According to Statistics Canada, the construction industry in Ontario employed over 534,000 workers in 2021, making it a vital part of the province’s economy. With an abundance of construction projects across the province, there is a wealth of opportunity for new businesses to thrive.
One of the main advantages of starting a construction business is the high demand for construction services. From new housing developments to commercial renovations, there is a constant need for skilled contractors to take on projects of all sizes.
In addition, the province offers several government programs and incentives to support small businesses, including funding opportunities, tax incentives, and training programs.
However, starting a new construction business also presents several challenges. One of the biggest challenges is competition. With so many established construction businesses already operating in the province, it can be difficult to stand out and attract new clients.
Additionally, the cost of equipment, materials, and labor can be high, making it difficult for new businesses to compete with established companies.
Despite the challenges, starting a new construction business can be a lucrative and fulfilling venture for those with the right skills and dedication. In this article, we will discuss the steps and requirements of starting a construction business in Ontario.
Step 1: Develop a Business Plan
Developing a business plan is an essential step for any new construction business Your business plan should be well-researched, professional, and concise.
It should be flexible enough to accommodate changes in the market or your business, and it should serve as a roadmap for achieving your goals.
Here’s how you can create a professional business plan:
Executive Summary: This section should provide a brief overview of your business plan, including your company’s name, mission statement, and key objectives.
Company Description: In this section, you should describe the history of your company, the nature of the construction services you will offer, and your target market.
Market Analysis: This section should include an overview of the construction industry in Ontario, your target market, and your competitors. You should identify market trends and opportunities for growth.
Services and Products: In this section, describe the specific services and products you will offer, including any specialty areas or unique features that set your business apart from competitors.
Marketing and Sales Strategy: In this section, outline your marketing and sales plan, including your pricing strategy, advertising and promotional activities, and methods for reaching your target market.
Operations Plan: This section should detail the day-to-day operations of your construction business, including any necessary licenses and permits, staffing requirements, and equipment needs.
Financial Projections: This section should include financial projections, such as income statements, cash flow statements, and balance sheets. You should also include a break-even analysis, outlining the point at which your business will become profitable.
Management Team: In this section, introduce your management team and describe their roles and responsibilities. This may include project managers, site supervisors, and administrative staff.
Conclusion: Summarize the key points of your business plan, highlighting your strengths and competitive advantages.
Step 2: Register Your Business
Registering your new construction business is required by law; all businesses must register with the government to obtain a business registration number and, if applicable, a tax registration number.
Failure to do so can result in penalties, fines, and even legal action. Registering your business also shows your commitment to operating a legitimate and responsible business.
It demonstrates to your clients, partners, and suppliers that you are a professional and trustworthy business owner.
Here’s how you can register your business:
Choose a business name: Choose a unique name for your business that is not already in use by another company in Ontario. Ensure that your chosen name is not misleading or infringing on any trademarks.
Register your business: You need to register your business with the Ontario government. You can register your business online through the ServiceOntario website. The registration process involves providing basic information about your business, including your business name, business address, and contact information.
Obtain a Business Number: A Business Number is a unique identifier assigned by the Canada Revenue Agency to your business. You can register for a BN at the same time as you register your business with the Ontario government, or you can register separately online through the CRA website.
Register for HST: If your construction business is expected to earn more than $30,000 in a year, you need to register for the Harmonized Sales Tax with the CRA. You can register for an HST account online through the CRA website.
Open a business bank account: It’s important to separate your personal finances from your business finances. Open a business bank account and obtain a business credit card to manage your business finances effectively.
Step 3: Obtain the Necessary Licenses and Permits
Obtaining the necessary permits and licenses is a critical part of starting a new construction business in Ontario, Canada.
Follow the steps below to make sure that your construction project is legally compliant, and that you can avoid costly fines and penalties.
Determine the permits and licenses required: The type of construction work you plan to undertake determines the licenses and permits required. Check with the local municipal government to determine which permits and licenses are necessary. As an example, If you carry on a business in the construction industry as a contractor, sub-contractor, sole proprietor, partner in a partnership, or executive officer in a corporation, you must register with the Workplace Safety and Insurance Board for mandatory insurance coverage. There are some exceptions to mandatory coverage.
Prepare your application: Once you have identified the necessary licenses and permits, you will need to prepare your application. This typically involves providing detailed information about your construction project, including building plans, construction timelines, and budget.
