Business Tips

Contracting in a new state or region

One thing that construction contractors have to take into consideration is the geographical scope of your work. How far are you willing to send crews or travel for a new project that could bring profits and possibly future work? Or what are the bounds that are holding you back?

Let’s say you’re located near a state border, or even within striking distance of multiple states. You’ll do wise to start off locally. Soon enough, though, it may not make sense to restrict yourself to a smaller jurisdiction—especially if new work is offered just outside of your usual footprint.

Or maybe you just perceive the opportunities available in a new setting and feel that to grow, you’ll need to get licensed up and ready to take on that new market.

If that new market is in a different state, remember that licensing processes can take one to six months. But without the proper licensing contractors can face jail time, and unlicensed contractors may not have any legal recourse if a client refuses to pay—so the alternative isn’t great.

1. Find out if you need to get a brand new construction license or not.

The first thing you should investigate is a) if licensing is required (in most states it is), or just registration; and b) if there is licensing reciprocity.

Registration—the only thing required in a few states—is a lower threshold than licensing. It involves some paperwork but no exam, and doesn’t guarantee expertise or competency.

Licensing reciprocity means honoring licensing and credentials from another state so that the whole licensing process doesn’t need to be repeated.

California, for example, has reciprocity agreements with the states of Arizona, Louisiana, Nevada and Utah. That doesn’t mean licensed contractors from those states have free reign to do whatever they want in California. However, if they hold a valid and active license in specific classifications in one of those states, they are several steps ahead. As another example, Arkansas has licensing reciprocity agreements with Tennessee, Alabama, Mississippi, and Louisiana.

Find out who has licensing authority in your state/county, which can be done with a simple Google search. Then check what shortcuts are offered for neighboring states (this is usually found on the respective licensing board’s website, but a phone call works, too).

2. Lay down grassroots, and digital ones.

Plain old word of mouth from existing customers is the best to break into new territory (geographic or otherwise). Recommendations from trusted sources will make you trustworthy. If a prospect has been referred to you, treat them like unmined gold.

Generally, grassroots marketing tactics in a new area are often very effective: if there are local realtor meetings, find a friendly one and attend it on the regular, armed with business cards and a company shirt. Join the Chamber of Commerce and/or advertise with them. Get involved by handling a repair in a park or church, and place your sign next to your work in a visible spot. Buy bus stop and newspaper ads. If you’re in residential, you can even print up eye-catching ads and staple them around neighborhoods in the early spring, when people are thinking “home improvement”.

Then there are the many online marketing avenues: Google paid search and organic search, Facebook and Instagram (also paid and/or organic), HomeAdvisor, Houzz, Thumbtack are all great ways to make yourself known. Paid Facebook offers geographic targeting. But you definitely need an eye-catching website—with at least a few pages and plenty of testimonials—that’s got SEO strength in the locality you’re aiming for. It may be worth paying a pro to handle this for you.

3. Go lean (if you don’t want to go home).

You can’t start off fat in a new market. You simply don’t have the work to support it yet. Rent or even pay for the delivery of the material to the job site if you have to rather than buying that expensive new truck right off. Then, once you have made some profit you can invest in the shiny equipment and tools.

And “lean” can’t just be something you apply by the book. It will differ for each company. Consider noting down (or carefully tracking) everything you do each day and how long it takes, then reviewing the next day or at the end of the week to see what can be improved. Starting off efficient in a new market is the best way to stay efficient in the long-term.

4. Don’t be mistaken for a storm-chaser

There is plenty of work to be done when a natural disaster strikes an area, be it a hurricane, a tornado, an earthquake, flooding, or wildfires—sometimes more work than the local contractors can handle.

If you choose to show up in town to try and claim some of the project overflow, you might want to tread lightly so you don’t come across as a “storm-chaser”. Traditionally this term has meant people who literally race toward extreme weather for the thrill of it, but it has come to signify something else in construction: a contractor (often a roofer) who is looking to take advantage of citizens in dire straits following a storm or other weather event by promising them quick work for low cost and either doing that work shoddily or having them sign over their insurance payout…and perhaps skipping town again without doing the repairs at all.

The signs people have been warned to look for in storm-chasers are these: they come on aggressively, offer work quickly and for a low cost, and don’t offer their credentials—i.e. licensing, customer reviews, etc.—as proof of their viability.

The best way to combat the image of storm-chaser, then, is to spread the message that you are available without aggressively pushing anyone into having work done faster and cheaper than their competitors offer. If you’re going to talk about your low costs, also emphasize quality.

Most importantly, make sure you are licensed to work in that state whether by reciprocity or directly, welcome prospective customers to check out your credentials on your web site, and provide them with phone numbers or emails of satisfied customers from the past. And if you’re going to be in town for a while, make it known that you will be around should any issues arise post-repair.