1 August 2022
They say the American Dream is to own your own home. Yours is to build them, too. It’s in your blood. The physicality of it. The workmanship. The feeling of accomplishment. You’re drawn to the whole process.
But perhaps you’re wondering: Is homebuilding a good career path? Am I prepared to strike out on my own?
In this article, I’ll explain why now might be the perfect time to turn your dreams into reality. And I’ll lay out the blueprint for how to become a general contractor and embark on your homebuilding career.
Let’s get building.
If you have the skills and desire, you have options to enter the homebuilding career path. There is plenty to say about why homebuilding is a good career path but here are seven major reasons for you to read and consider:
According to the Associated Builders and Contractors, as of February 2022 the construction industry was expecting to face a workforce shortage of 650,0002. That sends a clear message: If you’re skilled at what you do, the construction business may still definitely need you.
You see it all the time — machines replacing people in all sorts of jobs. Not so for writers (whoo-hoo for me) or homebuilders (whoo-hoo for you). The bottom line? Technology might be smart enough to assemble a car, but it’s not smart enough to assemble a house, at least not yet.
Money isn’t everything. But let’s be real — it’s certainly something, so there’s nothing wrong with asking how much do homebuilders make. According to research by home services website, Angi, plumbers, electricians, general contractors – average annual earnings are 22%, 29%, and 53% higher than that of the general population.
The study also found that earning tends to grow as tradespeople move from entry level to more experienced status, with wages nearly doubling as well, rising roughly 80% depending on the different skill sets.
There’s comfort in a steady salary for sure, but if you don’t feel a sense of purpose and fulfillment related to doing what you do, what good is working hard to do it? Working your own home construction job allows you to exercise the business and artistic sides of your brain. You may find yourself looking at your work and marveling at it regularly. Or you may walk by your project a year from now, smile, and think, “I designed that” or “I built that.”
Get a job in corporate America and you’re often to some degree working their “9-to-5” schedule. Many corporate jobs also entail incurring big debts from earning the school degree that enabled you to even apply for the job. Alternatively, when you learn how to become a general contractor you’ll find that you get to pick when and where to work, as well as how long to work. Calling your own shots can lower your stress level and boost your sense of purpose in your work and in your life.
Masonry. Plumbing. Carpentry. Roofing. Electrical. Engineering. Architecture. Interior design. There are few careers that offer the same degree of variety as homebuilding. And although you may be super-skilled at only one or two of them, you may get to have input into all of them. It might be enough to satisfy your business side. Your creative side. And everything in between.
Who knows, you might be an architect with zero desire for physically building things with your own two hands, but all the talent in the world for gathering the top-notch professionals and engineers who can turn your blueprints — and your clients’ dreams — into reality. That can be hugely satisfying.
Considering all of the variety of skills it takes to build a house, it’s extremely rare for one person to do it all. A career in home construction typically entails working with a diverse collection of tradespeople and artists beyond just an electrician, plumber, or some carpenters. Working with skilled labor people to create a finished product can be invigorating and hugely satisfying.
Often when you're asking “is homebuilding a good career path”, the biggest questions are: How do I start? Where do I start? What’s the process? What are the essentials? How do I protect myself financially?
Coming up are the steps that hopefully will give you a solid education in some of the most important things to do when considering if homebuilding is a good career path for you.
There’s nothing wrong with wanting to jump straight into the deep end of the pool — as long as there’s water in it. So first things first. Look around and do some heavy research into your local housing market.
You’ll want to know who your competition is. What do they specialize in? How much do they charge? What’s their reputation? Is the sandbox big enough for all the contractors to play in?
At the same time, keep in mind who your potential customer base might be. Speak with them directly to share your ideas and understand their needs so you can identify pockets of differentiation and opportunity.
For example, perhaps all the contractors in your area look like they’re working for clients with endless budgets, given the size of the houses they’re building.
You, on the other hand, want to focus on smaller, more energy-efficient “starter” homes for families who may want to live more modestly or haven’t amassed huge amounts of wealth yet. Perfect — if that’s a viable option in your area.
Heavy research will help you identify opportunities that can help you develop a better business plan.
One of the first and probably easiest places you can start your market research is with the U.S. Small Business Administration (SBA). They offer a wide range of free resources that provide hard data on customers and business markets.
After you feel you understand your local market, begin drafting a business plan.
Think of it as your North Star. It’s one of the most important documents you’ll create when first starting out, because it can help you keep your business and goals pointed in the right direction.
It’s also what lenders will ask for should you apply for a small business loan.
You may find that the more research you do, the stronger your goals might be. The stronger your goals, the better your business plan. The better your business plan, the greater chance you’ll keep your business on track.
If you need more specific training in this area, we created a free business plan template for small business owners that you can download.
Registering your business makes it an official legal entity. To do it, you’ll need a business name and a business structure.
When deciding on a business structure, it’s a good idea to consult with an attorney or business advisor. However, here are some common ones:
Sole proprietorship: A sole proprietorship links you, the owner, to your company. This business structure is easy to form, inexpensive, and offers tax benefits. But it usually does not protect you from personal liability.
