How to Start a Paving Business: Steps and Insurance Requirements

The Bureau of Labor Statistics estimated that over 41,000 paving equipment operators were working in 2022 in the US. Paving contractors are responsible for installing parking lots, repairing driveways, and fixing America’s roadways.  Suppose you are interested in how to start a paving business. In that case, this article will explain the steps, like hiring employees and getting insurance coverage. Keep reading to find out more.

How Much Do Paving and Surfacing Operators Make? 

Paving and surfacing operators have a median average hourly wage of $22. They have a median annual wage of $47,000. In the 90th percentile, paving operators make $39 an hour and $82,040 annually.

Steps to Starting a Paving Business

It may seem daunting to start a paving business initially. However, it becomes more manageable once you break the requirements into steps. See the list below for the steps that are part of how to start a paving company.

  • Decide on a business plan

  • Calculate business costs

  • Do market research

  • Determine what services to offer

  • Find Suppliers

  • Invest in equipment

  • File to form an LLC or Corporation

  • Open a business bank account.

  • Get the necessary licenses and permits

  • Hire employees

  • Build relationships

  • Maintain a website

  • Get the necessary insurance policies

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Decide on a Business Plan

A solid business plan is the first step in discovering how to start an asphalt business. Your business plan is the strategy that outlines what you need to succeed. You will need to research what your ideal customer is and what competition exists in your area. Use strategic planning to understand the scope of your business and try to narrow your ideas down to the ones with the highest chance of success.

As part of your action plan, you need to establish what you will be focused on over the longevity of your business. You need to find a way to secure funding for your business and set reasonable goals to indicate if your business succeeds.

Calculate Business Costs

Ultimately the success of your business will lie in how profitable you can be versus your business costs. The next step in learning how to start an asphalt paving business is to get your business’s finances on track. Below are some estimated costs to start your paving business.

Incorporation fees $100-$500 or more
Market research $1,500-$8000
Equipment $14,000
Office Space $1,000-$5,000 a month
Website $0-$10,000
Insurance $360-$4,000 annually

Do Market Research

Market research is essential to master when learning how to start an asphalt company. You want to consider the demographic of customers you are trying to attract. Gather information about what pricing these customers are receptive to, their demand for your services, and how competitive the market is.

You can use market research to fine-tune your business plan. Your market research will examine your ideal customer’s behavior and make observations. Market research methods employ surveys, questionnaires, interviews, and focus groups to get the necessary feedback you need to make solid business decisions.

Determine What Services Your Business Will Offer

Your paving business can offer different services to your customers. Since you are starting out, you want to focus on a few. These services can include:

  • Paving patios

  • Concrete pavers with artificial turf

  • Paving pool decks

  • Paving driveways

  • Paving home entryways

  • Repair services

  • Cleaning services

  • Sealing services

Find Suppliers

You must find suppliers once you have narrowed down the services you want to sell to customers. This will require researching what local businesses sell the materials you need for your operations. You can rely on your business network for recommendations on suppliers. Look into your supplier’s background and quality to know if they would make an excellent long-term business partner.

Invest in Equipment

Your paving business will need specific equipment to perform services for clients. Some vehicles that you may use in your business are outlined below.

Vehicle Description Cost
Sweeper This cleans a road’s surface after being milled from excessive dust and debris. This debris may prevent asphalt from bonding properly during the paving process. The debris can also come in the form of small rocks, which can fly up and hit the windshields of unsuspecting drivers. $20,000
Asphalt paver A machine that delivers hot mix asphalt to a surface spread by a set of drills. This asphalt is leveled and compacted by a screed. The screed will also control the amount of material released and ensure the asphalt is properly flattened. $30,000-$60,000
Compactor This machine applies weight to an asphalt surface and compresses the material under the contact area. This weight needs to be applied slowly to produce more compaction. $10,000
Dump truck This vehicle moves hot asphalt from the manufacturing plant to where your project is. $20,000
Milling machine A milling machine removes the surface layer of a road or pavement. It creates a grooved surface. This groove surface has a wider surface area, which helps with paving. $30,000

File to Form an LLC or Corporation

You must decide the structure of your business. We recommend you choose either an LLC or corporation for a paving business. Below are some advantages and disadvantages of each.

Business Structure Description Advantages Disadvantages
Limited Liability Company (LLC) A business that offers pass-through taxation and personal liability protection. Avoids double taxationFewer regulationsBetter flexibility in management structure Owners have to pay self-employment taxCan’t issue stocksFewer investor sources
Corporation A business composed of shareholders, directors, and officers Great for investorsStrong protection for personal liabilityThe life of a corporation extends beyond its owners Stricter rules to followDouble taxation because of corporate income taxRigid management structureMore complicated

Open a Business Bank Account

A business bank account keeps your business finances separate. You can apply for loans with a business bank account to help grow your business. Business bank accounts make filing at tax time easier since your expenses will be more organized. The IRS requires a business bank account if you have an incorporated business.

Most business bank accounts have some fees you need to handle. Checking accounts have maintenance fees you must pay, though some banks waive these fees if you meet a minimum balance requirement.

A bank will charge you fees on transactions if you exceed the maximum number of transactions per month. You may not need to worry about a transaction limit if you have a small business without many transactions. The terms of your business bank account may charge you a fee if you cancel your account before the contract period ends.

