Currently, the construction industry in Indonesia has the potential to develop. This gives contractors a great opportunity to develop their contractor business. However, growing a contractor business certainly requires organized planning, regardless of whether you are just starting out or have been involved in this for years.
So, how do you plan your contractor business well? What is needed to start this business? If you are interested in starting a contracting business, there are several things you need to prepare and pay attention to.
1. What is a Contractor Business?
1.1 Contractor Business Definition
The contractor business is the party responsible for carrying out construction projects in accordance with the agreed contracts. They usually have a work team consisting of various experts and skilled workers to complete the project well.
1.2 How to Become a Contractor
To become a competent contractor, one must go through several stages. If you want to become a contractor, you must at least go through several stages which include:
1. Formal education in related fields. The first step that prospective contractors usually take is to complete their formal education, for example at the D3 or S1 level in civil engineering or construction. This will provide the basic knowledge needed to understand the basic principles of building construction and planning.
2. Work Experience in the Field: Work experience in the field is also very necessary so that someone can apply the theory learned in the real world. This experience helps gain the practical skills necessary to lead construction projects successfully.
3. Obtaining a Certification or License: A person needs to obtain the necessary certification or license according to the regulations in force in the region where they operate. This is important to ensure that the contractor has credibility and expertise that is officially recognized by the authorities.
Even though it requires capital, the salary range for contractors can range from IDR 4,500,000 for entry level to IDR 30,000,000 for executive level. This is what makes the contractor profession have many fans and will continue to grow in the future. Please keep in mind that these ranges are only estimates based on experience, location, and status.
1.3 Contractor Duties and Responsibilities
The contractor's main duties include:
1. Construction project planning.
2. Organizing work teams.
3. Implementation of the project according to the predetermined schedule.
4. Project monitoring to ensure quality and compliance with budget.
5. Ensure the project runs smoothly and meets expected quality standards.
Also Read: Boarding House Business Opportunities: Advantages, Tips and Estimated Capital
2. Types of Contractor Business Services
The most important way to create a contracting company is to determine the type of services provided by your contracting business. Contractor businesses generally offer several types of services that are commonly offered by them which include:
2.1 Renovation
Renovation services include updating, repairing, or remodeling existing buildings. Remodeling contractors can assist in renovating a home, office, or other commercial building according to the client's needs and preferences.
2.2 Design Services
Contractors may also provide design services to help clients design their construction projects. This design service includes building planning, space layout, material selection, and other design elements to ensure the project runs according to the client's expectations.
2.3 Building and Materials
Contractor services also include the construction of new buildings and procurement of construction materials. They are responsible for constructing building structures according to agreed plans and specifications, as well as ensuring the use of quality construction materials for the continuity of the project.
2.4 Mechanical
The next contractor service is mechanical or related to mechanical systems in a building or project. The mechanical contractor services consist of design and planning, installation of HVAC systems, piping such as plumbing, elevators and escalators, etc., maintenance such as routine checks and cleaning, as well as renovation and retrofit of mechanical systems by replacing old systems with more updated systems or more energy efficient.
2.5 Electrical
The next contractor service is electrical. This service is related to electricity in a building or project. In design and planning, contractors can design an electrical system that suits your needs, estimate costs, and make drawings. Electrical also means the installation of all types of electrical systems such as cables, control panels, and security systems. Apart from that, this service also takes the form of maintenance such as routine and preventive checks, as well as troubleshooting and repairs.
2.6 Environmental Management
Environmental management contractor services are services related to the environmental management system of a building or project. Such as designing and planning environmental management systems according to needs; water, waste and air treatment systems; and ensure that you comply with all regulations related to the regional environmental management system.
2.7 Integrated Work
Integrated works contracting services offer services relating to all aspects of a construction project. Such as planning construction projects and managing aspects of construction projects from start to finish.
3. Benefits of Running a Contractor Business
Even though there are many challenges to face, the contracting business also has great profit potential. Some of the benefits you can get from this business are:
3.1 Large Profit Potential
The contracting business has the potential for large profits because there are many ongoing development projects in Indonesia. If you succeed in winning the tender and completing the project efficiently, you can gain large material benefits.
