When you start a construction company in Kenya, you are assured it will be profitable. With more people buying and developing land, everyone is procuring construction services. A lot goes into starting and growing a construction company in Kenya. While funding is critical, numerous types of research are needed to produce a successful construction company.
Below, we highlight some of the most critical steps you need to take to succeed in your construction company.
1) Come Up With a Business Plan
A business plan is an essential strategic tool for any entrepreneur. So, it goes without saying that when you are looking to start a construction company in Kenya, a business plan should be at the top of your list. This ensures your ideas are articulated, and your marketing strategy is outlined. A business plan will also be applicable for funding from VCs, angel investors, and lenders.
Are you having trouble coming up with one? Do not worry; our specialists will help you with that.
2) Know Your Business Model
While it appears easy from a bird’ s-eye view, substantial effort is required initially. Your business model should align with your skills, those of your staff, and the available market, and it should be easy to grow.
Some of the business models you could consider are:
Direct to general contractors– this is for new real estate projects and remodels.
Direct to client—this is for property development jobs for businesses and individuals or if you offer a service like a consultancy.
Unique niche– This is for package builders, project managers, or real estate developers.
Once you have developed a good business model, you can go to the next step.
3) Register Your Construction Company
While the construction company is undoubtedly lucrative, most people have no idea how to register it. So, most people end up having an informal construction company. This, of course, will bring you problems with the law.
Below is what you need to register your business and comply with the law.
a) Conduct a Name Search;
This ensures you do not have the same business name as any other company. It is crucial as it helps your business stand out. The procedure takes about a day; you have 30 days to register the business name.
b) Memorandum of Association;
This defines a company’s structure and objectives, provides the company name and outlines the scope of its activities.
It also contains the names of directors and their shareholding in the company. It gives regulations for managing and owning the company and indicates each director’s rights, powers, and responsibilities.
c) Compliance Certificates;
You are also required to get licenses from legal bodies of construction. The county government and The National Construction Authority (NCA) regulate the construction industry. The county government issues the permit. However, one has to register the projects with the NCA, which will issue you a compliance certificate to give you the go-ahead to start your construction projects.
The NCA has seven classifications depending on the scope of work the company can undertake. These classifications range from NCA1, where the director has a degree in building and construction or a related course, to NCA 7, where the director has a trade test. The registration and annual fees also vary across these classifications.
Other licenses required include work permits as a foreigner and business permits from the county government.
4) Fund Your Construction Company
When looking to start a construction company, you should have sufficient money to cover the costs of running it. These include rent and equipment, which can be costly, especially for a startup. The construction company in Kenya heavily depends on material sourcing, which can present several challenges.
However, there are several alternatives that you could consider;
a) Purchase order finance– This is a legally binding agreement that a buyer uses to request goods and services from a seller. If the financial lender approves your financing, the provider pays your supplier and fills the orders.
b) Vendor financing agreement—This is a contract between you and the supplier in which you will negotiate a reliable payment process for procuring the construction material.
c) Equipment loan—You could also consider borrowing a loan to buy the needed materials. Most lenders will require proof that you have already signed an agreement with a client before lending you money.
With these three options, you do not have to worry much about financing your company. Just be sure to honour your part of any options you choose to maintain trust and avoid problems with the law and a bad reputation.
5) Market Your Construction Company
You need to tell people about your company and activities. Today, the world is online, so you should consider online marketing alongside traditional marketing methods. Get on relevant social platforms, showcase your projects, and promote your business. Also, be sure to get a website; it gives the impression that your business is significant, even if you are starting.
When it comes to marketing, you might feel overwhelmed. But do not worry; we will help you reach the right audience and create a brand for your construction company.
6) Hire the Right Staff to Help You Grow Your Construction Company
You must hire experienced people for your company, especially since you are starting. You cannot make any mistakes, as they could prove critical in the long run. Hire specialists who will do a remarkable job. A good job will have your customers gushing about your expertise to other people. This will help establish your presence in the construction industry and have more people sourcing for your services.
7) Learn How To Bid for Tenders
You will need to learn how to bid for jobs and tenders to succeed when you start a construction company in Kenya. The constitution of Kenya has stated that all government departments reserve 30% of their tenders and contracts to women, youth, and people living with disabilities. If you fall under any of the above categories and might be interested In working with the government, head over to Access to Government Procurement Opportunity (AGPO) for a certificate which will pre-qualify you to bid for the reserved tenders.
8) Grow Your Network
Humans are social animals, and we need people to progress in life. You must meet and know people and nurture your connections in construction. These relationships will help you secure tenders and jobs and show you the ropes in the industry; primarily, as a newbie, you will need this guidance.
Finally
We have a team of construction specialists to assist you. For your construction services, everything is under 1) Project Management and 2) Operations, where you can make orders online for a specific service. You can also contact us via our online platform on this website for assistance. Order via the ORDER NOW page for our other premium-paid legal and business services.
If you have further questions or concerns, please get in touch with our construction lawyers through our contact us page. We aim to become your preferred choice for Construction SEO-savvy lawyers in Nairobi, Kenya.