How to Make an App: The Ultimate Guide (2024)  - UpFlip (2024)

We've all heard the statistics that 80% of small businesses fail. No one wants to be a part of that statistic, but so many small business owners never get past the start-up stage.If you have successfully started your business and earned a profit, Congratulations!The work isn't over though. You're probably working a ton of hours, spending less time than you want with your family, and probably need to hire some more help.Fortunately, there are plenty of small business owners who have been where you are, so we're going to share some tips from one who has made the transition from startup to business growth.Mike Andes started mowing lawns at 11 to pay for college. By 24, he had started Augusta Lawn Care, and today he makes 7-figures selling Augusta Lawn Care franchises.There are currently 60 franchises, so he knows a lot about how to grow a business.We'll discuss aspects of growing a business including:

• What does it mean to grow a business?
• What is considered fast business growth?
• What the fastest-growing companies do
• How to increase sales to your existing customers
• How to find new customers
• How to grow your business with marketing
• How can I grow my business with no money?

The information and resources we provide should give you the knowledge to grow your business, get new customers, and increase revenue.

What does it mean to grow a business?

To grow a business means to increase revenue. With the growth in revenue may come a need to hire employees, automate pain points, or set procedures to dictate the processes that are used to provide a service or sell products.Ultimately, the focus is on increasing revenue. Mike told us:[su_quote]Growing a business is about topline revenue. You are focused on an income statement’s top inch. That includes sales, hiring, and growth.[/su_quote]There are a variety of different strategies when you are considering how to expand your business. These will depend on the services you provide, the industry you operate in, your available resources, and how much of the geographic market you are currently serving.Some of the most common strategies for small business growth include:

• Increasing the revenue from each current customer
• Offering new services
• Hiring more people to provide services to more customers
• Increasing marketing
• Expanding to another geographic location
• Selling franchises

We'll discuss each of these with some examples of how Mike and other successful businesses increased their revenue.But first, let's discuss what is considered fast growth for a business.

What is considered fast business growth?

A successful business should be defined as one that helps the customer base, employees, and the business owner reach their goals. If the business successfully does that, you are already successful.Mike told us:[su_quote]Like many business owners, my first goal was to take home $1m in a year.[/su_quote]After that, you'll set new targets and look for new ways to challenge yourself. Mike told us his new goals are:[su_quote]To open as many locations as possible and have industry-best systems so our competitors have to adapt our practices or go bankrupt because all the customers come to us.[/su_quote]If you want to measure your success against others, there are some statistics you should consider.Let's look at some facts most people aren't really aware of:

• During the first year, business growth will be approaching infinity because you had no revenue before you started the business. Make sure to compare first-year growth in pure dollar amounts; otherwise, a calculator will say "Error" or "Undefined"
• It's easier to grow revenue from $100,000 to $1m/year, than it is to increase the money a business makes from $1m to $10m/year.
• Each industry has different growth targets and strategies. What might be rapid growth for one industry might be horrible for another
• The Federal Reserve typically expects GDP growth between 2-4%

Now that you are familiar with that information, Revenue Rocket classifies revenue growth in 5 different categories:

• Fast growth: Up to 15%/year
• Rapid growth: 15-25%/year
• Very rapid growth: 25-50%/year
• Hypergrowth: 50-100%/year
• Lightspeed growth: 100%+/year

In the same article, they suggest no more than a 30% increase in revenue and 15% increase in profit to foster sustainable business growth.That's consistent with what Mike told us:[su_quote]When a business grows too fast, it becomes a mess; you're always playing catch up, you are bringing on more people, and it can cause chaos. This is typically the time when owners give up on small businesses.[/su_quote]According to Fortune's 100 Fastest Growing Companies, the top 100 fastest growing businesses have a 3-year annual growth rate between 15-80%, which means they increase revenue 33.1%-483.2% in 3 years.It's important to note that most of these were in tech, finance, and pharmaceutical companies.

What the fastest-growing companies do

The business model adopted by many of the fastest-growing companies is one where they will:

• Get funding from venture capitalist firms and banks
• Run multi-million dollar marketing budgets
• Use computer automation systems that handle significant amounts of the daily operations
• Run at significant losses for years
• Sell billions of stock to fund running losses for a few more years
• Then become profitable

These are all things that other businesses probably won't be able to get away with. Small business success can still learn something from this business model.Get good at marketing strategies, scale the business with software, and focus on providing a great product or service.Mike gave us different pieces of advice that suggest that the lessons from major companies can be applied anywhere:[su_quote]Whatever your goals are for a year, cram them into 3 months. It will stretch your capacity and you'll grow faster than other businesses.[/su_quote][su_quote]Keep improving your processes. If you can stay in business for 10 years, you are going to grow and expand your customer base.[/su_quote][su_quote]If you focus on the product, the rest will come. Notice Tesla doesn’t do marketing. They focus on how many cars they build.[/su_quote]But he also reminded us that most of us aren't Fortune 500 companies:[su_quote]You aren’t a fortune 500 company. Don’t spend 3 hours a week on strategy meetings. Grow the business. You only need it 2x per year.[/su_quote]More importantly, he reminded us that our target audience doesn't expect us to be a massive corporation. They will appreciate it if we have our own brand identity.[su_quote]Sell the fact you don’t have the budget for a $50,000 video. Don't try to create something Apple would. Create something that shows you are a new business and are having fun with your marketing efforts.[/su_quote]

How Small Business Owners Increase Sales to Current Customers

Your growth strategy should include increasing the value of each customer.There are a ton of ways to increase total customer value, including a customer loyalty program, upselling, subscription-based business models, and marketing tools, like reminders that they didn’t complete a transaction.We'll discuss each of these strategies and how they can accelerate growth.

Customer Loyalty Program

The 2018 Bond Customer Loyalty Report found that 70% of people say that they are likely to recommend a company with a good loyalty program, 77% are more likely to continue doing business with a brand, and 63% modify their spending to get the most benefits.Despite this, no industry has more than a 50% loyalty program satisfaction score. That means there is a ton of room for improvement, and if you can get it right, you'll be ahead of your direct competitors.I feel like this should be repeated consistently:[su_quote]If you focus on the product, the rest will come.[/su_quote]Buildify has a review of some of the best apps for loyalty programs on Shopify, and many of them will be compatible with other websites.You will most likely need a CRM to maximize potential because 88% of people prefer suggestions that are tailored to them.Let's look at another strategy many businesses use.

Upselling

Upselling is the process of suggesting something that goes well with a product that the customer might enjoy. You see it all the time at fast-food restaurants:[su_quote]Would you like to make that a combo?" or " Would you like to make that a large?[/su_quote]Even Amazon does it. In the screenshot below, they suggest two books that people commonly buy when someone buys Building a StoryBrand.If someone chooses to buy all three, the purchase is 2.61 times the revenue.If you aren't doing this, you need to start today. It's an amazing growth strategy. Neil Patel, a rockstar marketer, suggests trying to make 30% of your profit come from upselling and tells you how he does it.Just make sure the suggestion is relevant. The Shopify App Store has 418 different upselling software apps.Mike also mentions it briefly as one of the key strategies to encourage customers to spend more.Check out our podcast with Mike below:

The Shopify App Store has 418 different upselling softwares, so make sure you read reviews before you choose one.Alternatively, you could review Predictive Analytics information on providers.Imagine what your profit would look like with an extra 30%!Don't get too caught up in that because we have more killer tricks to grow businesses.