Business bank accounts also make your brand more professional. Customers can make checks out to a business name rather than your name. This makes transactions feel routine and standardized.

Get the Necessary Licenses and Permits

Your paving equipment operators will need a commercial driver’s license to haul equipment and operate certain types of machinery. If they are properly built, basic paving in customer driveways will often not need a permit. However, cities often require special permits for resurfacing, restriping, or resealing parking lots.

Your paving business may need to submit paving plans to the city for review before you can install a parking lot for a customer. These permit restrictions protect the city from overdevelopment but can hinder your business operations.

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Hire Employees

Your employees will represent your business to customers while they carry out your paving services. It can be tough to find talented employees without a good recruiting strategy. You must create a good job ad that looks professional and sells potential recruits on the perks and benefits of working for you.

You can offer apprenticeships as part of your business so you have direct control over the training your employees will get. You can also partner with schools and other companies to access a pool of fresh potential employees. Reach out to suppliers to get referrals for potential employees. Make posts on specialized job boards to find candidates who can offer your team stability, relevant project experience, and flexibility.

Paving business employees must have a commercial driver’s license to be vehicle operators and be at least 18 years of age. The most common degree held by pavers is a high school diploma. You will want to seek candidates that can meet these qualifications.

Build Relationships

Business success is often about who you know. You want to build relationships with suppliers and local businesses in your area so you have a network of contacts to draw from. You can use these contacts to find employees to hire and spread your brand through your local community.

Networking can open doors to opportunities you might not predict. Identifying opportunities with your contacts can help generate leads and get updated about changes in your industry. You want to be informed about paving techniques and technologies as things happen. Having a good contact network also lets you keep a competitive advantage in your industry. Your network may have access to information and resources that a competitor might not have.

Maintain a Website

A business website is practically a requirement for your business in the digital age. Your website is a place customers can access 24/7 that provides answers to their questions, pricing for services, and helpful information to help them make a purchasing decision.

To create a website, you must pay for a domain name and find a web design service. You can use a template to design your website to Include customer reviews and testimonials to engage your community and assure potential customers that your services can be trusted.

You can leverage the customer expectation of a website to help promote your brand and establish credibility with your customers. An optimized website can help your business name rank highly on search engines and allow customers to find you organically.

Keep your website updated and ensure it can be accessed with a mobile device. Many people will use their phones to search the internet for services, and you want your business to look attractive to people no matter what device they use.

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Insurance Requirements for Boosting Income

Your paving business can only be successful with adequate insurance protection. The following insurance policies protect various aspects of your business from financial loss and lawsuits.

General Liability Insurance

General liability insurance protects you from various third-party lawsuits. The policy protects from bodily injury, property damage, and personal injury claims. You can use this insurance to protect you from the losses of damage to a client’s house when paving their driveway.

Thimble offers short-term general liability coverage that you can set to cover the length of a paving project. Their insurance policies are scalable to the needs of your business. You can manage your policies through their excellent app and get quotes within seconds. Thimble has an A+ from the Better Business Bureau.

Professional Liability Insurance

Your professional liability policy protects you from lawsuits relating to business mistakes. This policy protects you from negligence, errors, copyright infringement, personal injury, etc. It can protect you from legal costs for not fulfilling contracts with customers.

Hiscox is our recommended choice for professional liability insurance. You get flexible payment options with no additional fees. The company immediately assigned a dedicated claims representative to help you when a claim is reported. Hiscox has an A+ rating from AM Best.

Commercial Property Insurance

You can protect your equipment and business building with a commercial property insurance policy. This policy covers several physically damaging events that include:

  • Fire

  • Theft

  • Vandalism

  • Burst pipes

  • Water

  • Wind

For commercial property insurance, we recommend CoverWallet. They offer an easy-to-use digital insurance platform with over ten highly-rated insurance providers. CoverWallet lets you skip the insurance form and call a representative directly if you are in a hurry. They offer an excellent selection of insurance coverage and have an A+ from the Better Business Bureau.

Commercial Auto Insurance

A commercial auto policy protects you from vehicle accident lawsuits and damage to your business vehicles. You can use this policy to safeguard vehicles you use to transport equipment and meet with clients.

Tivly offers an excellent selection of commercial auto policies. Their platform has over 200 insurance partners to select from. You can get policy add-ons like gap insurance, rental reimbursement coverage, and more. Tivly has a 4-second phone answer rate for their customers. The Better Business Bureau gave them an A rating.

Workers Compensation Insurance

If you hire employees to help you with your paving business, you will most likely need workers’ compensation insurance. This policy is required in most states for businesses that meet a specific employee threshold. The policy pays disability benefits to injured employees and helps them with medical costs.

The Hartford is our choice for workers’ compensation insurance. With their policy, your employees can access 65,000 pharmacies and benefit from The Hartford’s 200 years of insurance experience. The company has a mobile app for your convenience. They are a reliable company with a 100% rating from the Corporate Equality Index. The Hartford boasts an A- rating from AM Best.

Business Owner’s Policy

A business owner’s policy is the most comprehensive form of insurance you will commonly buy. This policy combines the protection of several policies like general liability and commercial property insurance.

NEXT offers an excellent selection of options for a business owner’s policy. You can get quotes entirely online that address the needs of your business. NEXT has a 4.7/5 rating from their customer reviews and allows you instant access to your insurance certificate. The company has an A- with AM Best and a B+ from the Better Business Bureau.

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