Running a construction business is certainly not easy. There are just so many things to worry about, and so many steps to take along the way in order to achieve the desired success. From choosing and landing the right projects to completing them successfully and keeping everyone happy in the process… You certainly have a lot on your plate.
If you’re just now thinking of starting a construction business, this should help you do it right: https://www.wikihow.com/Start-a-Construction-Company
Anyway, whether you are just now starting with this, or you’ve been on the market for a while, there is no doubt that you are quite aware of the importance of keeping your business financially safe. Furthermore, you are also quite aware of the risks that lurk in this particular industry, and that you have to minimize in one way or another. And, on top of it all, you are aware of the importance of instilling confidence in your clients, making them know that you’ll complete the projects on time, and that you will do a great job for them. Among other things, this is what will help you land great projects.
Well, there is one concept that plays a major role in that last part. In short, we are talking about construction surety bonds, which have definitely become quite a vital part in running a business in this industry. There is a chance, however, that you may not be sure what these precisely are, why you may need them, as well as how to actually get the right solution for yourself. And, those are all, without a doubt, some quite important questions.
What we are going to do right now, thus, is answer those questions for you below. Thus, if you keep on reading, you will realize what this concept entails, as well as why getting construction surety bonds is a good idea. And, apart from all of that, you will also figure out how to get the best ones for your business. So, without any further ado, let us start answering those questions.
What Are Construction Surety Bonds?
Let us start with the basics. What exactly are construction surety bonds? To put it simply, a construction surety bond is a legally binding document that involves three parties. First off, there is you, the contractor, and then there is the project owner, or another entity that may be requiring the bond. And, of course, there is also the bonding company that is there to guarantee that you will complete your work and fulfill your obligations under the contract.
The surety bond serves to protect the project owner. So, if you fail to meet your obligations, he or she will be properly compensated through the bond. It is a very important concept, as it gives project owners some peace of mind, since they will be sure that they are protected throughout the project. But, clearly, this is also why it is so important for you as well.
Why Do You Need Them?
Now, the above should have made some things clearer, and you may now be tempted to get one of these right away. But, before you proceed towards partnering up with The Baldwin Group or similar companies that may find you the perfect surety bond solution, you want to know one thing for sure. To put it simply, you want to know why it is precisely that you, as the contractor, need to get this solution in the first place. While I may have hinted at that a bit previously, it is now time for us to get a bit more specific about it.
First things first, construction surety bonds are often a legal requirement. Public projects almost always require them, but then there are also some private ones that also require them, with the aim of mitigating financial risks. So, you need to get these in order to stay in compliance with the law.
But, it is not only about staying in compliance. As you may have guessed it already, when you don’t have these surety bonds, you are unlikely to win some types of projects, especially public ones. Even with the private ones, though, the project owners are sure to be more inclined to trust someone with a surety bond, as that keeps them well protected. Simply put, thus, these can help you win more projects.
Another reason why construction companies get surety bonds is because they instill trust and credibility. They show that your business is actually financially stable and capable of completing the job the project owners need completed. This further increases your competitiveness on the market and, as I have already mentioned, helps you land more jobs.
On top of all this, they will reduce your own financial and legal risks. How? Well, the surety will handle the dispute resolution and the claim processing, which allows you to avoid further legal complications. And we all know how expensive those can turn out to be. Click this to better understand what it takes to run a successful construction company.
How to Get the Right Solution for Your Business?
Moving on to our next question. How can you get the right surety bond solution for your business? Well, the main thing you have to do is find the right surety advisor and partner up with them, as they can help you on this journey. Let them know what you need, or try to figure out the requirements together with them. From there, they will do their best to find the right solution and advise you on what it is that you should do – that is, which option you should accept.
Of course, you will have to prepare the necessary documentation, as the surety company will conduct a thorough review before issuing you the bond. When you have everything ready, and the advisor you’ll partner up with will help, you’ll apply and get a bond quote. Make sure to evaluate it, and to then accept the quote and pay the premium, after which the surety will issue the bond. As you can see, the process can take a while, but it will definitely be worth it.