Subscription-Based Models

Anyone who uses business software has seen how a subscription-based model works.A quick search can find an Office 2019 disc for $49.99, but if you order Microsoft Office 365, it's $10/mo or $100/year.Given the typical person buys a computer every 4 years, the subscription-based model generates up to 9.6x the revenue and reduces the costs of manufacturing, transporting, and storing the disc.That's great for software companies, but how does that apply to other types of companies?Price Intelligently has a great blog on subscription-based models and points out that it will consistently increase total customer value until they cancel the subscription.This model can be used with any product that either releases new products routinely or sells disposable products.In service-based industries, subscription-based pricing can be used to strengthen customer loyalty (commonly used with UberEats/Doordash) and/or stabilize revenue.I have seen HVAC contractors charge people $20/month instead of $99 twice a year to do preventive maintenance with success.If you can use this model, I strongly suggest you do. If you are an e-commerce store, check out Shopify's walkthrough on subscription orders.Keep reading for ways to find new customers.

How a Business owner can find new customers

There are a variety of ways that business owners can find new customers. Deciding which way works best for you will be based on your business, your personality, and other conditions.Let's look at some of the most common ways.

Networking events

Networking events can be a great way to meet potential customers, especially if you are a B2B business. Other business owners will come to these events to exchange information about whatever the subject matter is.They may be potential customers, or they may be someone with whom you can exchange referrals.

Increase high performing marketing campaigns

If you find a paid marketing campaign is performing well, you can increase how much you are spending on it, but do it slowly because 10x spend might only be 8x revenue. To learn more about increasing advertising, check out on blog about starting an ad agency.

Reach out to past customers

As long as you have some type of customer relationship management, you should know when a customer last interacted with your business, exactly what services or products they got, and whether they were pleased with the service.Many people have busy lives, and people receive tens of thousands of emails a year. They might have gotten distracted and forgotten to reschedule their services.Reaching out to them could make a company more money, especially if it's something they do infrequently, like get oil changes, seasonal maintenance, or dentist appointments.

Encourage users of your service, products, or site to share experience

One company we interviewed told us they specifically ask customers to mention the full name of the company when writing reviews to help Google rankings.A common practice in the photography industry is to request customers tag the photography company when they share pictures on social media.This helps increase the relevancy of the business and counts as free marketing. In addition, if the customer is part of your target market, someone they know is probably a target customer.

Open another location

If you have gotten a sizeable share of the target market in your area, you may need to open another location. Depending on the type of business, the location may be in the same city or a different city.Mike told us:[su_quote]When you double locations, customers aren't just going to grow at the new location, but at the old one too. One of the biggest mistakes I made when opening a call center to support my second location was assuming that we could assume double the customers, but it was more like 3-4x the number of customers because the old location grew too.[/su_quote]Opening a new location for something like a smoke shop can be done several miles away in most big cities because there are smoke shops almost every square mile.Something like a lawn care business might require another truck that services a different area of the city.If you find you can't grow in the city, you may need to look for customers in other cities. At that point, you'll want to consider if opening and running the location yourself makes sense or if you want to start a franchise.Mike told us:[su_quote]If you are in a business like cleaning services with a low cost of startup, just start a second location. If it's something like lawn care, the startup costs are high, so sell franchises.[/su_quote]

Sell Franchises

Selling franchises can turn other people who are thinking about starting a business into customers, but selling franchises require well-documented policies and great business systems in place to make it where the new business owners don't damage the reputation.Most businesses have not clearly defined their company policies enough that they are ready to grow a business by selling franchises, but if you have, you should check out our posts about how to scale a business and how to sell a business.Mike told us:[su_quote]Franchises are best in high-cost-of-entry industries because you pass the costs to someone else but get less of the profit. It takes 100 franchisees before franchising becomes profitable.[/su_quote]

How to grow your small business with marketing

Finding customers with marketing can be a challenge during the early stages of business. There is a lot of trial and error before potential clients become new customers. SalesForce has a blog about why it takes 6-8 touches to get new customers.That means they've done their research, looked at reviews, looked at pictures of your work, asked friends if they are existing customers, and seen many of your ads. Small businesses are competing with other small businesses and large companies for new customers.Be prepared to learn a lot about marketing or hire someone. Either way, don't expect your marketing plan to generate results that happen overnight.Stephen from NW Softwash spent a lot of time talking about marketing in our interview with him about power washing. He talks about social media, marketing budgets, building a team, and how he grew his business up to $120k/mo by the age of 21.Take a few to listen to what he has to say.[su_youtube url="https://www.youtube.com/watch?v=H99wDmpnE_g"]You'll want to use tools like Google My Business to help you show up in search engines. You'll want your company website to be easy to use as customer experience can help or hurt a business.You might want to have a professional copywriter create your landing pages.Then there are paid ads, but that is a complex market. I'd recommend talking to someone who specializes in paid ads so you don't waste your buying power. Let's look at social media.

How to use social media to grow your business

Many companies use social media to reach new customers.Social media gives you a place to share the good news, show you genuinely care, while at the same time exposing you to a vast amount of data about both existing customers and new customers, hence the rise in spending on social media by both big business and small companies.If you want to know how to grow a small business on social media, the best thing to do is follow what people with massive followings do and learn how to apply the same strategies to your business.Learning from other people's success is part of the trick if you want to know how to make your business grow.

How to grow your business on Instagram

If you want to use Instagram to increase business, I suggest you review their help section and other resources for businesses who want to market on their platform.When you market on this platform, it's all about pictures, so make sure to have fun ones mixed in with work you are proud of.As an owner of a small business, I know how tempting it is to always be focused on business, but make it a point to celebrate small victories for your team, goofy moments, and things that bring a human touch.Mike told us:[su_quote]With marketing for a large geographic region that has diversity, try to create ads that work everywhere so you won't have to make different ones for different locations.[/su_quote]You should also find local "celebrities" or micro-influencers and try to get them to communicate with their audience about your company.Just make sure they actually love your product. People can tell when someone is being insincere.Ultimately, Mike reminded us:[su_quote]I focus on audience, improving systems, things like that. You don't need to spend a ton on marketing. Look at Tesla — they don't have a marketing budget because they Have Elon's tweets.[/su_quote]

How can I grow my business with no money?

