How to Run Your Own Construction Excavating Company

January 26, 2022

If you want to grow your excavation business, you need to focus on building and marketing your business. It is necessary to hire an experienced and skilled excavation crew.

You also require professional licensing, business licensing, financing, and the proper equipment to run a construction excavating business.

Register Your Business

All business owners register their business with the secretary of their state. You, therefore, need to register your business in the state where you will conduct your business. You will need to choose a business name. So, search the name on the website of the secretary of state.

You, however, need to choose a unique business name. Once you choose a business name, fill in the online application form, pay the necessary fees and, then, wait for the state to approve your application.

Once the state approves your application, visit the website of IRS to get a tax identification number. All business owners need to have a tax identification number. They will use it to get credit, open bank accounts, and even run payroll.

Insurance and Bonds

Check the requirements for bonds and insurance with the local city building department and state. Most businesses must have a general liability insurance policy. It is much better to have at least $1M in coverage, even though you may need $500,000 in some states.

If you are getting equipment, ensure your insurance policy covers your business equipment against loss, such as vandalism and accidents.

The state may require you to get a surety bond. Like insurance, surety bonds protect clients from losses. However, the business will repay the claim. It is, therefore, necessary for most construction businesses surety bonds of at least $75,000.

If you will hire employees, you will also need to get workers’ compensation.

Create a Business Plan

If you want to grow your company, you must create a plan for achieving your business goals. You need to start with the vision and mission of your company when writing your business plan. Create a management team to help you execute your plan.

You must create your marketing plan and add your startup budget to your business plan. In addition, you must add the projects you plan to bid on, the companies you plan to work with, and the number of employees of these companies.

Get the Proper Equipment

The cost of excavation equipment is between $10,000 and $100,000. However, the specialty items are more expensive.

You can purchase the most frequently used excavators and rent the less frequently used and large machines. You can use mini excavators for small and residential jobs.

If you want to get heavy equipment, you might want to look at the leasing options or financing options or surplus equipment.

You can also rent or purchase a truck. You can use your truck to your heavy equipment to the site.

Funding Your Business

You will need funds to purchase heavy equipment and run your excavation company.

For instance, you will need funds for administrative costs for payroll services, contracts, insurance, basic leasing, and business licensing.

You also need funds to advertise and market your excavation company.

If you cannot get the necessary funds on your own, you can visit Small Business Administration office near you to talk to a counselor. Once the counselor reviews your business plan, they can pair you with the local bank partners offering SBA loans. One of the most popular SBA programs is the SBA 7(a) program. It offers up to $5,000,000 in financing.

Proper Commercial Licensing

Check for the required licenses with the local building contractor association. You will need permits for any job. You or your site manager can obtain proper permits.

In most states, you may only need a driver’s license to operate your excavator. It is, however, better to get a commercial driver’s license to operate large equipment.

You will need a truck to transport your heavy equipment. And the driver needs to have a commercial driver’s license to drive the truck.

Marketing and Networking

Partnering with general contractors can help you get more clients. You will work in a specialized niche, so your services will complement the needs of both landscapers and other contractors.

You can, therefore, join groups and trade associations to meet the general contractors.


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