Starting from scratch as a contractor can be a daunting challenge. The Business Manual asked Earl Lim, the owner and CEO of Erukraft Builders, for insights on how to get started.

According to data from Statista, the construction sector contributed 7% of the country’s gross domestic product (GDP) last year. In addition to this, around 110,530 residential constructions were completed from approved building permits in the Philippines. As for non-residential constructions, Statista says that this reached about 35,200. Furthermore, Statista notes that the sector is expected to continuously grow as the Philippine economy continues to recover. This projection, along with the numbers from the previous year, make the construction sector enticing for aspiring entrepreneurs, particularly to those who are interested in becoming a contractor. 

However, starting a career as a contractor can be easier said and done, especially for those who do not know where to start. Being a contractor involves knowing where to find labor, how to source materials and equipment, and how to find clients and projects. 

To get a better understanding on what aspiring contractors should know before starting their business, The Business Manual spoke to Earl Lim, a 28-year-old contractor who is also the owner and CEO of Erukfraft Builders. 

Why did you decide to be a contractor? Why did you opt for that route instead of staying in the corporate world?

Having experienced having a corporate job as well working in Japan, I have come to witness how the construction industry here unequivocally pays way better despite the fact that I earned significantly in a first-world country. 

Since the Philippines is a third-world country where development of infrastructures—may it be commercial, residential, and industrial—is vastly progressing, I saw the potential of this industry for growth in the years to come. 

What are the challenges you faced when you were starting out? How did you overcome them?

When I was starting out, having connections was a vital key in acquiring projects, as is the case for most businesses who want to survive. But generally, having connections is nothing if you are not equipped with the fundamental knowledge needed to substantiate one’s capabilities. 

After graduating from Mapua University with a degree in Manufacturing Engineering, I started to help out in the family hardware business. To supplement my knowledge, I started doing small jobs nearby, such as roof replacements, painting jobs, and gate fabrications. 

You need to always give your best service to satisfy every client, then word of mouth will do the marketing for you. Just remember that one’s confidence is not enough without backing it up with competence.

How do you typically go about finding clients?

As a startup construction company, we usually rely on the referrals and recommendations from satisfied and repeat clients. We also do our own marketing as well by participating in biddings for various projects we encounter along the way. 

Eventually, we plan to do marketing online through social media and by creating a website for the company to showcase our accomplished projects and services.

How did you go about finding the needed workforce? How were you able to secure the needed manpower for the laborious works?

Finding the right and solid people to do the job can be a chore. From our experience, we had to learn first the methodology of the actual work before finding the right people for it. That will be your basis in determining whether a group or a worker is qualified to accomplish a specific task. 

It is also important to compensate them properly in order to keep them. Knowing how the work is being done is pivotal so we can assess and provide the proper compensation for their work to prevent compensation issues. 

Creating a system will allow you to calculate the right and proper compensation that will secure you a team you can trust in delivering quality service for your clients.

How did you go about finding the needed equipment and raw materials needed for projects?

One of the things that gave us an edge when we started this construction business is our vast knowledge in procurement. We started out as suppliers of different raw materials and equipment that we sold to customers and other contractors. 

We had to do our own research to determine where to get the specific requirements of our customers at a reasonable selling price. Knowing and understanding the specifications, where to get the materials, and knowing the prices will allow you to estimate the material cost of a project. This information will help your client gauge the budget needed to finance the construction.

What concrete tips and advice can you give when it comes to dealing with clients and their preferences? How do you balance these preferences with the set budget?

One of the most important details we need to iron out first when dealing with clients is the baseline of their construction budget. However large or small the project may be, this helps us builders/contractors to estimate if the task at hand can be accomplished or not. 

This also helps us guide clients to stay on track financially and support client relationships. It also helps us guide decision making from project inception through closeout. For some cases where the budget slightly doesn’t meet the expected projected cost, we clarify the details in quotations that elucidates the breakdown of the actual project cost. 

With the help of other specialties in different fields taking part in the construction project, we can value engineer the cost by lowering some specifications and methodologies in implementation, while at the same time giving it a safety factor. 

Would you recommend fresh graduates to go straight into contracting? Why or why not?

Contracting is a very risky business if you do have insufficient knowledge. It takes a lot of preparations fundamentally and financially, as well as a lot of guts to engage in contracting. 

Build your experience first, build connections, know the legalities, and acquire capital. Get all the resources, advice, tips before contracting because the devil is in the details. Many contractors fail because of inexperience. 

What concrete tips and advice can you give aspiring contractors or those who are still finding their feet in the industry?

Just always do your best. Never stop accepting work, no matter how small it is. Word of mouth spreads so fast. Never stop learning new things. As the world is evolving, there are new things we encounter every project. 

There will always be drought, but that’s how the world prepares you to be ready when it rains. 

Earl Lim is the owner and CEO of Erukraft Builders. He graduated with a degree in Manufacturing Engineering from Mapua University. Prior to starting his own business, he was involved in his family’s hardware business.