If you don't have any funds and can't take loans to market your company or do any of the other tips to increase sales discussed in this post and in the podcast, you should probably start thinking ahead and reinvest some of the profits from your business.When people ask me how to grow my business, the first thing I ask them is:[su_quote]What is your business and how are you addressing the market?[/su_quote]Most of the time, they don't have a clue how to answer it. One customer decided to spend $150k to bring 30 products to market, but he wouldn't start selling any of them until all of them were ready to sell.It's 5 years later, and the company hasn't sold a single product.This kind of expenditure is comparable to buying large fixed assets, which Mike told us:[su_quote]Fixed assets are the most cash-intensive part of a business. Find ways to limit them.[/su_quote]The point of this is that regardless of whether your company is profitable, losing money, or has not brought its products to market, start small.Master marketing, identify your target market, and learn how to efficiently run a company, then expand.Or you can try to take out loans and hope that it doesn't maintain the status quo. Whatever you do, remember the best piece of advice Mike gave:[su_quote]If you focus on the product, the rest will come. If you can manage to stay open for 10 years, there is no way you will not grow.[/su_quote]Basically, if you want to grow your business, keep working. When a process breaks or takes too long, fix it, make it easier for your customers to buy from you, and learn marketing skills.If you stick to it and learn from your mistakes, you will eventually become a master of your field.We hope you found this information informative. If you enjoyed the blog and the podcast, make sure to follow us for more great insights from business owners who have managed to make a great living in a variety of fields.

Business ideas

Have you ever wanted to make people happy with yummy cakes or tasty breads? Ever thought about entering one of the fastest-growing industries for small businesses? It may be time to start a bakery!

Today we're revealing insider information on how to start your own baking business.

We connected with Puran Deep, a successful bakery owner who runs the wildly popular Wild Wheat Bakery in Kent, Washington. In 2019, his bakery exceeded over $1 million in revenue!

Now, we're passing his expert advice on to you. We'll show you step-by-step how to plan, start, and grow a thriving bakery business in this $30 billion per year industry.

[su_note note_color="#dbeafc"]In addition, we're giving answers to popular questions like these:

• How Do I Start My Own Bakery?
  • Step 1. Consider Bakery Business Ideas
  • Step 2. Perform Market Research
  • Step 3. Understand Your Local Business Laws
  • Step 4. Consider Locations
  • Step 5. Get Menu Ideas
  • Step 6. Understand the Finances
  • Step 7. Create a Bakery Business Plan
  • Step 8. Create a Business Entity
  • Step 9. Secure Funding
  • Step 10. Develop a Marketing Plan
  • Step 11. Purchase Equipment
  • Step 12. Hire Staff
  • Step 13. Build Your Business
• What Are the Biggest Mistakes When Opening a Bakery?
• Conclusion

[/su_note]

Click any of the links above to jump ahead to that section.

How Do I Start My Own Bakery?

You'll find everything you need to know in this step-by-step guide for starting a bakery!

If you are new to the bakery world—or haven't ever stepped foot in a kitchen—it's a good idea to visit some bakery businesses to glean information and practical experience. Small business owners are often happy to share what they know.

We interviewed Puran Deep (P.D.) from Wild Wheat Bakery in Kent, Washington. P.D. started four different businesses in the past and now runs Wild Wheat, a cafe-bakery often featured in The Seattle Times and the winner of many “Best of Kent” awards.

See the YouTube video about how to start a bakery below.

[su_youtube url="https://www.youtube.com/watch?v=j2_xwBgyFFU"]

P.D. grew tired of the rat race and wanted to start his own business. That's when the opportunity to purchase Wild Wheat, an established bakery-cafe with an excellent reputation, landed on his desk.

P.D. bought an existing bakery, but he still has tons of advice to offer to someone starting from scratch. We'll share his expert tips and other practical advice as we proceed through the steps for starting a bakery as a new business.

[su_quote]You have to treat everybody that walks in this door with great customer service. Make sure they are getting what they need. Make sure you're giving them quality food. Over 50% of our customers on a daily basis are our regular customers.[/su_quote]

Another alternative is to buy an existing bakery.

Step 1. Consider Bakery Business Ideas

The first step of starting a bakery is considering the different types of bakery ideas you're interested in. Retail bakeries, home bakeries, and wholesale bakeries are viable options.

Recently, the baked goods industry has grown significantly, so it’s a good time to get started. Several options are available for starting your own bakery business.

Bakery Cafes

• Average Annual Revenue: $1.52 million per year
• Average Profit Margins: 5.4%
• Startup Cost: $100 (at home) to $3M (Panera Franchise)
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 1.1%
• Best for: Cooks, chefs, people who love cooking

A bakery cafe offers tables where customers can sit down and eat in a dining area. It combines the benefit of freshly baked goods with the enjoyment of a small restaurant business.

Like a small restaurant, this type of business also provides coffee, other beverages, and an extended menu. Wild Wheat Bakery offers an extended breakfast menu featuring omelets and other egg dishes.

As an added component, P.D. roasts his own coffee beans on location. Customers can enjoy a cup in the cafe or take home the beans to brew themselves.

A perfect example of a Bakery Cafe is the world-famous Ferrara Bakery in New York City.

Wholesale Bakeries

This type of bakery business does not keep a storefront and acts as a supplier to restaurants, grocery stores, etc.

Wholesale bakeries benefit from predictable and reliable sales to retail businesses. Wholesale bakeries sell to customers who buy in bulk. And there's no worry about the upkeep of a retail bakery.

Finding grocers, local coffee shops, and restaurants to carry your product is the key challenge of a wholesale bakery. This critical aspect may be difficult for a new business trying to break into the baking market.

However, it is very important for any bakery. We asked P.D. why wholesale is so important for a bakery, and here's what he told us:

[su_quote]You have your staff; you have your employees that are producing a certain number of breads or whatever they're making. It's not a huge cost for them to produce a little bit more with the same employees and the same equipment, but you can increase your sales significantly.[/su_quote]

Marsee Baking is a wholesale bakery that operates in Seattle and Portland and would be a great model to build your business on.

Counter-Service Bakery

Typically, small counter-service bakeries expect customers to pick up their orders and go. One benefit is that it limits the time and energy spent on customer service.

Part of the larger category of retail bakeries, it's possible to combine a counter-service bakery with a wholesale bakery. The bakery would sell baked goods to grocers or restaurants and provide pick-up and/or delivery service to retail clients.

Clark Street Bakery in Los Angeles started in an apartment and now has four counter-service locations.

Food Truck Bakeries

One of the most affordable ways to open a bakery is through food trucks. Food truck bakeries have become a viable option for running your own business. For more information on how to get started, check out our blog post on How to Start a Food Truck Business.

The Teal House Coffee and Bakery food truck is one of the most well-known around Austin, Texas!

Home Bakeries

Cottage industry businesses can be a simple way to dip into opening a bakery without a large investment. For those wondering how to start a home bakery, simply alter the steps in this business guide to meet your home baking needs.

[su_quote]Baking can be done with a few simple ingredients, so it's about simplicity and nostalgia – people are reminded of their childhood.” – Paul Hollywood – Celebrity Chef and Judge on The Great British Bake Off [/su_quote]

Specialty Bakery Cakes

Many business owners succeed with specialty bakeries like a cake business. One of my favorites is Freed’s Bakery in Vegas. They create custom wedding cakes and other treats for special events. Check out their fidget spinner cake below.

[su_youtube url="https://www.youtube.com/watch?v=0pW-5YkkOv8"]

How to Start a Bakery Business From Home

Many people start a bakery from home simply by selling their baked goods to friends and family. You might not need a formal business plan, but check into local regulations on how to run a bakery from home without a commercial kitchen.

Step 2. Perform Market Research

You might wonder whether starting a bakery business in your area is viable.

