Top Challenges Contractors Face in Building their Construction Practice


Choosing to be your own boss by building an independent contractor’s practice is a thrilling and rewarding option if you don’t like the idea of someone else profiting off of your labor. However, as fulfilling as it may be to work on your own terms, there are certain challenges you must prepare yourself for as an independent contractor. For one, there are some things you’d have to do on your own without the benefit of having an employer.

Additionally, here are some top challenges contractors face in building their own construction practice:

  1. Inconsistent earnings

One of the main problems with being an independent contractor is that you can’t actually rely on anyone else to bring you business, like when you work for an agency and you just get deployed to tasks or projects.

Therefore, you also can’t count on consistent paychecks. You really have to work hard to land jobs, otherwise, you can literally go for months without earning anything. On the plus side, there are virtually no limits to what you can earn if you’re industrious.

  1. Huge capital upfront

Being an independent contractor also means not having any access to the equipment and resources that larger firms usually have. You’re going to have to purchase or rent your own gear to use for your projects. This would require a huge capital upfront, not to mention additional costs in storing and maintaining equipment.

For this reason, you have to actively work hard to improve your profit margins. You have to find strategies to execute construction or renovation jobs without spending too much money. This way, you can properly offset whatever you spend in capital without resorting to overcharging your services.

  1. Sorting out license renewal requirements

As a licensed contractor, you would constantly deal with license renewal requirements. This could be tricky to do on your own, so it pays to have some help in sorting out and complying with education requirements to renew your license. Keep in mind that these requirements vary per state, and could change at any time, especially certain continuing education requirements, so you need to remain updated so you won’t miss any requirements for your next license renewal. 

  1. Complicated tax-filing process

When you work for a firm or agency, they would most likely have lawyers and accountants working to file everyone’s taxes for them, splitting the costs for everyone. As an independent contractor, the onus for computing and filing your own taxes will fall squarely on you. 

Having yourself reclassified from employee status to being an independent contractor is in itself a complicated process, so it also pays to have someone guiding you throughout this process. The good thing about knowing how to do your own taxes, though, is that you only need to learn it once and you can just do the same process year in and year out. 

  1. Building clients’ trust

Building clients’ trust as an independent contractor requires strict professionalism, and maybe even years and years of building rapport with them. There’s no sugarcoating it — this part is really difficult, especially at first. Without a household agency name attached to yours, you really have to convince your first clients that you are a trustworthy contractor, but it can snowball very fast from there.

Once your first clients end up satisfied with your work as an independent contractor, you can ask them for favorable feedback or even referrals to some of their friends who might be in need of the same services you provide. 

An independent contractor can never piggy-back on the reputation of any agency, so your own reputation will be your strongest, most powerful currency. You’ve got to be extra careful not to make major mistakes that may cost you any future business.

  1. Expensive insurance options

Lastly, you would have to arrange and pay for your own insurance as a sole contractor. This is something you must not dispense with, even if no one else will be paying on your behalf. Having ample insurance coverage is very important in this line of business since you will be dealing with people’s prized properties and homes. 

All these challenges are not listed and discussed to dissuade you from pursuing an independent profession. As mentioned at the start of this article, there is still nothing more rewarding and fulfilling than making it on your own. However, knowing you will face these challenges and aptly preparing for them will put you one step ahead of the curve at every turn, thus improving your chances of succeeding as a contractor.