Submit your application: You can submit your application for permits and licenses either online or in person. Be sure to include all required documentation, such as building plans, zoning certificates, and engineering reports.
Pay the fees: There are fees associated with obtaining permits and licenses. Ensure that you pay all the required fees, which can vary depending on the type and size of your construction project.
Await Approval: After you submit your application, it will undergo a review process by the appropriate regulatory body. This process can take several weeks or months, depending on the complexity of your construction project.
Obtain the necessary permits and licenses: Once your application is approved, you will receive the necessary permits and licenses to commence construction work.
Display permits and licenses: Ensure that you display all permits and licenses in a visible location on the construction site. This makes it easier for inspectors to verify that you have the necessary permits and licenses.
Step 4: Obtain Insurance
Obtaining the necessary insurance policies is an important step when starting a new construction business. Adequate insurance coverage protects your business, employees, and clients from financial losses due to accidents, injuries, or damage.
By following the steps below, you can ensure that your construction business is adequately insured and legally compliant:
Determine the insurance policies required: There are several types of insurance policies that construction businesses in Ontario need to obtain. These include general liability insurance, worker’s compensation insurance, and equipment insurance. You may also require additional insurance, depending on the scope of your construction work.
Research insurance providers: Once you determine the types of insurance policies required, you need to research and compare insurance providers. Look for providers that specialize in construction insurance and have a reputation for excellent customer service.
Obtain quotes: After shortlisting potential insurance providers, request quotes for the required insurance policies. Make sure you provide accurate information about your construction business to get accurate quotes.
Review insurance policies:Review the policies carefully to ensure that they provide adequate coverage for your construction business. Be sure to read the fine print and understand the exclusions and limitations of the policies.
Purchase insurance policies: Once you have decided on an insurance provider and reviewed the policies, you can purchase the insurance policies. Ensure that you pay the premiums on time to avoid lapses in coverage.
Maintain insurance policies: It’s essential to maintain insurance policies for the entire duration of your construction business. This means paying premiums on time, updating coverage as required, and renewing policies before they expire.
Document and keep insurance records: Keep all insurance documentation and records in a safe place. This includes policy documents, certificates of insurance, and claims history. These records can help you provide proof of insurance when required.
Step 5: Hire Employees
Hiring employees for a new construction business requires careful planning, recruitment, and selection processes. By following the steps below, you can attract, hire, and retain the best candidates for your construction business.
Determine your staffing needs: Before you start recruiting employees, determine the positions and number of staff you need. This includes both skilled and unskilled workers, such as carpenters, electricians, plumbers, project managers, and administrative staff.
Develop job descriptions: Develop job descriptions that clearly outline the job duties, required qualifications, and experience for each position. This will help you attract the right candidates for each role.
Advertise the job openings:Advertise the job openings through various channels, including job boards, social media, newspapers, and industry associations. Be sure to include the job description, qualifications, and application instructions.
Review resumes and applications: Review the resumes and applications of the candidates who applied for the job openings. Narrow down the applicants to the most qualified candidates who match the job requirements.
Conduct interviews: Conduct interviews with the shortlisted candidates to assess their skills, experience, and personality. You can conduct in-person interviews, phone interviews, or video interviews.
Check references: After the interviews, check the references of the candidates to verify their employment history, skills, and experience.
Make a job offer: Once you have identified the best candidate, make a job offer that includes the job description, salary, benefits, and employment terms.
Complete hiring paperwork: Before the new employee starts working, ensure that you complete all the necessary hiring paperwork, including employment contracts, tax forms, and benefit enrollment forms.
Provide training and orientation: Provide training and orientation to the new employee to familiarize them with the company policies, procedures, and safety protocols.
Step 6: Purchase Equipment
Purchasing equipment is a significant investment for a new construction business. By following the steps below, you can ensure that you choose the right equipment, negotiate the best deals, and maintain the equipment to maximize its lifespan and performance.
Determine the equipment required: Determine the type and quantity of equipment required for your construction business. This includes equipment such as excavators, bulldozers, cranes, concrete mixers, and trucks.
Research equipment suppliers: Research equipment suppliers that specialize in construction equipment in Ontario. Look for suppliers that offer a wide range of equipment, financing options, and excellent customer service.
Obtain quotes: Request quotes from the equipment suppliers for the equipment required. Compare the quotes to find the best deals and negotiate the prices, if possible.