It's important to know what's happening in the baking business in order to meet customer needs. This market research report provides tons of information and industry data about Bakery Cafes in the US.

The good news? Bakeries are on the upswing!

Even so, it's important to research your local business environment for things like:

• Demographics
• Local Market Trends
• Competition
• Budget
• Target Audience

All of this information will be vital later when you build your business plan.

According to P.D., knowing what customers need is critical to running a business. He says:

[su_quote]…you have to have the right mindset, you have to take care of the customers and know their needs.[/su_quote]

So, before you even get started in business, find out what potential customers want by doing your research ahead of time.

When considering which baked good offerings to provide, know that certain segments of the market are larger than others, as seen below:

[su_note note_color="#dbeafc"]

• Bread: 32%
• Rolls: 19%
• Cakes: 15%
• Retail bakery products: 10%
• Soft cakes: 8%
• Pies: 2%[/su_note]

  Step 3. Understand Your Local Business Laws

  Because it can take time for agencies to process paperwork, it's important to understand business licensing early in the process. The bakery industry deals with food, so the Health Department in your area should be your first contact.

  Licensing and registration varies between states and even within local jurisdictions. One excellent resource for learning the basics is the Small Business Administration. The required permits depend on the type of bakery and location.

  Run through this list for a cost estimate of your licenses and permits:

  • Business License – Around $50. Based on location/type/size. Renewable.
  • Food Service License: $100-1000. Based on size, # of employees. Renewable.
  • Employer ID Number (EIN) – Free. Issued by IRS for tax purposes. Takes time.
  • Certificate of Occupancy – Around $100. Proof of final inspection. Locally issued.
  • Fire Department Permit – $50-200. Inspection of ovens, etc. Locally issued.
  • Food Handler's Permit – $100-500 for each employee. Renewable.
  • Sign Permit – $20-50+. Allows a permanent sign. Locally issued.
  • Music License – $250-500 to play music.

  Here's a link to the U.S. FDA list of regulations and codes for food service establishments by state. It clarifies the differences in regulations between states.

  For county and city information, perform a quick internet search or inquire at your local health department.

  Can I Get A Baking License For At-Home Bakery?

  

  Sometimes. It depends on your local laws. A home bakery business may also be called a home baking business or cottage food business. There may be special requirements for how to start a bakery from home including:

  • Refrigeration
  • Ingredient
  • Packaging
  • Maximum Revenue
  • Distribution

  Cast Iron is a home-based food business management software platform that has a list of laws that make a good starting point for those wondering how to start a cake business from home. It’s a good place to start for others starting a baking business too.

  How Long Does It Take to Start a Bakery?

  Starting a bakery can take from a few weeks to a few months, depending on the scale of the operation.

  A bakery at home can be fairly quick when your customers are people you know. A retail or wholesale bakery may take a few months or even a year to start, depending on your location, funding, and other circ*mstances.

  Step 4. Consider Locations

  A retail bakery does best in a high-traffic area. Ideally, your space will be easily accessible to lots of people, have enough space for seating, and a reasonable rent for the square footage.

  For example, the world-famous Ferrara Bakery is located in New York City in the heart of Little Italy on the corner of Grand and Mulberry Street.

  It may not be the most spacious cafe, but the foot traffic more than makes up for the lack of seating. Try to find this balance with your location!

  [su_quote]In any business, location is key. If someone is planning to open up a new location, pay a lot of attention to the foot traffic where you are opening it. Location can be something that can make or break your business. It's very important.[/su_quote]

  Consider these factors when choosing your business location:

  

  • Accessibility: Is it easy for customers to get to your location?
  • Competition: Are there other bakeries nearby?
  • Foot traffic: How many potential customers pass by on foot? Remember P.D.'s advice.
  • Parking: For customers arriving in their own vehicles, is there enough space to park?
  • Growth potential: Is there a possibility to expand in the future?
  • Demographics (target audience): Who lives or works in the area? Does this align with your ideal customer?
  • Cost: Research all the details of the price to buy or rent the space.
  • Bakery layout: There's much more to consider than just how customers will move through the bakery. Keep reading below.

  Bakery Layout

  You should consider the new bakery floor plan before you open a bakery in a commercial space. You’ll want to consider the following features:

  • Counter space
  • Bakery equipment
  • Prep space
  • Dining space
  • Office space

  All this goes into a bakery floor plan. You should probably consult an architect and a commercial real estate agent before choosing a small commercial space where you’ll open bakery operations.

  Step 5. Get Menu Ideas

  

  Before determining the cost of opening your new business, you must have a rough idea of your menu. Mastering recipes takes time and practice. The good news is that you can enjoy tasting the test recipes!

  Business success hinges on offering the highest quality products that people want. It's important to create an eye-catching menu.

  Offer special items that make you stand out from the crowd. Give customers a reason to do business with you!

  If you need some inspiration, here are some recipe sites to review:

  • Love and Lemons
  • Food Network
  • Taste of Home

  Look at the bakery offerings that offer the highest profit potential.

  Step 6. Understand the Finances

  While spending time in the kitchen is loads of fun, you also need to crunch the numbers to open a successful bakery. You’ll want to consider the following:

  • Cost of opening a bakery
  • Monthly operating costs
  • Cost of goods sold for the products.

  How Much Does It Cost to Start a Bakery?

  

  The startup capital for starting a bakery varies based on the type of bakery you choose to start. Those who want to know how to start a baking business should expect the following startup costs depending on what type of business entity they start.

  • Home-based: $100+
  • Food Trucks: $100+. Learn more about getting the startup capital for food trucks.
  • Franchises: You’ll need to demonstrate up to $7.5 million net worth for starting a Panera franchise.

  While the low end is just for a small bakery to buy the materials, those who are really interested in owning a bakery should expect $2-5K just for the business licensing. Depending on the scale, you can get by with the minimum, or go all out.

  Learn How to Price Your Baked Goods

  To run a profitable business, you must figure out how much it costs to make each one of your baked goods. This allows you to price items for the highest profit margin.

  It's easy to lose money on a product if you don't know exactly how much it costs to make it. This includes ingredients, labor, packaging, and even cooking time to account for the electricity (or gas) running the oven. Most restaurant managers aim for the cost of serving to be approximately 1/3rd of revenue.

  Before you open, call local vendors to price their supplies, and then determine the cost of production. Consider this pricing guide based on information from the Houston Chronicle.

  PRICING GUIDE FOR BAKED GOODS

  Click through the 10 steps below to calculate your costs.

