Content of the material
- General Contractor Requirements and Job Description
- Pros and Cons to Keep in Mind
- What does it take to be a successful general contractor?
- Step 4: Create your business plan
- Identify your differentiation
- Calculate your finances
- Plan your marketing
- Develop your templates
- How much does a contractor earn?
- Contractor Degrees & Concentrations
- 8. Dealing with tax issues
- What Types of Services Do I Want to Provide?
- Get Free Advice from an Accountant
- Steps to Become a Contractor
- Step 1: Earn a College Degree
- Step 2: Gain Construction Experience
- Step 3: Complete Training
- Step 4: Earn Certification/Licensure
- What is a Contractor License?
General Contractor Requirements and Job Description
A general contractor oversees every aspect of a construction project. Many contractors get to their position by gaining experience, completing an apprenticeship or earning an undergraduate degree in the field. General contractors may be employed to supervise new construction of housing projects or office buildings, but they are also capable of overseeing remodeling and renovation. They must be familiar with city and state building codes in order to make sure their structures abide by the law. The table below provides an overview of helpful information about this career, including education and job outlook.
|Degree Required||Bachelor’s degree; apprenticeships are also available|
|Education Field of Study||Construction management, engineering, construction science|
|Key Skills||Leadership, interpersonal, problem-solving, time management|
|Licensure/Certification||Licensure is required in some states and if managing large projects; Certification is optional|
|Job Growth (2020-2030)||11% (for all construction managers)*|
|Average Annual Salary (2022)||$86,000 (for general contractors)**|
Sources: *U.S. Bureau of Labor Statistics, **PayScale.com
Pros and Cons to Keep in Mind
Replacing experience with coursework can be a great way to become a licensed general contractor on your own terms. However, it’s not the same as hands-on experience and you’ll have to find ways to make up for that. You will have to work harder to get your name out there and prove your credibility, rather than gaining a reputation gradually. There are a few ways you can work around these obstacles.
What does it take to be a successful general contractor?
- Organizational skills. The general contractor’s principal role is to oversee the site and keep track of every detail of construction. You’ll need to assure that the crews and contractors have the materials they need, that they and subcontractors are paid on time, and that you can respond quickly to the inevitable surprises, from discovering an unexpected pipe to a tropical storm delaying work.
- Communication skills. It’s not enough that you have a plan, to be a successful contractor you need to communicate it to your crew and subcontractors. As the leader of the site’s team, you’ll have to make sure that all the other players understand what is expected of them.
- Construction knowledge. While you will have architectural prints and structural plans to follow, you’ll be a better general contractor the more you understand about construction materials and how buildings are built. Architects and engineers are not perfect, and a general contractor who can identify a problem and propose a solution is invaluable. One way to begin building your knowledge of construction starting today is with Jordan Smith’s Introduction to Reading Blueprints course which will provide you with an essential and basic skill expect of all contractors, being able to quickly make sense of architectural plans. You can also educate yourself by reading about the construction industry. Feedspot’s list of the top 75 construction blogs is a great place to start.
- Specialized mechanical expertise. With many buildings, subcontractors will likely install air conditioning and heating, acoustical features, solar panels, and other similar systems. The better you understand these different areas, however, the more you can contribute to the project.
- Legal knowledge. While the requirements for contractors do not include being fluent in every detail of building codes—architects are responsible for assuring that the building is designed to comply with all federal, state, and local construction regulations—general contractors must run a site that complies with all safety regulations. It is also the general contractors’ responsibility to schedule inspections to assure that construction projects have been built following the approved drawings.
- On the job experience. Key to being a successful contractor is years on the job, learning how to work with electricians, plumbers, and other subcontractors; the best ways to communicate with clients; and managing crews. Being curious and observing what works and what doesn’t will pay off when you step up to the general contractor role. Unlike some areas of construction, becoming a general contractor does not require any specific degrees. Many general contractors learn everything they know on construction sites.
Step 4: Create your business plan
One of the most overlooked steps in becoming a construction contractor is developing a sound business plan. A contractor’s business plan includes several components, ranging from the scope of work he or she will perform to the financial aspects of running a business. In general, a contractor business plan should include the following information to ensure the business side of construction contracting is both feasible and profitable over time.
Identify your differentiation
Contractors in construction can take many paths to success in business, but each begins with a determination of what specialty or differentiation will set the contractor apart. For example, contractors with substantial experience in electrical work or mechanical projects should focus on these skills to set them apart from other contractors in the business.
Similarly, construction contractors can differentiate themselves by opting to work only on large commercial projects or small residential projects. Regardless of which type of work you plan to complete as a contractor, it is important to spell this out in the business plan so you have a clear path of what’s needed to run the business.
Calculate your finances
Another more complex aspect of creating a business plan as a construction contractor is identifying the sources of capital available to help launch the business. There are costs associated with creating a legal business structure, like an LLC or an S-corporation, as well as securing the appropriate insurance and surety bond. There are also expenses for licensing fees, exams, and training that must be added into the mix at the start of the business.
Contractors must also consider what is needed in terms of business management software, a mobile phone and laptop, and any equipment necessary to complete projects over time. These costs can add up quickly, so it is necessary for new contractors to estimate relevant expenses and prepare for covering the costs as they arise.
