How to Become a General Contractor Help, Requirements Advice, Building Construction Guide
How to Become a General Contractor: Steps and Requirements
22 Sep 2020
Doing a big renovation on your house? Maybe you got one of the over 1.4 million residential building permits granted in August of 2020 for a new home. If so, you probably have a general contractor in the mix.
General contractors typically function as the day-to-day supervisors during a construction or renovation project. While most general contractors know their way around equipment, hands-on work isn’t their main responsibility.
Instead, they deal with administrative tasks, such as bringing in subcontractors, talking with the client, and dealing with the project schedule.
If you’ve ever wondered how to become a general contractor, keep reading for the key steps and requirements.
General Experience and Education
General contractors usually start off working as a crew member on building projects and construction sites. They pick up core skills and learn about building codes.
Many aspiring general contractors also pursue higher education. A few degree programs that help prepare you for a general contractor role include:
- Civil engineering
- Construction technology
- Construction management
Some people take college courses in the fall and spring, then work construction over the summer. This gives you a steady combination of hands-on experience and book learning.
If you work for a general contractor, talk with them about your plans. Ask questions about what they do and why, as long as they don’t mind.
Many states require that you work in construction for a minimum period before you can even become a general contractor. The time varies by state, but 3-5 years is fairly common.
Training Options
Getting hired on with a construction company and going to college is one approach. It’s not the only approach for picking up experience and education.
You can also look into an apprenticeship. In an apprentice program, you work under the same general contractor for a set period of years. In exchange, the general contractor trains you in all the essentials, including skills like bidding and administrative functions.
Professional organizations run training programs that help you prepare for the licensing exam.
Contractor Exam
It’s not universal, but most states require that you pass a contractor’s exam before you apply for a license. Also, even if your state doesn’t require an exam, your county or city might. Ask around with the local contractors and check state and local government websites for exam requirements.
Also, different locations use different exams or even multiple exams. Some common topics you’ll see on a general contractor’s exam include:
- Business management
- Financial management
- Safety regulations
- Building codes
- Building materials
- Plumbing
- HVAC
If your city or state breaks the exam up, it might break them up into a business/finance/law exam and one focused on construction essentials.
You should expect a fee for each exam you take.
Getting Your License
Again, the exact process for getting your general contractor license varies by location. The requirements also vary. In general, you can expect requirements that include:
- Minimum time working in the industry
- Pass the licensing exam
- Tax information
- Proof of identity (such as a driver’s license)
- Proof of insurance and bond
Some states or cities also require that you provide them with a copy of police records. Most states and cities provide the exact requirements for licensing on their websites.
You’ll also pay a fee for your license in locations that require a license.
Insurance and Bond
As a rule, you cannot get your license until you secure general contractors insurance. In most cases, this is a general liability policy with a required minimum coverage amount. The state or city sets the minimum amount, but $300,000, $500,000, and $1 million policy limits are fairly standard amounts.
Most locations also require that you secure a worker’s compensation policy before getting your license. They may require it even if you don’t currently have any employees.
You will also need a license and permit bond. These bonds are a promise that you won’t violate local, state, or federal laws in the course of your business.
The government body issuing the license determines the total bond needed. A $10,000 bond is usually the smallest amount for a sizeable community.
The upshot is that you pay a premium on the bond like an insurance policy. In most cases, it’s typically a small percentage of the total bond amount, such as 1% or 3%.
Create a Business Plan
Contracting is like other service businesses, such as plumbing or auto repair. You must build a reputation that draws in new customers.
That means you need a solid business plan from outset. A good business plan lays out several things, such as:
- Finances
- Services offered
- Company structure
- Local market factors
- Your key selling points
- Marketing
- Objectives
While you might not hit every objective or execute every marketing strategy laid out in the plan, it will help you. The plan gives you a starting point and a road map you can follow.
It also makes you sit down and think hard about your future business.
Is building apartment complexes your dream or would you rather build homes? Do you like renovation or fresh construction? Who is your ideal customer?
You should also consider how you’ll be conducting business. Will you be accepting credit card payments as a home services contractor? Will you develop a content marketing strategy?
Knowing this information keeps you focused on taking work that gets you closer to your ideal business.
How to Become a General Contractor? Plan Long-Term
There is no shortcut answer for how to become a general contractor. In most places, it takes anywhere from three to five years to rack up the necessary experience to even take the exam. That means you must plan long-term.
You need a job in construction or an apprenticeship with a general contractor to start. This lets you secure that experience most states require. It also lets you save up for the exam and licensing fees.
You will likely need some additional time studying building codes and applicable laws. There are study guides for that part, but it still takes time.
You’ll also want a business plan, although you can work on that as you work toward your license.
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