You are here Home » Start-ups » 5 Ways You Can Minimize Risk When Opening A Contracting Business

5 Ways You Can Minimize Risk When Opening A Contracting Business


20% of worker deaths in the U.S. are in the construction field, despite construction workers making up only 6% of the labor force. Injury rates among construction workers are 71% higher than injury rates across all other industries. In states like Virginia, a general contractor can be held liable for all accidents caused by one of their employees.

With statistics like that, it’s not surprising that construction is listed as one of the most dangerous fields you can work in. Despite these risks, contracting is extremely worthwhile financially when done properly. So, let’s talk about the five ways you can minimize risk when opening a contracting business.

1. Get Experience

One of the best ways to minimize risk is to develop an understanding of the job itself. You need to know what the day-to-day is like so you can prepare for what you may encounter. The best way to do this is to work under an experienced professional.

Before bringing your contractor business to life, seek out a job in the construction field that will allow you to gain hands-on experience while observing the daily realities and up-and-coming trends. Seeing another contractor in action will help you understand what your duties and responsibilities are.

With this new knowledge, you’ll be better prepared to analyze and eliminate risks.

2. Obtain The Proper License

To operate safely, and legally, you need to obtain the proper license. In Virginia, for example, you need a contractor’s license if you plan to do work totaling more than $1,000.

Getting a contractor’s license is the best way to ensure you don’t run into legal trouble, so here’s what you need to know.

Licenses come in Class A, B, and C forms.

  • Class A is needed if you plan to do jobs over $120,000 or if you plan to make $750,000 in a twelve-month period.
  • Class B is for jobs under $120,000 but over $10,000, or income equaling more than $150,000 in a twelve-month period.
  • Class C covers jobs ovr $1,000, but less than $10,000.

You’re required to complete an eight-hour pre-licensing course, which you can begin now through this training from RocketCert. The course covers exam prep, the books you need, and additional help services. If you don’t pass, you won’t have to pay, so there’s no risk of losing money.

3. Find The Right Insurance

The types of insurance contractors must carry are different depending on where you work. In general, you can count on needing contractor’s liability insurance and worker’s compensation insurance.

Check your local laws to see what other forms of insurance may be required. Once you know what you need, research insurance companies to see which can give you the best coverage at the best price.

Keep in mind that you want a policy that eliminates the risk of paying out-of-pocket in the event of a claim.

4. Take A First Aid Course

Taking a first aid course will prepare you for the event of an injury. Knowing basic first aid allows you to begin treatment immediately, lowering hospital time and recovery time for the injured person.

Consider having everyone on your team attend a course to ensure your company is as prepared as possible for an emergency. In some cases, this type of training can also lower your insurance costs. So don’t forget to give your insurance company a call and see what deals they may be offering.

Preparation reduces the risk of an injury becoming worse while you wait for an ambulance.

5. Be Careful Who You Hire

In most states, including Virginia, a contractor is liable for injuries caused by the carelessness of their employees. This means you need to be extremely cautious when hiring.

You should always check the background of potential employees and ensure they understand safety procedures. Your employees must know that you value everyone’s safety and don’t tolerate unnecessary risks.

Be aware of what’s going on at your worksites, and encourage employees to come to you with concerns.

Keep these five ways to minimize risk in mind as you move forward with your contracting business. They can save you time, energy, and a lot of money.

You may also like