Plan your marketing
Although construction contractors must have substantial experience in the industry before starting their own business, the competition in the contractor world is high. For this reason, new construction contractors must develop a plan for marketing their business to residential or commercial clients in the state or city where they work. Marketing can be done on a budget, through outlets like social media or online advertisements, but it often comes as a higher cost than most anticipate. To keep marketing expenses from getting excessive, consider your options for marketing through print, radio, or word-of-mouth referrals in addition to online channels to start.
Develop your templates
Before taking on your first client as a construction contractor, you must have a business template in place that spells out several aspects of each project. This business template should include a standard agreement between the contractor and the client, the pricing terms, the payment terms, and any information the protects you and your client from legal issues in the future. A contractor template relies heavily on the price charged for specific projects, so it is crucial to have this information down before working with a new client on a new project.
How much does a contractor earn?
A construction contractor earns an average hourly wage of $20.20 according to PayScale. However, as more time is spent in the contractor role and skills improve over time, construction contractors can earn up to $46 per hour. This translates into an annual salary between $59,000 and $108,000.
There may also be bonuses and commissions paid to construction contractors when they meet deadlines or stay within the proposed budget of a project. As a construction contractor who works for him or herself, additional compensation in the form of profit-sharing plans or retirement plan contributions may be lower than working for a construction company. However, construction contractors have the ability to set their own hourly rate on each project.
Contractor Degrees & Concentrations
Not all contractors perform the same work or duties. With so many degree paths available, there is bound to be one that fits your professional goals, scheduling needs and more.
|Career Goals and Educational Needs||Certificate||Associate||Bachelor’s||Online|
|I have a little bit of experience with construction, but do not know if contracting or construction management is right for me. I need a degree that leaves options open.|| |
|I’ve been working as an apprentice for a few years and am ready to strike out on my own. I’ve noticed my competition tends to have more education than I do right now. I need a program that can validate my skills without a lengthy commitment.|| |
|I’ve always wanted to run my own construction company, but I know that it doesn’t happen overnight. It’s time to get an education that will open doors to management positions.|| |
|I am a full-time worker who would like to launch or advance my career. I need a construction management program that fits my schedule.|| |
8. Dealing with tax issues
If you go down the umbrella route, your income will be processed in exactly the same way it was when you had a permanent job (via Pay-As-You-Earn, a.k.a. PAYE). You need to submit your timesheet to your umbrella company, who will then invoice your end-client. Once payment has been received, the umbrella company will process your payslip, and you will receive a net salary, after deductions for income tax, National Insurance, the umbrella fee, and any other pre-agreed deductions.
For limited company contractors, your accountant will take care of all your company’s tax affairs, although you do need to spend time understanding how everything works.
As a company director, you will need to register for self-assessment, and submit your tax return and pay any tax liabilities by 31st January each year. Your company will also pay Corporation Tax on its profits, and you may have taxes to pay on the salary you draw down.
What Types of Services Do I Want to Provide?
Some people like the security of large jobs, while others prefer the flexibility of more short-term projects.
If you’re looking at getting a contractor license of some sort, it is important to consider the kinds of job, the kinds of work, that most appeals to you. It’s also important to take into consideration your long-term goals.
In other words, the amount of work that you can do before you have to get a contractor license should only be part of the equation. The amount of work you can take on also depends on the project cost and your geographic area.
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Steps to Become a Contractor
Step 1: Earn a College Degree
Students can choose one of several education pathways to become a general contractor. While some contractors may only need a high school diploma and work experience, it is becoming more common for these professionals to need postsecondary education.
At the postsecondary level there are a variety of options, including online general contractor courses, as well as online construction certificates and general contractor bachelor’s and master’s programs. More and more construction managers are choosing to earn a degree in subjects like:
- Construction management
- Construction engineering
- Building science
- Construction science
Degree programs may offer students the following types of courses:
- Construction estimating
- Construction contracts
- Construction techniques
- Construction scheduling
- Construction project management
Step 2: Gain Construction Experience
While the amount of construction experience may vary based on position and level of education, experience in the field is usually required or preferred. General contractors with less education may become experienced by working in a particular specialty area of construction, such as masonry or carpentry, or as other construction laborers. In addition to working various construction jobs, those who pursue a postsecondary degree may gain hands-on experience through cooperative education programs and/or internship opportunities.
Step 3: Complete Training
Although self-employed general contractors do not typically need on-the-job training, some contractors who go to work for a construction company or firm may be required to complete some moderate training. These firm contractors may train for months to years with a more experienced contractor to learn the ins and outs of the company and work on various kinds of projects.
Step 4: Earn Certification/Licensure
Certification is not generally required for a general contractor, but may help them be competitive in the field and/or attract new clients. Various certifications are available through several different organizations, including the American Institute of Constructors, the International Code Council, and the Construction Management Association of America. Typically candidates for certifications need to meet experience requirements and pass an exam.
Those wondering how to become a licensed contractor in their state should contact their state’s licensing board. Depending on the state, contractors may need licenses to work on commercial projects, residential projects, electrical work, plumbing, and more.
What is a Contractor License?
A contractor license is a license, provided either by the government or a ‘professional organization’ such as a union or guild, that allows its holder to legally perform various contracting jobs.
The most common types of contractor licenses are general contractor, subcontractor, electrician, roofer, and plumber.
You will have to network aggressively to get your name to potential customers but don’t forget about your professional community. Customers trust recommendations from other professionals and back and forth referrals can make up a big part of your business. Most importantly though, experienced contractors can be an important source of first-hand information you can’t get anywhere else.
Becoming a general contractor doesn’t necessarily require a lot of experience. With hard work, careful planning, and a good support network, you can build a successful business.