3.2 Extensive Business Development Potential
The contracting business also has broad development potential. You can expand your business by developing more comprehensive services, such as high-rise construction or larger infrastructure projects.
3.3 Partnerships with Large Companies
Many large companies that have construction projects need contractors to carry out the project. If you succeed in building a good reputation and quality, you can get partnerships with these big companies and increase the profit potential of your business.
3.4 Flexibility
The contracting business also offers flexibility in running a business. You can adjust your work schedule and projects according to your needs, giving you freedom in managing your time and resources.
3.5 Wide Career Opportunities
Running a contracting business provides extensive career opportunities for business people. By developing your business appropriately and efficiently, you can open up opportunities for significant career growth and expand your network and business partnerships.
4. Challenges of Running a Contractor Business
Even though the contracting business has large profit potential, there are several challenges that must be faced in running this business. Some of the contracting business challenges include:
4.1 Internal Challenges
4.1.1 Quality and Timeliness
Quality and timeliness in completing projects is very important in the contracting business. Maintaining quality work and meeting predetermined project deadlines is key to building a good reputation in the construction industry.
4.1.2 Domination of the Indonesian Construction Market
The Indonesian construction market is dominated by large contractors who have adequate human resources and experience. This can be a challenge for small or new contractors to compete in a competitive market.
4.1.3 Contractor Company Competition
High competition between contractor companies is also a challenge in this business. With so many contractor companies competing to get projects, contractors must be able to highlight their advantages in order to compete effectively.
4.1.4 Lack of Skilled Human Resources
The next challenge is the difficulty in finding and recruiting skilled workers. This difficulty is usually due to a lack of training and development to improve employee skills. Therefore, contractor companies must pay attention to the resources owned by the company and maintain the loyalty of the human resources that have been formed
4.1.5 Limitations in Obtaining Capital
The next challenge in running a contractor business is limitations in obtaining capital. This is because the contractor business requires a large amount of capital. Especially if you want to create a large contracting business. Therefore, make sure you collect capital first before starting this contracting business. You can also take out loans from banks or financial institutions such as BFI Finance.
4.1.6 Unstable Raw Material Prices
Fluctuations in the prices of raw materials such as cement, wood and steel can have a significant impact on the capital and profit margins of your contractor business. This certainly makes it difficult for you to predict project costs and there is a risk of cost overruns if raw material prices rise significantly.
4.2 External Challenges
4.2.1 Complex Regulations and Licensing
Complicated regulations and permits are one of the main challenges in the contracting business. Every construction project requires various permits and must comply with various regulations imposed by local, national, or even international governments. This licensing process often takes a long time and requires a lot of documents and approval from various agencies. Therefore, contractors must have a team that specifically handles regulatory and licensing aspects, and work closely with legal consultants and regulators to ensure that all requirements are met properly.
4.2.2 Relatively Expensive Logistics Costs
High logistics costs are another significant challenge in the contracting business. Shipping building materials and equipment to the project site can be very expensive, especially if the project is in a remote or hard-to-reach area. To overcome these challenges, contractors need to plan logistics carefully and choose the most efficient delivery methods. Collaboration with a reliable logistics provider that has a good track record can help reduce costs and ensure that materials and equipment arrive on time and in good condition.
4.2.3 Natural Disasters
Floods, earthquakes, and other disasters can cause damage to project sites, delay work, and increase costs. Apart from that, natural disasters can also endanger worker safety and damage equipment and materials used in construction. To reduce the impact of natural disasters, contractors must develop comprehensive risk mitigation plans. This includes insurance that covers damage from natural disasters, emergency planning, and additional safety measures to protect workers and assets.
4.2.4 Frequently Changing Government Policies
Frequently changing government policies are also a big challenge for the contractor business. Changes in tax policies, environmental regulations, safety standards, and economic policies can affect operating costs and project viability. Contractors must always be ready to adapt to these changes and ensure that their company operations remain in compliance with the latest regulations.