  [su_tab title="1" disabled="no" anchor="" url="" target="blank" class=""]Calculate the number of batches you can get from a bulk ingredient.For instance, if the recipe calls for 8 ounces of milk and you buy your milk in gallons, here is the formula:128 oz / 8 oz = 16 batches[/su_tab][su_tabs][su_tab title="2" disabled="no" anchor="" url="" target="blank" class=""]Divide the cost of each ingredient by the number of batches.If a gallon of milk costs $4, this is the formula:$4 / 16 batches = $0.25 per batch for milkComplete this step for each ingredient in a recipe.[/su_tab] [su_tab title="3" disabled="no" anchor="" url="" target="blank" class=""]Add together the cost of all ingredients per batch.This will calculate the total cost of ingredients for an entire recipe.[/su_tab] [su_tab title="4" disabled="no" anchor="" url="" target="blank" class=""]Divide the cost per batch by servings per recipe.So, if the total cost per recipe is $5 and makes 10 servings:$5 batch / 10 servings = $0.50 per serving[/su_tab] [su_tab title="5" disabled="no" anchor="" url="" target="blank" class=""]Add in other items (cupcake liners, packaging, etc.).For example, cupcake liners cost $5 per 100, so each cupcake liner costs $0.05.$0.50 per serving + $0.05 liner = $0.55 per serving[/su_tab] [su_tab title="6" disabled="no" anchor="" url="" target="blank" class=""]Add in the cost of equipment usage.Here, divide the cost of equipment by the number of days of its expected usage and then divide that number by the average number of servings you will produce per day.For instance, for an oven that costs $10,000 and lasts for ten years (1825 days) and bakes 500 servings per day, this would be the formula:$10,000 / 1825 days = $5.48$5.48 / 500 servings = $0.01Repeat for each piece of equipment.[/su_tab] [su_tab title="7" disabled="no" anchor="" url="" target="blank" class=""]Figure operating costs.Do the same as above to include all operating costs. This includes utilities, storage space, rent, advertising, printer ink, labor, etc.For instance, if your monthly electricity bill is $500, then divide that by 30 days and the estimated 500 servings per day:$500 / 30 days / 500 servings = $0.03Again, do this with all of your operating costs and add all of that in.[/su_tab] [su_tab title="8" disabled="no" anchor="" url="" target="blank" class=""]Divide your per-serving cost by the number of expected items sold.Bakeries must be realistic about the fact that they will not sell out of everything in their shops, and perishable items must be counted into the cost of doing business.If you think that you can sell 75% of your items, and your per-serving cost is $0.50, then your formula is this:$0.60 / 0.75 = $0.80You must increase your per-item cost to $0.80 to account for unsold baked goods.[/su_tab] [su_tab title="9" disabled="no" anchor="" url="" target="blank" class=""]Add in your profit margin.Here, add 100 to your desired profit margin and then divide that number by 100. For instance, if you need a 200% profit margin:200% + 100 = 300 / 100 = 3.0Then multiply the cost by your profit margin to determine the per-serving price like this:$0.80 cost x 3.0 profit margin = $2.40 per serving price[/su_tab] [su_tab title="10" disabled="no" anchor="" url="" target="blank" class=""]Compare prices.If this per-serving cost is similar to what other local bakeries are charging, then you're on the right track. If it's under, then you should up your price. If your cost is higher, reconsider if this is a product you can sell at a profit.[/su_tab][/su_tabs]

  Track Your Finances

  Along with determining costs, you need to decide on a way to keep track of your business finances. One option is to hire a trusted bookkeeper or accountant to free up your time to run the business.

  There are also several options available for small business accounting software including Quickbooks, Freshbooks, Wave, Xero, and more.

  Step 7. Create a Bakery Business Plan

  A detailed business plan is helpful when starting a bakery.

  Consider these components when writing your bakery’s business plan:

  • Executive Summary: contains the most important points from each of the following categories
  • Company Overview: a description of your business
  • Market Analysis: includes pertinent information from your market research
  • Business Offering: a list of the products you will sell to your customers
  • Management: includes business partnerships, number of employees, who will run the various areas
  • Marketing Plan: information on how you plan to reach customers, advertise, etc.
  • Financial Projections: predictions for the financial success of your business

  The Small Business Administration offers this business plan writing guide. We’re also partial to our business plans created by Mike Andes or Brandon Boushy to help you create a bakery business plan.

  Is a Bakery a Profitable Business?

  Baking can be very profitable if you work hard and provide the best products for customers. Depending on various factors, bakery owner salaries range from around $17K to $71K per year.

  These statistics include tiny home bakeries, so there's potential for earning much more!

  Step 8. Create a Business Entity

  

  With a business plan in place, it's time to create a legal company. Register your business at the federal and state levels and establish a legal structure. It's possible to register online.

  Choosing a business structure (Limited Liability Corporation, Sole Proprietorship, Corporation, S Corporation, or Partnership) can be complicated if you're not familiar with the process.

  The IRS has extensive resources on business structures, but it’s best to work with an accountant and/or business attorney to maximize your legal and tax benefits.

  Typically, a bakery will be set up as a Limited Liability Corporation (LLC) to avoid exposing the owner's personal assets to legal action (like a slip and fall in the bakery).

  Step 9. Secure Funding

  If you have personal savings available to start your business, that's fantastic! But you may need to borrow a portion of your startup costs until it becomes a viable business.

  If you only have around $50,000, but want a larger cushion at $100,000, you may get a business loan. However, you must provide viable financial projections that show your ability to pay back the loan.

  As P.D. said,

  [su_quote]If you make a good business plan and the lenders buy into that, you can get funding.[/su_quote]

  Consider these different options to secure funding for your business, as suggested by the Small Business Association:

  Venture Capital Funding

  

  If you can find an angel investor who believes in you and your plan, this type of funding can be effective.

  However, it means shared ownership, which many entrepreneurs are not super excited about. But it also lowers risk and prevents borrowing money.

  Consider this video we've created about Venture Funding.

  Crowdfunding

  Another way to avoid a loan is to raise the money from many people who invest a small amount of money.

  Typically, investors get something in return, such as advertising credit, or gifts and other perks. Several online platforms host crowdfunding campaigns.

  Business Loan

  

  The amount and interest rate on business loans varies significantly. You can try for a loan through a local bank, as well as through the government-assisted loan programs with the SBA.

  Securing this type of funding requires a business plan, financial projections (usually for 5 years), and expense sheets.

  Friends and Family

  If your friends or family are interested in your project, you may find you can borrow the funds from someone you know.

  How to Start a Bakery Business With No Money

  

  If you want to start your bakery on a shoestring budget, that's great! As mentioned above, you can save a ton of money by starting in your own home and by selling to friends and family.

  Another option, if you have good credit, is to leverage a zero-interest rate period on a credit card. It's risky but possible to use the zero-interest period to start your business and then pay the card off before the interest kicks in.

  Note: Have a solid business plan in place if you're thinking about this option.

  Step 10. Develop a Marketing Plan

  When you invest in starting a bakery, make sure customers can find you!

  P.D.'s strategy for getting new customers is based on Social Media Marketing, like these recommendations from Neil Patel. He outsources a marketing company to run his Instagram, Facebook, and other profiles.

  They focus on letting customers know about new product releases and any interesting news.

  [su_quote]These days everyone is on their phone![/su_quote]

  You can get your name out there and draw in customers in a variety of ways, including these options:

  Traditional Advertising

  This includes print ads, billboards, radio, flyers, and going door-to-door.

  Social Media

  

  Initially free to use, you can also purchase additional social media ad options. It's possible to outsource your social media marketing by hiring a professional marketer. Find a professional to help with this through Fiverr or Upwork.

  Press Releases

  Besides social media, don't forget about print and online newspapers. Depending on your location, your local paper may print your bakery opening as business news when you present it to them as a press release.

