South Carolina is the third-fastest growing state by population (as of 2023), meaning the local economy is booming. With so many new residents calling the Palmetto State home, now is a fantastic time to start a construction company. However, while the industry can be lucrative, starting a construction business requires time, investment, and hard work. So, let’s break down what it takes to give your company the solid foundation it needs to reach new heights.

Step-by-Step Guide to Starting a Construction Company in South Carolina

Starting any kind of business can be challenging, but creating a construction company has some unique obstacles. For example, you’ll have to secure the right equipment, which can mean various certifications and insurance requirements. Overall, construction companies typically need a lot of capital to get started, so make sure you have sufficient funding.

With that in mind, here are the steps to turn your business idea into reality.

Step One: Determine Your Field

Not all construction companies specialize in the same types of projects or contracts. Since you’ll be new to the state and the industry, it might make sense to pick a niche within the industry. For example, you can focus on single-family homes. In this case, you can either build homes according to buyer preferences or work on housing developments with multiple units.

Alternatively, you can focus on commercial construction, such as office buildings, strip malls, or high-rises. Each demographic has its own challenges, including competition and investment requirements. Sometimes, it may be better to start small (i.e., home renovations) and work your way up to larger infrastructure projects.

The primary reason to pick a niche within the construction industry is so that you can focus your attention and investments. For example, the equipment and materials needed for new home construction are much different than those for an office building or skyscraper. The permitting and funding processes are also unique for different project types, so it helps to start with what you’re familiar with first.

Step Two: Create the Right Business Entity

As a construction company, you’ll have to hire employees, so it will be impossible to start as a sole proprietorship. Partnerships can also be tricky to manage with this type of enterprise unless you know you and your partner(s) will stay in business together for a long time.

Instead, it’s much better to form your business as a limited liability company or corporation. However, corporations require strict organizational hierarchies, and you may have to pay more taxes. So, an LLC is often the best choice, especially for a construction company.

Another advantage of starting an LLC is that you can save money both upfront and over the long term. While a corporation has to pay a license fee and a tax on profitable income, SC LLC costs are only a one-time expense. In South Carolina, it costs $110 to form an LLC, and you don’t have to file an annual report (or pay a filing fee each year).

Step Three: Obtain Statewide Permits

One of the main challenges of starting a construction company is obtaining various permits and certifications. Not only do you need a business license to operate in South Carolina, but you must also get a General Contractor’s License. This license costs $350 upfront, and you must pay a $135 fee every other year to keep it valid.

Having a business and contractor’s license is only the beginning. With each new project, you must obtain building permits from the local zoning board. Depending on where you plan on building in the state, you’ll have to deal with different boards. Sometimes, the process can be relatively smooth and inexpensive. In other cases, you may have to wait months for the paperwork to go through before you can start construction.

Now is the time to build relationships with various state and county departments. By building a rapport with these bureaucracies, you may be able to avoid lengthy delays and ensure faster approval times. Once they know who you are and how you operate your business, they can decide on specific project approvals based on trust.

Step Four: Get Funding

As we mentioned, starting a construction company requires substantial upfront investment. However, the amount of funding also depends on the type of construction you’re planning on doing. At a minimum, you’ll need vehicles and equipment to haul dirt and raw materials (i.e., wood boards and planks), move earth, and pour concrete.

While you can lease this equipment for a specific project, sometimes it makes more sense to buy equipment outright. This way, you don’t have to make ongoing lease payments, and you can sometimes leverage the value of your equipment to secure temporary loans.

One of the advantages of being in the construction business is that most cities and municipalities offer construction financing options. Because these areas want to invest in development and infrastructure, they’re willing to loan money to companies that can make these developments happen quickly and under budget.

Additionally, you can get a Small Business Administration (SBA) loan, which typically offers favorable interest rates and repayment options. SBA loans are typically in high demand, but you can get lucky sometimes, particularly as a new business.

Finally, you can seek out individual investors for specific building projects and contracts. Many investors know the value of real estate development, so it’s relatively easy to find people and firms willing to put money in a big contract. Plus, once you have one or two projects completed, it’s much easier to find more investors.

Step Five: Buy Equipment and Hire Employees

As we mentioned, you can either lease or buy construction equipment outright. Again, the types of projects you’ll be working on will determine the best course of action. For example, it may be a good idea to wait until you get financing for your first build before buying or leasing any equipment. This way, you don’t have to put up any of your own money upfront.

You’ll also have to hire employees to work on your building project, no matter large or small. Make sure to find workers who specialize in the type of construction you’re doing. For example, if you’re working on single-family homes, you want a crew of people who have built many homes before. This way, they know how to follow the blueprint and ensure everything is up to current building codes.

Step Six: Get Contracts

Depending on your experience in the construction industry, you may be able to get contracts before you invest in any business infrastructure. For example, if you’ve already worked for other construction businesses, you may already have contacts you can lean on to get the inside track on new developments. Then, once you have a contract in hand, you can use that to secure better loans with more favorable repayment options.

Also, consider your client base. You can market your business to individual homeowners (i.e., home renovations), private investors (i.e., fix and flips or new home construction), government agencies (i.e., infrastructure projects), or commercial developers (i.e., strip malls and office buildings). Each demographic requires a different pitch, so it helps to know who you’re pitching to before finalizing the details of your business.

Finally, you can use brokers to help you find more contracts. A broker acts as a negotiator between you and your clients, and you simply pay them a small fee. Brokers can be an excellent resource when starting your business because they’ll have connections you wouldn’t have access to otherwise.

Overall, starting a construction company in South Carolina can be a lucrative investment, but it requires patience, skills, and sufficient funding. With the right mindset and experience, it shouldn’t be too hard to get your new enterprise off the ground.