Most new owners ask me about forming an LLC. That’s not Step 1. Step 1 is a customer. Until someone outside your current employer pays you for real work, you don’t have a business; you have a hope.
When I started, I approached a developer and asked if I could bid on their roadway, pipe, and mass grading packages. That pipeline of $500K to $4M projects gave me enough momentum to stand up the company the right way.
The four realities
- Customer
Can you name a paying client who will hire you this quarter? Not a “maybe.” A scope and a number. If not, your first job is business development: conversations, estimating, and pricing before you touch paperwork. - Cash
You’ll pay labor weekly. You’ll get paid whenever the process of payment from clients allows. If you’ve got 35–90 people on payroll, union dues, and suppliers, “net 30” can feel like “net never.” Build working capital into your plan and your bids. Cash doesn’t fix everything, but the lack of it breaks almost anything.
Practical moves:
Bid with a margin that matches the risk
Tighten collections without burning bridges
Keep an eye on the cash forecast (even a simple spreadsheet)
- Competence
You need two kinds: craft and controls. Can you deliver the work? And can you handle the paperwork (submittals, RFIs, schedules, pay apps, claims, and letters) without melting down your cash flow? - License (and what it signals)
Owners and GCs use licensing to manage risk. It tells them you have a legal entity, insurance, minimum cash, and a record they can verify. Requirements vary widely by state.
For example, in Hawaii you’ll need recommendation letters, tax clearances, board review and exams. Eight to sixteen months for completing the process isn’t unusual in contrast to Idaho/Washington where it is very streamlined, completed often within weeks, assuming financials are in order.
A good CPA and attorney are worth it. So is help on the license application if paperwork isn’t your superpower.
The order that works
Customer → Entity → CPA → License → First mobilization. If you have a real client and real cash, the rest becomes execution.
Common early mistakes (and fixes)
- Underpricing risk: Add contingency, or price accurately, for what actually goes wrong on your kind of jobs.
- Overhiring too fast: Staff to backlog, not to optimism. Cut labor when you have to.
- Ignoring the balance sheet: The bank and surety care, and you should too.
If you’re serious about launching, get these three mentioned above right and you’ll avoid 80% of the self-inflicted pain I see. The market will still test you, but you’ll be standing when the invoices finally get paid.
📘 I go deeper on items like these in Starting a Successful Construction Business (Build America Guides, Vol. 1)