  Coupons

  

  Consider placing coupon ads in a local paper. To offer bounce-back coupons (used on a return visit), use an online tool like Canva to design them, then have them printed locally. Many bakeries or coffee shops have loyalty cards designed and printed this way.

  Is It Hard to Open a Bakery?

  Opening a bakery is hard work, but it is worth it! According to P.D.:

  [su_quote]There's nothing you can't learn if you have the right mindset and the right attitude. You need to be open-minded. Keep the right mindset. Stay the course, do what you have to do, keep at it. Eventually, things smooth out and you come out on top.[/su_quote]

  Step 11. Purchase Equipment

  You've found your space and secured funding. Now you must prepare your kitchen and dining area to bake and serve the best products.

  What Equipment Do I Need to Start a Bakery?

  

  Reliable equipment is essential for any commercial kitchen. Purchase your equipment online or locally. Your bakery equipment list for your commercial kitchen should include:

  • Ovens – Commercial-grade ovens can be extremely pricey but are a vital piece of equipment for your business. P.D. says his ovens cost around $100K each brand new. Many bakeries choose to lease larger equipment to save on startup costs.
  • Mixers – Large capacity stand mixers, with special dough hooks for kneading bread.
  • Refrigeration – For storing your perishable ingredients such as milk and cream.
  • Tables/Workspace – Depending on the type of baking, tables may be necessary for decorating cakes or for packaging products.
  • Storage – A place to store your ingredients prior to use, and for storage of packaging, or other items. Carts with shelves may be useful for cooling baked goods fresh out of the oven.
  • Dining Area – Tables, chairs, and a counter for the retail area are all important aspects of your bakery.
  • POS System – One critical point for any business is how to let your customers pay. A Point-of-Sale system is vital to your business. When you can choose one that links well with your accounting software (mentioned above), it's even better!

  Step 12. Hire Staff

  For a retail or wholesale bakery business, qualified employees working in the kitchen are the backbone of the business. Bakeries open very early, and it is essential to have reliable employees willing to bake bread at four in the morning.

  If you're running a cafe-bakery, counter help and possibly servers are a necessity. They act as the front line for providing great customer service that ensures return business.

  Here are some sites where you can post jobs and find qualified candidates:

  • Indeed
  • Monster
  • ZipRecruiter

  Finding top talent in food service is no simple task, so go beyond traditional job hiring sites like Indeed. Instead, reach out to local culinary schools and food programs (community colleges) to secure reliable talent with interest in the industry.

  According to P.D., in taking care of your staff, you don't want to skimp:

  [su_quote]I tell them to make sure that your people are taken care of, and the rest will be fine. You only have so many hours in a day. You'll burn out if you're not careful. It's not worth stressing yourself out.[/su_quote]

  Step 13. Build Your Business

  

  Once you've started baking, pursue continuous growth for your business. That means setting goals and making plans to find and keep customers.

  P.D. says you should ask yourself a simple question:

  [su_quote]I want to grow 10% every year. What do I have to do?[/su_quote]

  Here are some other questions to ponder on growth:

  • What should I do differently or better to gain new customers and keep existing ones?
  • Is there room to add new products?
  • Would a customer loyalty program help our bottom line?
  • What does our marketing data show?

  Brainstorm and research ways to please your customers and then execute the best ideas.

  According to P.D., wholesale products are one of the best ways to grow a bakery business. They provide large profit margins without a large investment.

  It may mean running the ovens a bit longer or arranging for more deliveries, but it's a steady way to increase revenue without a lot more work.

  P.D. says that with samples in hand, cold call restaurants with whom you want to do business and let them try your products. If your product is of outstanding quality, it should sell itself. But you must get people to try it.

  [su_quote]I would throw a bunch of samples in my car and just go to a bunch of different restaurants and drop off samples and ask them. Look at their menu, whether they're serving hamburgers or if they're a sub shop. Give them hamburger buns or baguettes for their sandwiches. And when they like the product, they call and they're ready to order.[/su_quote]

  What Are the Biggest Mistakes When Opening a Bakery?

  P.D. stated that one of the biggest mistakes in opening a bakery is not finding and keeping the best employees. With 36 full and part-time staff, P.D. offers this insight:

  [su_quote]Employees are what you need for your business. You can't be everywhere, so you have to put trust in your people and take care of them, then they'll take care of your business.[/su_quote]

  Conclusion

  If you can already smell the heavenly croissants baking in your oven, then it might be time to get started with these steps on how to start a bakery! Follow our guide to overcome many of the hurdles beginning entrepreneurs and bakers face.

  With planning and perseverance, you'll be serving customers and raking in dough (get it?) like P.D.

  If you were thinking about starting a bakery, would you start a home bakery, wholesale, or food truck bakery? Let us know in the comments below!

Business ideas

Have you ever wondered how to start a construction company but hesitated because you don’t have business experience or a previous business failed?

Marc Rousso knows what it’s like. His real estate business failed during the 2009 recession and left him owing the bank $2.5 million after liquidating everything. But within seven years, he grew JayMarc Homes into a construction company that makes $80 million annually, and he’s already paid off all the debt from his prior business.

We combine his insight with industry research to share everything you need to know to get into contracting (even if you have no money to invest).

How to start a construction company

We’ll cover each of the following topics. Read from start to finish or click any link to jump to the step you need help navigating right now.

1. Learn about the construction industry.
2. Decide how to start your own construction company.
3. Write a construction company business plan.
4. Choose a construction company name.
5. Learn how to open a construction company.
6. Set up your construction business finances.
7. Establish safety protocols.
8. Get equipment and supplies.
9. Hire employees.
10. Consider how to grow a construction business.
11. Document your own business processes.

Step 1. Learn about the construction industry

• How much do construction companies make? According to IBISWorld Report 23, the average company makes around $696K in revenue, but JayMarc Homes makes approximately $80 million per year.
• How much do construction company owners make? The profit margin for construction work is 3.4% before taxes, which means that the average small business owner makes approximately $23,664 in profit plus any salary they take from contracting.
• How many construction companies are in the U.S.? There are over 3.8 million construction companies in the United States, with an average of 2.63 employees.
• What is the most profitable construction niche? Land developers have the most profitable niche with an average pre-tax margin of 17%, followed by remodeling and excavation at 7.2%. Check out the table below for other segments' profit margins.
• How to start a construction company with no experience: Starting a construction company with no experience may be a challenge. The average home requires 22 subcontractors to build a house, so you’ll need lots of basic knowledge and soft skills to manage a contracting company without experience.
• How to start a construction company with no money: You can always book jobs and then rent the equipment needed to complete the job. Reinvest the profits into the business to reduce your costs over time.
• How much does it cost to start a construction company? Marc started his contracting business with around $15K. But other construction companies have started with much less. In fact, the VP Homes CEO entered the construction industry with $80 of tools and is now making $1.2 million per year.
• What skills do I need to own a construction business? You must understand building materials, each subcontracting field, and safety requirements. You might also need certifications depending on your niche.

Pro Tip: Subscribe to construction industry publications and local industry publications to keep updated on trends in your industry. Check out some of the popular industry organizations.

