often successful business owners are happy to help new starters, as they received help from others in their journey – you just need to ask!

Get the right systems in place

If you don’t have the right systems in place early on, you will quickly see cracks emerge in your business.  Like many things, you don’t need to complicate this.

To start with, we recommend you have the following systems in place:

• Document storage and email (eg, Microsoft 365 or Google Workspace)
• Accounting software (the most popular for small civil contractors are Xero and MYOB Accountright)
• Construction Management Software (eg, Varicon)

As you grow you may want to consider other systems like estimating software (eg, Pronamics Expert Estimator, Sales and CRM systems (eg, Hubspot for sales, Ignition for sending quotes).

Takeaways

Starting a civil construction business isn’t for everyone, but if this is something that you aspire towards and you have the foundational skills for delivering civil construction projects it is absolutely doable.

By following these steps to minimise risk, getting the right support and implementing effective systems you can set yourself up for a long, prosperous and enjoyable future as a civil construction business owner.

If you want to implement the right systems to get you going, reach out to us to discuss how Varicon can help you!

Note: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or business advice. Starting a civil construction business involves risk and requires careful planning and professional guidance. We strongly suggest you seek advice from a qualified accountant, financial advisor, or business consultant before making any decisions.