Want to learn how to become a general contractor this year? Find everything you need to know in this blog.
Are you good at motivating people? Do you have great organizational skills? And do you dream of being your own boss?
If you answered yes to any of these questions, a career as a general contractor is right up your alley.
Keep reading to learn how to become a general contractor, as well as how to start your own contractor business.
What’s more, this article provides answers to questions such as:
- How much do general contractors make?
- What is a general contractors license?
- How do you hire subcontractors for your business?
Finally, you’ll get a sneak peak into the best general contractor software to give your business a head start.
What is a general contractor?
Step one to learning how to become a general contractor is understanding what exactly a general contractor does.
General contractors are responsible for the oversight of construction projects. In many ways, you can think of them as construction managers.
You can be a residential contractor, a commercial contractor, or a combination of both.
As a general contractor, you are responsible for managing and supervising other people who are part of the project at hand, such as:
- Electrical contractors.
The main tasks of a general contractor include:
- Being the main point of contact for customers.
- Sourcing materials.
- Managing budgets.
General contractor vs. handyman
While the two jobs are sometimes confused, learning how to become a general contractor and how to become a handyman are two different processes.
A handyman is a professional who is skilled at repairs and small projects. You can think of a handyman as someone you call when you need something fixed around your house. Examples include changing light bulbs and quick paint jobs.
A handyman rarely needs anything beyond a business license. On the other hand, general contractors often have stricter licensing requirements, depending on where you live.
We’ll go more in depth into how to become a general contractor in a moment, but first, let’s address the question on your mind: how much do general contractors make?
How much do general contractors make?
The answer to “How much do general contractors make?” may not be as straightforward as you’d hope.
While Indeed notes that the average salary of a general contractor in the United States is $103,842 per year, the amount that self-employed general contractors make varies largely.
Factors that affect your potential annual salary include:
- Where you live.
- Prices set by your competition.
- General contractors license cost.
- Liability insurance amount.
- The amount of jobs you take on.
- Overall overhead costs.
The good news is that running your own business means that there’s no cap to how much you make. The harder — or smarter — you work, the more you’ll make.
Convinced that the contracting business is for you? Let’s check out how to become a general contractor.
How to become a general contractor
Let’s get right into it: here’s how to become a general contractor.
Step 1: Education requirements and training
The first step towards becoming a general contractor is to ensure you fulfill any educational requirements.
There are generally two paths to becoming a general contractor: higher education and hands-on experience. The most successful contractors have a combination of the two.
Generally, any education in the construction industry provides you with the contracting skills you need. A degree or diploma in subjects such as construction management or civil engineering prepare you for a career as a general contractor.
Having hands-on experience is equally as necessary, whether it’s through a trade program or an apprenticeship.
What’s more, as a potential business owner, there are additional skills you need that aren’t specific to construction, such as:
- Project planning.
- Business management.
- Budgeting and financial management.
Step 2: Get licensed
In most states, general contractors are legally required to get licensed in order to work. In many of these states, this involves taking a licensing exam.
Be sure to review the license requirements in your area before starting your business.
Even if your area doesn’t have contractor license requirements, you should still consider getting accreditation of some kind. Customers are more likely to trust a licensed contractor over an unlicensed one.
Finally, no matter where you are, don’t forget to get a business license.
Step 3: Earn some experience
Getting real-world experience is a crucial step to becoming a successful general contractor. While your job is primarily to oversee the work of others, you still need to be skilled at doing (at least some of) the work that you’re supervising.
If you’ve been working in the construction industry for a while and are making a career change, you can skip this step. But, if you’ve never picked up a hammer in your life, you should consider working for established construction companies to gain experience before starting your own construction business.
Step 4: Calculate your rates
Part of learning how to become a general contractor is learning how to calculate your rates.
As mentioned, the short answer to “How much do general contractors make?” is “It depends.” What it depends on is how you calculate your rates.
Once you figure out your overhead costs, you can calculate how much you need to charge to make a profit.
Contractors sometimes charge an hourly rate for their services, but this is rare, due to the nature of the job. Most general contractors charge a percentage of the total cost of the job, or even a fixed price.
Pro-tip: using robust accounting software simplifies the way you keep track of your revenue. For example, using Xero for contractor projects is a great way to keep track of your sales, profits, and success.
Step 5: Seek out jobs
Once you have the required licenses, experience, and a plan for your business, you’re ready to seek new jobs.
There are several ways that you can market your business and find new customers:
- Online ads.
- Social media.
- Word of mouth.
- Flyers around town.
Finally, people are often in search of general contractors to oversee a project they’ve already started. So don’t forget to regularly search if there are any jobs in your area that you can apply for.
There’s one part of a general contractor’s job we haven’t discussed yet: hiring subcontractors. Let’s see what that involves.
Hiring subcontractors for your general contractor business
Learning how to become a general contractor is one thing. Learning how to hire subcontractors is a different wheelhouse, and can be a whole job within itself.
General contractors are often required to hire subcontractors so they can complete projects on time. Your customer is trusting you to find the best, so it’s essential to hire skilled subcontractors whom you are confident in.
In most cases, the biggest challenge in finding the right subcontractors is sticking to your customer’s budget. That’s why it’s best that your initial estimate includes the cost of each potential subcontractor, so your customer isn’t blindsided.
To start, there are a variety of websites available for general contractors and construction managers to find subcontractors. Examples include BuildingConnected and Associated General Contractors of America (AGC).
Some of these sites require you to post a Request for Proposal (RFP). In these cases, interested contractors will submit a proposal for your consideration.
From there, you should establish a prequalification process for your potential subcontractors to go through, to test if they meet the needs of your project. This process can include:
- Verifying licenses.
- Calling references.
- Testing knowledge and skill.
Once your subcontractor of choice passes your tests, you’re ready to bring them up to speed on the job.
Lastly, don’t forget to build relationships with your subcontractors so that you don’t have to keep repeating this process. Building a network of reliable subcontractors is what keeps your general contractor business efficient and profitable.
Recap: How to become a general contractor
Now that you know the answer to “How much do general contractors make?” and how to determine the licenses you might need, you’re ready to start your own general contractor business and take on new projects.
However, if you’re looking to skyrocket your business growth, you need to consider implementing a software solution to give you that extra push. Along with the business tools and features they offer, general contractor software like Method:CRM allow you to:
- Keep better track of job progress.
- Pull up customer and project information on the go.
- Organize your subcontractors and their rates.
General contractor FAQs
How do you become a licensed general contractor?
How to become a general contractor depends on the state where you live and the licensing requirements in your area. For the most part, the process consists of five steps:
- Determine which level of government controls general contractor licenses in your area.
- Fulfill educational requirements, such as a pre-license education course.
- Gain hands-on experience and skills in the field.
- Take any applicable exams.
- Fill out your license application.
How much do general contractors make?
General contractors make upwards of $100,000 if they have a successful business.
However, this amount depends on factors such as where you live and your contractor rates.
If you own your construction business, there’s no limit to how much you can make as a general contractor.
How much do general contractors charge?
General contractors usually charge 10-20% of a project’s total construction costs.
Most general contractors determine their rates based on how much their subcontractors charge. Based on those figures, a general contractor’s mark-up could be as high as 40%.
See how Method:CRM can help jumpstart my contractor business.
Image credit: Borevina via Pixabay