Case Study: JayMarc Homes

JayMarc Homes focuses on building custom homes. It was their second construction business after a company closure. They currently make about $80 million in revenue annually with a 10% profit margin, but Marc warned:

[su_quote]In any 10 years, you’ll probably have a 5% year, 10% year, 17% year, and 27% year. It all depends on the economy.[/su_quote]

Check out our interview with Marc below:

Next, you'll want to decide how to start a construction company.

Step 2. Decide how to start your own construction company

People who want to start contracting and construction companies have two main options:

• General contracting
• Subcontracting

Find out more about how to start a construction company as each of these types of contractors.

What is a general contractor?

A general contractor is the primary contact between a property owner and the construction project. Their role includes:

• Creating and managing the construction budget
• Hiring, managing, and paying subcontractors
• Working with the architect to implement and revise design specifications
• Maintaining project schedule and timing
• Scheduling inspections
• Making payments to vendors and specialty contractors
• Collecting and tracking lien waivers
• Managing post-construction issues with warranties and payments

How to start a general contracting business

Starting a general contracting business will normally require some or all of the following:

• time in the field
• education in the field
• passing an exam
• background checks
• security bonds

Find your state’s licensing requirements for how to start a small construction business as a general contractor.

What is a subcontractor?

Subcontracting businesses are normally construction services focused on specific trades like HVAC, plumbing, electrical, roofing, carpentry, or other fields with specialized construction equipment or tools. The bigger specialty contractors may also compete as general contractors.

For instance, when I worked at Honeywell, we would compete for both HVAC and general construction work when bidding on government contracts for new federal, state, and local projects.

There are plenty of business ideas in the construction industry to consider. Check out our courses here. The cleaning business, pressure washing, and flooring courses will all guide you toward success in the construction industry.

Once you've decided whether you want to be a general contractor or a subcontractor, you'll want a business plan to guide you through the process of how to start a construction company and succeed.

Step 3. Write a construction company business plan

You’ll need a construction business plan to be successful.

A solid business plan includes:

• Contracting insurance information
• Competitive analysis
• Construction equipment list
• Financial projections
• Location details
• Licenses and permits
• Marketing plan
• Money-making strategies

Pro Tip: Our business plan guide walks you through writing a business plan and includes a free template for getting your business plan in order.

We can't discuss how to start a construction company without discussing choosing a business name…

Step 4. Choose a construction company name

Choosing a name can be exciting! Consider the following tips when choosing a construction business name:

• Add your details: JayMarc Homes communicates what field the business entity is in, though it could also be a real estate business.
• Easy and clear: JayMarc Homes might be changed to JayMark by potential customers. When it comes to getting a website, I would buy both domains, just in case.
• Location: Construction companies can rank higher in search results with a business name that includes the city name.
• Branding: A new construction company will have other branding elements. How will they tie in with your new business name?

Pro Tip: Try out our construction business name generator. Find a name that ensures your business’s future success and click on it to buy the domain.

Next, we’ll discuss how to start a contracting business legally.

Step 5. How to open a construction company

After writing a business plan, you’ll need to establish a legal structure. While some businesses can get away without creating a business entity, it is legally necessary for a local construction company.

Building companies should consult with a business lawyer to make sure they comply with all the laws that govern small construction companies in their area.

Your new construction builder will likely need assorted licenses, permits, insurance, and tax forms. Find out what you’ll need from the Small Business Administration (SBA) and Municode Library.

Business structure for construction companies

Construction companies need to create a separate legal entity to keep company property and personal assets separate. Most construction companies will form one of the following structures through their state’s Secretary of State website:

1. S-Corporation: Best for high-earning companies that want to lower business owner taxes. A limited number of stockholders, provides personal liability protection, requires business owners to receive a salary (and optional dividends), no double taxation.
2. C-Corporation: Best for companies trying to change the world. Unlimited stockholders, provides personal liability protection, high compliance costs, and double taxation. Business owners can earn money through multiple income streams with different tax codes.
3. Limited Liability Company: Best for companies that want to separate business entities from personal assets. Provides limited liability, pass-through income, and no double taxation.

Pro Tip: To learn more about business structures, check out our blog on 11 structure options.

You’ll also want to get your business licensed. Some states let you do it all at once. Don’t forget to grab an employer identification number (sometimes called a federal tax ID) from the IRS. It’s used for payroll and business taxes when starting a contracting business.

What licenses are needed to start a construction business?

A successful construction business will need different business licenses depending on your location and business plan. There are main categories of business licenses for a contractor business: general contractor’s license or subcontractor license. Check with local industry associations and the state and local government for more information.

Next, you'll need to thing about finances as you learn how to start a construction company.

Step 6. Set up your construction business finances

Financial management is an essential part of how to start your own construction business. Once you arrive at this step, you should already know your budget, but let’s look at how to:

• Get a business bank account
• Get small business insurance.
• Secure funding
• Create a pricing structure

Business bank account

To run a successful business, you need to open a business bank account because you need to separate your business and personal finances and assets. Business bank accounts can be either online or from brick-and-mortar (legacy) banks and credit unions.

Online banks tend to have better offers, but they might not have as broad a range of business credit card accounts and service offerings as the legacy banking system. If credit accounts or making cash deposits are important to you, go with the legacy banks. Learn more from our business bank account guide.

Get business insurance

You’ll want to get business insurance, including:

• General liability insurance: Covers against customer injuries
• Property insurance: Protects the business owner from expenses due to property damage
• Workers compensation insurance: Pays employees for lost wages and medical bills when they get hurt
• State disability insurance: Covers against full or partial disability
• Unemployment insurance: Covers former employees who are laid off
• Commercial vehicle insurance: Covers against accidents when driving

Pro Tip: Consider Simply Business to get the most competitive general liability insurance quotes for your business.

Funding

The contracting industry doesn’t cost a lot to get into, but funding is an essential part of starting a successful business. You might consider:

• Small business loans (including SBA loans)
• Equipment loans
• Angel investors
• Business partners
• Credit cards
• Crowdfunding
• Government programs
• Home equity loan
• Friends or family
• Personal finance through savings or wages
• Rollover for business startups (ROBS)

Each method has its pros and cons. For example, SBA loans may be a good way for a new business to get a business loan because they typically have better interest rates than any other business loan. That said, the interest could start accruing before your first building is complete.

A business line of credit only charges interest on the money you use, making it a cost-effective way to fund your own construction company.

Pro Tip: National Business Credit is our preferred business financing partner.

Pricing structure

A construction company will have different ways of pricing. Some of the common ones are:

• Time and materials: You charge based on the time and materials used for the construction project.
• Flat rate: Charge an all-inclusive fee.
• Market value: If you’re designing and building a home, you might sell the property at market value. This can have huge profit margins if you can purchase materials for less than most local companies.

We cant talk about how to start a construction company without reminding you there are lots of safety laws you need to follow

Step 7. Establish safety protocols

Occupational Safety and Health Administration (OSHA) governs workplace safety and has special requirements about how to run a construction company. Supervisors will need the OSHA 30 certification. There are also personal protective equipment requirements for each trade.

Take OSHA requirements seriously to keep all parties safe from injury, fines, and legal action.

