How to Start a Construction Business in Houston

Houston is one of the easiest major US markets to start a construction business in. Texas does not issue a state general contractor license. Demand is deep. Subs are everywhere. Capital is available for the operators who know where to ask. The decisions you make in your first ninety days will run your business for the next five years. Make them on purpose.

Choosing Your Entity

Most small Houston construction businesses start as a Texas LLC. The setup is cheap, the protection is real, and the tax flexibility is good. Once you are netting consistent profit, talk to a Texas CPA about an S-corp election to reduce self-employment tax. Do not skip this conversation.

File your LLC with the Texas Secretary of State. Get an EIN from the IRS. Open a separate business bank account. Use it for everything. Mixing personal and business funds is the single fastest way to lose your liability protection.

Texas Contractor License Reality

Texas does not issue a general contractor license. It does require licensure for specific trades. Electrical and HVAC are licensed through TDLR. Plumbing is licensed through the Texas State Board of Plumbing Examiners. Roofing has no state license but a registered roofing contractor program through TDI exists.

The City of Houston requires general contractor registration to pull permits in city limits. Other municipalities and Harris County have their own requirements. If you are going to operate in a specific area, call the local building department and ask what they require. Most are responsive.

Insurance You Actually Need

• General liability. Required for almost every job. Aim for at least $1 million per occurrence and $2 million aggregate. Some clients will want more.
• Workers' comp. Texas does not require it for most employers, but most general contractors will require it from you on their job sites. Get it.
• Commercial auto. If you drive a truck for the business, you need this. A personal policy will not cover a business loss.
• Builder's risk. Per project, for the duration of the build. Required by lenders, recommended even when not.
• Tools and equipment. Replace a job site of stolen tools once and you will buy this policy.

Contracts Matter

Do not start the business without a contract template a Texas attorney has reviewed. The contract should include scope, schedule, payment terms, change order procedure, default and termination, lien waivers, dispute resolution, and a clear definition of substantial completion. A handshake will hurt you eventually. The contract is the relationship in writing.

How to Land Your First Three Jobs

Your first three jobs come from your existing network. Tell every person you know that you are open for business. Ask for referrals specifically. Offer to do small projects for repeat clients of existing builders so you can prove yourself. Show up at Coffee & Construction Houston and other Houston construction rooms regularly.

Do not bid the first jobs to lose money. Bid them to be profitable, but with a margin you can defend. The first three jobs set your pricing reputation.

Building a Sub Bench

You are only as good as your subs. Build a roster of two to three reliable subs in each major trade. Treat them well. Pay them on time. Refer them out. Subs talk. The contractor who pays late and pushes blame will run out of subs in 18 months and not understand why.

How to Think About Scaling

The first version of the business is you on every job site. The second version is you running multiple jobs through a foreman. The third version is a real management team and a real backlog. Each transition is painful. Plan for it before it happens.

Most construction businesses break at the second transition. The owner cannot let go of the daily work, so they cap their growth at one or two jobs at a time. The owners who break through hire a foreman they trust and step back from the daily field work, on purpose.

Where to Sharpen This in Houston

Coffee & Construction Houston has hosted dozens of first-year contractors over the years. The room is The Construction Lounge. The firm behind the curriculum is BEDDIEO Construction & Design. You can also see my work as a Houston developer if you want context on how I think about the business.