10 risks every entrepreneur should avoid

Starting a new construction company in Canada?

Your mind is made up. No more sending CV’s…you want to be your own boss.

Congratulations. The hardest part is over.

You’ve taken the jump into entrepreneurship. It feels like you’re in a free fall and you start to panic. You never thought it was going to be this hard. You have to bend in four, multi-task and self-motivate all the time. Well, that’s pretty much the job description of an entrepreneur. But there are rewards too: lots of them.

Breathe. I’ll help you identify the 10 common mistakes of new construction companies…so you’ll land on two feet from day one.

The Flight

The first reflex we have as new entrepreneurs is to make a grocery list of all the equipment, manpower and cash we need to start our business. As we add more items to our list, the ‘000s also increase.

Then comes the sudden realization that we don’t have this kind of money and we need to make a loan.

We knock on a few doors and as we collect refusals, our motivation also decreases. We start thinking that it takes lots of money to be an entrepreneur. That this is only limited to a privileged few.

No despair. Your pockets are empty, not your brain. Exchange your services with fellow friends, you will soon realize you can monetize your company real fast. Creativity is the source of all wealth.

10. No financing = Game Over

The first thing you do when you enroll in business school is work on your Business Plan.

I, myself, have yet to recover from the traumatizing experience.

What did it teach me? Lots of things. Do I read it often? Not as much as I should.

It’s not important to write an encyclopedia about your business. But it’s important to go through the thinking process…thoroughly.

Many companies fail because they do not identify their market nor project their financials well enough. Avoid this mistake. Do your homework, drench yourself in statistics and prepare, prepare, prepare. It’s time well invested. Ask for help from your local business centre.

9. The creepy Business Plan

You’re busy with the registration papers, making that first sale, moving and setting up the internet in your new office.

But there is one thing you’ve completely left out: you’re still using your personal gmail or hotmail address to respond to your clients.

You have no brand (logo), don’t write on your own letterhead paper…don’t even have a business card.

If you want to be paid like a pro, start acting like one. Gear up.

8. Mirror, mirror…

You signed your first contract. Yey!

Soon enough, things start going sour. The client keeps changing his mind and your profit starts melting down.

You know this project smells foul, the client is not taking you seriously. Yet you stay. You want to make things right.

Get off. Business between two people is based on respect & trust.

7. Don’t leave me!

One tedious aspect of the construction business in Canada is the multiple accreditations and permits you need to get.

The construction industry in each province has its own requirements. Out-of-province contractors must have their credentials up-to-date before they accept any work in a given province.

Check the commission board in the canadian province where you plan to establish your business.

6. What card?

One of the first dilemmas you need to solve is to choose the appropriate legal form of your company.

There exists a big difference between registering or incorporating a company, between choosing the provincial or federal regime.

This decision will greatly affect your liabilities and finances.

Seek professional help to go through the paperwork without any mistakes.

5. Register or incorporate?

Qualified manpower is key to your success as a construction company. Avoid partnerships with unqualified personnel, even though they are in your closest social circle.

Many small companies fall into the trap of hiring unqualified family members or close friends and the consequences are bad for the business and worse for the personal relations.

Emotions and business don’t mix well together. Make sure you have the best people on board and when it’s office time, it’s office time.

Your liability insurer will thank you.

4. We’re a family

You’ve invested a handsome sum of money in equipment, furniture, accessories and are ready to work. Before you hit the green button, make sure your insurance program is live and kicking.

In general, a start-up construction company will need General Liability and an Errors & Omissions insurance (for all in-house design work). For your office settings, an All-Risks Property insurance (with Business Interruption coverage) is a must.

If you possess a specially pricey piece of equipment or non-motorized vehicles (trailers), you may want to consider Equipment insurance.

Make sure you’re aware of local regulations regarding injury benefits for your workers. They (and your mind) will thank you for it.

3. Insure thyself

Make Risk Management a living process in your company. Host regular meetings with your workers, analyze together problems encountered on site and encourage reporting.

Communication must also flow freely between you and your client.

Be rigorous in your record-keeping and encourage continuous learning.

There is no such thing as too much communication.

2. Live and learn

You get along. The price is negotiated. You shake hands. Every one is ready.

Wait. No.

Where’s your contract?

A contract is the binding document for both your client and yourself. Even though verbal contracts are still valid in Canada, they offer weak protection against legal claims and abuse.

Always invest the necessary time to write a contract.

Establishing good business practices for 5000$ jobs will pave the road for successful 5 000 000$ jobs. Good Luck!

1. Every preacher needs a bible

Ivette has more than eleven year’s experience in Project & Risk Management. Specialized in construction, environmental and media projects, Ivette identifies and analyzes strategic and operational risks, performs due diligence studies and manages the renewal of insurance portfolios.

As project manager, Ivette has completed several geotechnical and environmental studies and restoration projects in Canada. Her passion for communication has led her to produce multimedia projects and collaborate as a writer and speaker on technical and cultural subjects.

ichorrofong@catalisis.caLinkedin: http://www.linkedin.com/in/ichorrofong

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