5. Tips for Starting a Contractor Business
5.1 Business Plan
To start a successful contracting business, it is important to have a well-thought-out business plan. Your business plan should include:
1. Market Analysis: Understand the market in construction, trends and project demand.
2. Competitor Analysis: Identify the strengths and weaknesses of your competitors.
3. Business Goals: Set short-term and long-term goals for your business.
4. Business Strategy: Formulate a strategy to achieve your business goals.
5. Financial Plan: Prepare realistic financial projections for your business.
Also Read: Apartment Rental Business, Opportunity to Make Money with the Assets You Have
5.2 Collect Multiple Portfolios
Putting together a portfolio of projects you have completed will not only help strengthen the reputation and credibility of your contractor business, but will give potential customers a clear picture of the capabilities and quality of work you can offer.
5.3 Define Name
When choosing a contractor business name, make sure you consider various factors such as suitability for your line of business, the impression you want to convey to potential customers, and the uniqueness of your contractor business. Also make sure the name you choose is not already used by another business to avoid causing legal conflicts in the future.
5.4 Ensure Business License
Be sure to obtain all necessary business permits before starting your contractor business operations. Opening a contractor business without a complete business license can cause legal problems and hinder the smooth running of your operations. Therefore, before starting to run a business, make sure you have obtained all the necessary permits from the relevant authorities.
5.5 Offline and Online Promotion
To expand the promotional reach of your contractor business, you should take advantage of the various promotional methods available, both offline and online. In the field of offline promotion, you can use brochures and banners. Meanwhile, in the online sector, you can promote via social media and create a website. This will increase potential customers' awareness of your contractor business. By utilizing these various promotional platforms, you can reach more people and introduce your contractor services to a wider market.
5.6 Build Good Relationships
To expand your network and increase business opportunities, you can build good relationships with related parties in the construction industry. Attending seminars, workshops, or other construction events can help you make useful connections and expand the scope of your business.
5.7 Maintain Quality and Reputation
The quality of work and the reputation of a contractor's business are very important in the construction industry. By maintaining good quality work and reputation, you can build customer trust and increase your chances of getting bigger projects.
5.8 Be Proactive
To maintain and grow a contracting business, it is important to be proactive in seeking new opportunities. Various proactive strategies such as conducting market research, innovating services, and establishing strategic partnerships can help your business develop sustainably.
5.9 Make Wise Decisions
In running a contracting business, it is important to make wise and strategic decisions. Carefully evaluate each step you take, consider the risks and opportunities, and be oriented towards the long-term goals of your business.
Also Read: How to Open a Bustling Building Shop Business: Tips and Business Capital
6. Estimated Contractor Business Capital
If you are interested in starting a contracting business, you need to know the estimated capital for this business. Starting a contractor business requires varying costs, depending on several factors such as the business scale of your target contractor business.
6.1 Small Scale Contractor Business
A small-scale contractor business requires initial capital of around IDR 10 - 50 million. Usually, small-scale contractors work on small projects such as renovating a house or building a shophouse.
6.2 Medium Scale Contractor Business
Medium-scale contractor businesses generally require larger initial capital, namely around IDR 50 million - IDR 250 million. Medium-scale contracting businesses are usually suitable for larger projects such as building buildings or infrastructure.
6.3 Large Scale Contractor Business
Lastly, a large-scale contractor business certainly requires very large capital, namely over IDR 250 million to billions of rupiah. Large contractor businesses are suitable for large-scale projects, such as building toll roads or airports.
BFI friends, that's the information you need to know about how to start a contractor business. Always remember that managing a contractor business has its own challenges. Always consider the advantages and disadvantages of running a business.
If you currently want and are running a contractor business, but need additional funds, you can apply for additional business capital through BFI Finance. BFI Finance is a financing company that provides multi-purpose loans with collateral for car BPKB, motorbike BPKB, and house or shophouse certificates for your various needs. With competitively low interest, BFI Finance offers disbursement of up to 3 billion rupiah for home collateral with a fast application process and approval disbursement within days as long as prospective consumers fulfill all requirements completely. Apply now!