You'll need to get equipment because it's a crucial aspect of how to start a construction company.

Step 8. Get equipment and supplies

Construction businesses need lots of equipment and supplies, including:

• Personal Protective Equipment (PPE): Hard hats, safety vests, safety goggles, lockout-tagout equipment, and eye protection
• Project Management Software: You’ll need construction management software like Monday Sales CRM.
• Heavy Machines: You might need excavators, dump trucks, cranes, concrete mixers, and other machinery.
• Hand Tools: You’ll need various tools depending on your specialization, but most construction workers will need at least a hammer and screwdrivers.
• Power Tools: Buy or rent drills, saws, and other power tools to make your construction jobs faster and easier.
• Specialty Equipment: Each field in the construction industry will need different tools. Make sure to research the crucial tools for your industry.

Check out our interview with Avanni Petras to find out how he dealt with the cost of equipment when he started Petras Homes on a shoestring budget.

When you think about how to start a construction company, are you thinking about having employees? If you are check out our next section.

Step 9. Hire employees

Hiring employees in the construction industry is a crucial aspect of how to start a home-building company. We asked Marc how many employees they have and he told us:

[su_quote]We have 45 employees, 30 in the office and 15 out in the field. Almost all our employees are referrals.[/su_quote]

Marc described some of the ways they help make JayMarc Homes a great place to work. He told us:

1. During the first week, we don’t send them out to the field. We help them get to know everyone so they feel like they are part of the family.
2. We have them read the book Exceptional Service, Exceptional Profit. It helps align new employees with quality services and business strategy.
3. Once everyone gets to know the new employees, we get together and tell them positive adjectives that describe them — it builds them up and lets them know how amazing we think they are.
4. Then, we do a naming ceremony where we establish team names.

He also told us

[su_quote]Over 10% of our workforce has left and come back.[/su_quote]

Pro Tips: It helps if the people you hire possess technical skills, but they can be taught. Here’s a great new hire checklist for a contracting business.

[su_quote]We’re a luxury brand. We sell premium customer service and have every model available as a home.[/su_quote]

Step 10. Consider how to grow a construction business

JayMarc Homes holds webinars where they teach people about the aspects of custom home building and home ownership.

[su_quote]Our webinars don’t make us money, but they help us build relationships where people trust us more and come to us when they are ready to build a custom home.[/su_quote]

Marc specifically recommends identifying your niche and mastering it. He told us:

[su_quote]If you don’t master a niche, you’ll have a hard time making a profit. You’ll effectively pay a dumb tax by trying to jump all over the place.[/su_quote]

Market research: Identify your customer

Hopefully, you did some market research about your target market when writing your business plan, but if you didn’t, it’s time for market research now. Small businesses in the construction industry might specialize in specific construction areas like remodeling. In Marc’s case, they have three primary customers they identify:

1. High-end home buyers: The target audience for the homes they build and sell themselves. These will normally be people with 700+ credit scores who can afford a $3 million home.
2. Landowners: Wealthy families who own undeveloped land and need to build their homes. These clients will normally have special features they want in their homes. JayMarc is able to offer them standard models or combine two or more home models.
3. Distraught housing owners: These customers own or rent properties in wealthy neighborhoods. They create great opportunities to make higher profits by demolishing the home and replacing it with a new one in better condition.

[su_quote]We specifically drive the neighborhoods we want to build in and look for homes in the third category. We then build a relationship with them. It helps attract business when we remove an eye sore and replace it with a beautiful new home.[/su_quote]

Read more about identifying ideal customers and creating a customer persona.

Use this information in your own marketing strategy to help you find customers using digital marketing, which we’ll discuss next.

Digital marketing

In the digital age, your online presence is how customers find you. A website, social media accounts, email newsletters, and digital advertising are all practical marketing tools. Check out UpFlip’s helpful guide on creating a website.

Be sure to implement SEO for the best results. Services like Surfer can help you with that. And the best part is you can always perform a quick test to determine if your SEO is working.

Check out what Entrepreneur.com has to say about finding a reputable SEO company. And once you have your website, don’t forget to explore the following opportunities to improve SEO:

Try a digital business card service, like Popl, that allows you to link your contacts, websites, social pages, payment apps, and promotional material all from one page.

Instead of spending too much time scrolling through social media, make it work for your business! Facebook and Instagram provide free insights on business accounts with opportunities to run paid ads.

Managing multiple social media accounts can take a lot of time, and that’s something most small business owners don’t have to spare. Tailwind makes this easier by managing your email and social media marketing across platforms and is an especially useful tool for small businesses that don’t have the budget to hire dedicated marketing staff.

A newsletter is an excellent way to keep in touch with customers and send them coupons. Mailchimp and Constant Contact provide awesome email marketing tools.

Take your ad dollars one step further with broader digital marketing efforts. Consider pay per click (PPC), marketing automation, and other avenues.

Consider creating mailers, brochures, business cards, car magnets, flyers, t-shirts, and other promotional swag as a way of getting your name out there. Use an application like Canva to help.

Cold-calling and door-to-door advertising are less common these days than they were through the mid-’90s, but these methods can still be effective if done responsibly.

Pro Tip: Consider simple uniforms and vehicle branding to look professional and maximize advertising.

Get reviews to feed the crews

In addition, actively seek reviews! You’ll need to ask every customer for reviews. Otherwise, negative reviews will prevail. For bad reviews (warranted or not), respond professionally.

Good feedback leads to new customers and encourages repeat business.

Step 11. Document your own business processes

Construction companies have lots of processes that have to be followed. From getting permits to inspections and proper building techniques, you’ll need to make sure everyone knows what to do.

Good processes scale easily for others to follow. You won’t stop being actively involved completely, but good processes will help you delegate better. Use Lucidchart to document them in a process map.

Here’s a basic “process” for documenting your processes:

1. Set a goal for your process mapping session.
2. Include all roles involved in the workflow.
3. Identify the issue you hope to solve with the map.
4. List all activities.
5. Determine the triggers, inputs, and outputs.
6. Flow out the steps and decisions because you can’t always depend on the “ideal” path.
7. Make the final draft, get all roles to agree, and sign off on the process map.

For instance, the basic home building process includes:

1. Commit to an architectural plan.
2. Clear the land.
3. Get building permits.
4. Arrange for utility and infrastructure (electrical and plumbing) installation.
5. Lay the foundation.
6. Add the framing and roof.
7. Install in-home plumbing and electric.
8. Get inspections.
9. Install fixtures.
10. Get more inspections.
11. Perform construction site cleanup.

Each of these will have subprocesses that need to be performed or managed, too.

Now you know how to start a construction company. It's up to you to do the rest.

Create a successful contracting business

The internet won’t replace the construction industry. Before starting your construction business, ask yourself these two fundamental questions:

• What do I need to research?
• Am I capable of providing a great experience through top-level customer service?

It might seem like a lot, but don’t overcomplicate it. In truth, you can start a construction business quickly.

Provide outstanding service, make money, and satisfy your customers. That’s all you need to succeed. Now you know how to start construction business operations. It's time to go forward and build.

What construction practices would you like to see improved?

Business ideas