Choose the equipment: Once you have compared the quotes and negotiated the prices, choose the equipment that meets your needs and budget. Consider factors such as quality, performance, maintenance, and warranties.
Arrange financing: If you need financing to purchase the equipment, arrange financing through a bank or other financial institution. Ensure that you can afford the monthly payments and interest rates.
Complete the purchase: Once you have arranged financing, complete the purchase of the equipment. Sign the purchase agreement, pay the down payment, and arrange for delivery or pickup.
Ensure proper maintenance: It’s essential to ensure proper maintenance of the equipment to keep it in good condition and avoid breakdowns. Follow the manufacturer’s maintenance instructions and schedule regular inspections and repairs.
Consider equipment insurance: Consider purchasing equipment insurance to protect your investment in case of damage or theft. Shop around for insurance providers and policies that offer adequate coverage at a reasonable cost.
Step 7: Market Your Business
Marketing your new construction business requires consistent effort, creativity, and experimentation. By following the steps below, you can develop a strong brand identity, establish your online presence, and reach your target audience effectively.
Develop a marketing plan: Develop a marketing plan that outlines your target audience, marketing objectives, strategies, and tactics. This will help you focus your efforts and allocate your resources effectively.
Create a brand identity:Create a brand identity for your construction business, including a logo, tagline, and brand message that reflects your values, vision, and unique selling proposition.
Build a website: Build a website for your construction business that showcases your services, portfolio, testimonials, and contact information. Ensure that the website is user-friendly, mobile-responsive, and optimized for search engines.
Optimize for SEO: Optimize your website and content for search engines by using relevant keywords, meta descriptions, and alt tags. This will help your website rank higher in search engine results and attract more traffic.
Leverage social media: Leverage social media platforms such as Facebook, LinkedIn, and Instagram to promote your construction business, share updates, and engage with your audience. Use paid advertising to reach a larger audience and target specific demographics.
Attend trade shows and events:Attend trade shows, conferences, and events related to the construction industry to network with potential clients, partners, and suppliers. Display your portfolio, brochures, and business cards to showcase your expertise and services.
Collaborate with other businesses: Collaborate with other businesses in the construction industry, such as architects, designers, and contractors, to cross-promote each other’s services and expand your reach.
Step 8: Maintain Compliance
Maintaining compliance is an ongoing process that requires diligence, attention to detail, and a commitment to best practices. By following the steps below, you can ensure that your construction business operates legally, safely, and sustainably.
Understand the regulations: Familiarize yourself with the laws and regulations that apply to your construction business in Ontario. This includes building codes, safety standards, environmental regulations, and employment laws.
Obtain necessary permits and licenses: Obtain all necessary permits and licenses required to operate your construction business in Ontario. This includes building permits, environmental permits, business licenses, and trade certifications.
Maintain accurate records: Maintain accurate records of all financial transactions, contracts, permits, licenses, and employee records. This will help you demonstrate compliance and avoid penalties or fines.
Implement safety protocols: Implement safety protocols and training programs for your employees to ensure a safe working environment. This includes providing personal protective equipment, conducting safety inspections, and following best practices for construction safety.
Monitor and report environmental impact: Monitor and report your construction business’s impact on the environment, including air and water quality, waste management, and energy consumption. Implement practices that reduce your environmental footprint and comply with environmental regulations.
Comply with employment laws: Comply with employment laws related to wages, benefits, overtime, and health and safety in the workplace. This includes providing a safe and healthy work environment, paying employees on time, and providing fair and equal treatment to all employees.
Regularly review and update policies: Regularly review and update your policies and procedures to ensure compliance with new regulations or changes to existing ones. Stay up to date on industry developments and best practices to maintain your business’s compliance and competitiveness.
Conclusion:
With a booming construction industry and ample opportunities for growth, new businesses can establish themselves and thrive in this competitive market.
While there may be challenges, including competition and high costs, these can be overcome by providing quality services, taking advantage of available resources, and staying dedicated to the success of the business.
By doing so, new construction businesses can build a solid foundation for the future and contribute to the province’s thriving economy.
Maurice (Moe) Muise learned the ins-and-outs of government while an employee of the Government of Canada in Ottawa for 10 years. His current focus is helping small businesses in Ontario to identify and maximize government grants to grow their business.
Click here to learn more about Moe’s background and how he can help your business.
