I get phone calls periodically from someone who I have trained that is starting a new construction company and is seeking my advice. Here is a summary of my recommendations:

  • HeavyBid – go with a standalone at first and if cash flow is an issue go with the Basic version with the goal to upgrade as the company grows to the Advanced version, mulituser, or HCSS Cloud. But always start a new company with an emphasis on a good estimating foundation.
  • Accounting – Quickbooks is the best way out of the block to get started but if you expect fairly rapid growth I recommend starting with Deltek ComputerEase or Foundation. By the time you consider the cost of changing from Quickbooks to one of these full construction accounting software it just makes sense to start with full construction accounting that can do certified payroll when you need it. If you start with Quickbooks have the goal of upgrading to a full construction accounting within a two-year timeframe. [this ties into my next point]
  • Don’t start a construction company unless you are serious about understanding construction accounting principles. If accounting is just a necessary evil to you then here is my advice – don’t start a new company.
  • Rent equipment but keep close watch on what is currently being rented and get real costs into the estimates. Put in the overhead budget times when the equipment is sitting and not being used on a project.
  • Know what your overhead percentage in terms of cost or sales. Separate in your estimates overhead costs and profit. If you are marking up the estimate at 8%-10% of costs and that includes overhead you are bidding at or below your costs. That is not going to be a successful business model. Understand if your gross sales for a year are under one million dollars your overhead costs are going to be at least 25% if not more of gross sales.
  • Get a takeoff software early on. A good material takeoff is critical to a good estimate. Options are Bluebeam, Onscreen Takeoff, and Planswift.
  • Your construction company will not survive without an emphasis on job safety from day one. Consider HCSS Safety as your 2nd HCSS software purchase. It will pay for itself many times over. Don’t wait until the first accident to start trying to implement a safety software solution.
  • Find niche work quickly that will help you keep your crews working between projects. It might be a maintenance contract with a city’s public works department or a continuing contract with a large company needing the kind of work you perform. Diversify as much as you can.
  • If I was starting a company the first HCSS product I would purchase would be HeavyBid. Second would be HCSS Safety. Third would be HeavyJob but only after I have implemented a true construction accounting system (not Quickbooks).
  • The second person you should hire should be someone who is familiar with accounting. Doesn’t have to be a CPA but someone familiar with construction accounting.

I hope the above helps. I am usually in a customer’s office every week and have seen the good and the bad. I hear the success stories and the best practices behind them. Success doesn’t happen by accident.