The startups that decide to venture into the field of construction work should be wary of the path ahead. It can be filled with a lot of changing variables and startups rarely choose this work owing to high entry costs and the long time required to start business since breaking ground.
However the startups who can work their way into the industry can reap huge benefits and have their own creations standing for decades to come, on display for everyone in the world to see.
| Benefits of Construction work Startup | Drawbacks of Construction work Startup |
| Startups in construction being the sole proprietor have complete ownership over all of their projects in construction | As they have complete control over everything they are the ones who have to near all the risk of every project they choose to undertake |
| The startups in construction get to take home all of the profits and it is not divided | Before they have a solid business credit, startups are unfavourable in the eyes of lenders, financial institutions, etc. when it comes to funding |
| They enjoy a host of financial benefits including having to pay considerably lower rates of corporate tax than their better established counterparts | Keeping a track of all taxes can be a mammoth task for the Construction work startups with work rarely adhering to different tax cycles |
| Using their personal networks their can sell their services and respond immediately to any kind of work that comes their way | They can bid for only a limited number of projects as their funds, manpower, etc. provide them with very little leeway in this department |
| Startups use their ‘personal touch’ with their clients to their benefits and building lasting bonds that continue to benefit them in the long run | They require an incredible amount of time to finish building as they need to finish projects while also expanding their business at the same time |
| They are very cost-effective making them the perfect choice for anyone looking for higher value proposition |
Advantages of Construction work Startup
- Ownership :
Startups being the only proprietor, can decide on exactly which construction jobs to take and how to carry out the work. They hire the people they feel are right for the job, they decide on the materials and equipment used for it and they can turn down any job they feel will not earn them sufficient profits.
- Profit :
Since they are the sole proprietor the startups also get to enjoy all of the benefits acquired from each particular construction work. They do not have the headache of having to pay any stockholders once they are successful in landing a profitable project. Also they have no partners so the profit does not get divided.
- Financial Benefits :
One of the biggest financial benefits of being a startup is that you are still a small business who is acting as a single proprietor or a sole partner. So the tax rate imposed on them is far less than the high rates of corporate tax that their larger and more established competitors have to pay.
- Response Time :
Startups generally have less amount of customers on hand than bigger companies. As a result they can be much more nimble and answer the calls for an array of work that require immediate attention, as soon as they come in. All clients are not required to abide by a bidding process and startups can sell their services via their personal network(s).
- Building Relationships :
Startups have the option of getting really up close and personal with their clients and thus building strong ties that will bring more business their way through the years. Bigger businesses do not always have that much time on hand to provide that personal touch, which startups can easily offer and build up a strong client base quickly.
- Efficiency :
They do not have any high administrative overheads and their manner of offering services is very efficient and competitive and thus more cost-effective. This makes them favourable for clients who want to partner with smaller corporations to attain the benefit of a better value proposition.
Disadvantages of Construction work Startup
- Risk :
Startups have very little room for error. Being the sole proprietor thay have to assume all of the risks that come with working in construction. They are also solely responsible for every single debt incurred. They also need to maintain paying high rates of insurance so as to cover themselves and all of the employees that they hire.
- Funding :
Funding is very hard to come by as a business that is just starting up in the construction sector. Till startups have successfully built up a strong reputation with a financial institution like a bank, they might have to dependent on loans taken personally or even their own savings in order to fund their initial projects.
- Taxes :
Though rates are low, managing taxes can pose quite a challenge for the startups. Construction work along with their payments do not always adhere to the tax year, making the startups amortize several of their payments and even their deductions. Accurate bookkeeping is crucial as the Internal Revenue Tax Cycle might not necessarily collide with their working cycle.
- Bids :
Startups do not have the freedom of bidding for lower projects as they do not have other highly profitable jobs which can make up for the lost income, unlike large corporations. They have less flexibility regarding keeping their employees, working on projects which require a massive amount of capital investment at the onset, etc.
- Building Time :
Startups in construction need a lot of time to finish their projects, mostly owing to their constant need to keep a watch over their job site, while still building up their business simultaneously. They do not yet have the financial muscle to hire sales representatives, foremen, etc. and when they do, they tend to lose their ‘personal touch’.
Startups who have opted to get into construction, should carefully weigh out all options and check the different parameters before taking any decision. Despite the high rewards they have to manage a lot of complicated processes, like taxes, faulting in any of which can be detrimental for the business. So thorough research beforehand is a must.
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Business, marketing, and blogging – these three words describe me the best. I am the founder of Burban Branding and Media, and a self-taught marketer with 10 years of experience. My passion lies in helping startups enhance their business through marketing, HR, leadership, and finance. I am on a mission to assist businesses in achieving their goals.