Acquiring a contracting license is the first and most important step your contracting business. But completing a contract requires more than obtaining the license itself. To ensure that your business meets all the state and federal regulations and can accomplish the contract with true success, avoid these 5 common mistakes with your contracting license.
1. Not Being Properly Licensed
The most common mistake—and the most detrimental to you and your business—is not being properly licensed. A contracting license is absolutely required to work on any projects, whether they are residential, commercial, or government contracts. Many contractors make the mistake of thinking that just because they have a license or obtained one years ago, they are certified to continue their work. This is not the case, and it’s highly important that you have the appropriate contracting license.
Not being properly licensed can include committing common contracting license mistakes to get licensed in the first place, such as failing to study thoroughly for the exam. It can also include not having the license for the correct state, or failing to renew your license. Any of these mistakes that mean you are not properly licensed not only can lead to the termination of a contract, but depending on the severity, it could lead to hefty fines or even jail time.
2. Not Securing a Contractor License Bond
So you have the right contractor’s license, does that mean you’re cleared to begin working on contracts? Not so fast. If you’re a general contractor, or you’re hoping to start your own business, you’ll need to make sure your business and your client are insured against any mishaps that may arise with a contractor license bond.
A contractor license bond insulates you and your client from financial disaster. If for any reason your company is unable to complete the project, the bond provider will make sure your client gets their money back. The bond also protects your business from being sued by the client in case any delay or failure to complete the project should occur.
3. Failing to Comply with Industry Regulations
Your contractor’s license is a highly important and valuable certification that allows your business to succeed. But the contracting industry can be very complex with numerous regulations at the local, state, and federal levels. Failing to comply with these means a regulatory agency could take legal action to get your license stripped from you, putting you out of work and even the industry if the transgression is severe enough.
4. Underestimating the Scope of the Project
You have a license and you know how to do the job—but do you have a strong grasp of estimating the scope of the project? Underestimating the scope of a contract is another mistake that licensed contractors often make. Not completing the project in time, committing a scheduling mistake, lacking the necessary resources, or not putting in high enough of a bid to cover the expenses of the project can all lead to a doomed project from the start. Not completing a project might not get your license taken away, but it will damage the integrity of your reputation and the credibility that your license gives you.
5. Not Investing in Your License
Your contractor’s license is an investment in yourself as a contractor and in your future ability to complete projects successfully. Not investing in your license, however, can seriously devalue your license and your work. Whether it’s studying old licensing books with outdated information, or not keeping up with changes to the contracting industry, the lack of investment in your license can have serious consequences in the short and long term.
To invest in your license, and to ensure that you avoid the pitfalls of these common contractor licensing mistakes, take advantage of the services we offer here at Contractor’s Institute. We’ll make sure you get all the value out of your license preparation and exams and show you the ropes to having a successful contracting career.