The key steps to setting up a construction consultancy

Setting up your own consultancy is common practice in the construction sector we guide you through the key stages of the start-up process

Author: Claire Watkins

11 February 2020

Setting up your own business can be a daunting prospect. It requires energy, patience, considerable courage and, of course, it comes at a cost. Your aspiration may be to run a growing business, employing people who are passionate about providing a quality service and creating a name and a legacy for others to continue.


This is all achievable; most entrepreneurs, however, will tell you that running a successful business did not come without taking a few risks – and making a few mistakes. Mistakes are unavoidable, but it is possible to minimise them and make sure you are in a position to recover quickly.

The starting point for any new venture is a business plan: this sets out what you want to achieve and how you plan to achieve it. A business plan is essential, and not just for your own purposes; if you are likely to require finance, it is a good way to encourage your bank to lend you the necessary funds.

A business plan should include the following items.

  • Service or product

    Comment on the sector – how your business fits into it, how you plan to approach your business, where you see gaps in the market and how you intend to fill them. Describe, in as much detail as possible, how your business will distinguish itself from the others already in the market. Include information on how you will provide a quality service, where the work will come from and who you consider to be your target market. For example, if a key part of your business plan is project management and construction design management, you should focus on how you intend to streamline processes so costs are controlled, regulations are met and any red tape is kept to a minimum. The goal is to address your clients' needs rather than simply sell a service.

  • Resources

    This is where you include details of the team you intend to hire to provide the relevant service or product. Various qualities will be required so, in addition to highly skilled surveyors, you might also require a business development specialist, practice manager, finance manager and IT specialist – or, at least to begin with, you may be required to upskill and carry out these roles yourself. You also need to consider office space, depending on the size of your business: will you operate from your home, take a lease and adapt it to your own specifications, or opt for serviced offices that can provide IT, meeting rooms and front-of-house support as part of the deal? Software is another consideration: for construction businesses it is essential to choose software that is designed for the management of long-term projects.

  • Your clients and referrers

    Many new businesses struggle to define how much money should be spent on marketing. Once you've identified your target market, devote some time and cost to cultivating relationships with key referrers and attending networking events, as a means of creating awareness of your brand. Although a good website is also essential, more than 90 per cent of new work for most surveying firms comes from referrals. While part of this figure is most likely to be made up of contacts from businesses you've worked with before, new connections will undoubtedly be very useful. Building a network of architects, construction companies, estate agents, surveyors and other professionals who are not already in your field is time well spent.

  • Growth plan

    Be bold and set goals. If your intention is to achieve a £5m turnover in ten years, map out how you plan to achieve this target. Will it be through organic growth? How do you intend to go about attracting staff? Decide how you would like your firm to stand out from the others in the marketplace so it becomes a business people want to work for. We are seeing a generational shift where new entrants into any profession are demanding more than just a nine-to-five job. Every modern business needs to consider flexible working, agile working, employee ownership and incentives that go beyond purely financial reward.

  • Financial details

    A business plan should include cash-flow and profit forecasts; ideally for five years, but at least a minimum of two. It is advisable to start with known costs: salary expectations, rent, IT equipment and professional indemnity insurance. Once you have noted these core costs, you need to include any other items of potential expenditure so you can see how much revenue you will need to generate to be able to cover all these costs.

It is important to have a good grasp of job costing so as not to lose sight of the break-even point of a project, rendering it potentially loss-making. Ensure you work out how much it costs to employ one person by taking into account all essential overheads and tax requirements; this will help you work out how much business each employee will need to generate in order to achieve your projected profit level.

Choosing a business structure

If you are flying solo then operating as a sole practitioner – defined as being self-employed by the government – will keep things simple. There are no filing requirements other than the need to submit a tax return to HMRC at the end of each tax year, and a VAT return if you are VAT-registered. HMRC is in the process of replacing the annual tax return with more frequent online reporting obligations in a scheme known as Making Tax Digital (for more information, see Construction Journal November/December 2019 pp.30–32).

Another option is a limited company. There are advantages to this structure – not least the appeal of limiting liability. Limited companies offer flexibility around remunerating director–shareholders as they can earn a salary as well as receiving a share of profits via dividend payments. Directors, as well as other employees, can also benefit from receiving employer contributions to their pension.

From a tax perspective, there can be advantages to operating as a limited company. This is because corporate tax rates are lower, so profits that are retained in the company, that is, profits that are not paid out as salary or dividends, are taxed at 19 per cent. This rate is correct at the time of writing but it is subject to change.

Limited companies are also required to file accounts with Companies House, although small companies are obliged to supply less financial information for public record than larger companies as they are entitled to file accounts in filleted form. This means details of turnover, expenditure and profit are largely omitted.

"Although a good website is essential, more than 90 per cent of new work for most surveying firms comes from referrals"

Another common structure is the limited liability partnership (LLP). LLPs are popular because they afford the owners – or members – limited liability in much the same way as a limited company, yet they are more flexible in structure because profits can be allocated easily, retaining the partnership ethos that is attractive to so many professional practices. Profits are shared among members by agreement and partners are taxed under self-assessment rules, with tax payments being made in January and July each year.

Although selecting the right structure is important, it does not tie you in forever and it is very common for an LLP to convert to a limited company and vice versa. At different stages of the business's life, one structure might provide a better fit than another. For example, it is quite common to see well-established surveyor firms adopting a company structure. This is often because firms that have been operating for a few years can afford to leave working capital in the business, where it is taxed at low corporate rates.

In an LLP structure, the same working capital would be taxed at much higher income tax rates. It is also increasingly common to see companies implementing share-based ownership schemes, such as share options and employee ownership trusts, enabling all employees to become shareholders in the business. For some firms this is a key part of their succession planning, particularly where founding shareholders choose to sell their shares to employees, instead of back to the company.

Developing a plan and deciding on a structure are the first steps in building a dynamic, agile company to compete in today's business environment.

Claire Watkins is partner and head of professional practices at Buzzacott LLP

Related competencies include: Business planning

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