Corporation: A corporation model allows the business to operate as a separate entity, which can protect you from personal liability. Corporations often cost more to set up than other structures, and they require more extensive record-keeping, operational processes, and reporting.
Limited Liability Corporations (LLCs): An LLC offers a combination of tax benefits and personal liability protection for small business owners. Many construction owners choose an LLC for those reasons.
Your business structure — and location — will determine how and where you need to register your business. This resource from the U.S. Small Business Administration can help you with that determination.
OK, you’ve registered your business. Next up: Licenses and permits.
You may need them to operate legally. Without them, you run the risk of hefty fees and tax penalties. You might even be forced to close down if you’re not licensed.
Although that sounds like serious stuff, don’t let it stop you. We created an easy guide to getting your contractor’s license. It explains why you may need a license and what the requirements are by state.
Also, check what requirements exist in your city or town. Licenses and permits are not the same thing. Some cities and towns may require that you have specific permits in addition to your license.
The homebuilding industry is ripe with opportunity. It also can be rife with injuries, accidents, and lawsuits. That’s why contractor insurance can be an important consideration.
But what does “contractor insurance” mean and what does it cover?
Contractor insurance describes a bundle of policies that provides comprehensive coverage for general contractors. This coverage is meant to protect you from the biggest risks you’ll likely face in this line of work.
Examples of insurance coverages we recommend for general contractors include:
It might sound like a lot to absorb. But the good news is you don’t have to absorb it alone. At Simply Business, we’re here to help.
We work with leading national insurers to provide general contractor insurance policies tailored to your specific risks. We do this by taking the time to understand your homebuilding business, so you can get a policy that offers the protection you may need.
Best of all? We make it fast and easy to get insured. To get a quote, it usually takes just under 10 minutes, and we can take it from there. Or if you want to talk to a helpful human (one of our licensed insurance agents), you can give us a call at 844-654-7272.
Get an affordable & customized policy in just minutes. So you can get back to what matters: Your business.Start Here>
While looking into how to become a general contractor, you also should be thinking about homebuilding start-up costs, expenses, and reinvestments.
Covering the necessary costs associated with licenses, permits, business insurance, legal fees, and equipment to start a career in home construction could run you several thousand dollars or more, depending on how big your plans are.
If your cash savings aren’t enough to cover these costs, you may need credit. If you don’t have credit — or you do but your credit score has taken a beating over the years — you might want to get a secured business credit card. It can be a great way to build — or rebuild — your credit while driving your small business forward.
It’s important to keep in mind that strong credit can be critical to getting any loans you might need to grow your business. So is business insurance. Both can help a potential lender feel more confident when lending you money.
If you’re interested in learning how the loan process works, we wrote a guide on how to get a small business loan. In it, we share a few tips that can help get your business started and keep it running successfully.
Home construction is one of those businesses you usually don’t do alone. You’ll likely need a team.
Focus on acquiring skilled, knowledgeable, and dependable employees. And be sure to treat them well. If they feel valued, it’s more likely they’ll want to stick around and help you grow your business with you. Here are some other tips:
Sounds like a no-brainer, but the demands are usually high on the customer side of the homebuilding business. Your diplomacy skills are likely to be tested early and often.
Clear and active communication is key to preventing and diffusing any potential conflict that might arise. Although you don’t have to give in to every unreasonable demand, it’s important to work hard to fulfill your clients’ expectations. Be kind.
The more productive you are, the more profitable you can be. Investing in new technology and equipment can help you on that front.
Be selective with projects. It may be tempting to take any job that comes along, especially if you’re just starting out. However, it’s usually wise to resist that temptation. To grow your home-building business for the long term, you might be better off selecting only the jobs that will return maximum profits in the short term.
Knowing what you’re good at and promoting those skills can help build your brand.
For example, I once selected a structural engineer turned architect turned homebuilder to design and build one of my homes. I was his first official client. I selected him because he played to his strengths.
He was willing to work with me to customize the layout and look of my house.
And he made sure I understood that he was highly qualified to convert that design on paper into something that could actually be built and would be structurally sound.
Plus, I knew he had the network to actually build the home. I was thrilled with the entire process and the results. The point is — he took an approach to homebuilding that was true to him, and it sold me.
Networking is part of the job if you want to hire and retain good employees, create profitable relationships with vendors, and secure new clients. To do this, consider joining and staying active in a local chapter of a trade association. Or set up a booth at a home show. You might even consider creating a Facebook business page.
You’ve probably been thinking about how to become a homebuilder for a long time. But for some reason, maybe that dream has felt out of reach. Until now.
Although starting a homebuilding career can be a sizable undertaking, it can be hugely rewarding. Hopefully after reading this article you have a better understanding of what it takes to get started.
The opportunity is out there. Build on it. Good luck!
I went to college to be an accountant and graduated with a degree in creative writing. Words won out over numbers, but barely. All credit goes to my parents. Had they talked about anything other than banking at the dinner table growing up—and had they never bribed me with Pop-Tarts to read books, play with my Matchbox cars and quietly exercise my imagination—who knows where my left and right brain would be today.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.