General contractor business guide: licensing, pricing & growth

General contracting is one of the most complex and potentially most lucrative businesses in the trades. The GC is the one who coordinates everything — subs, materials, schedules, clients, and permits — and takes responsibility for the whole project. Done well, it's a highly profitable business. Done wrong, it's the fastest way to lose everything you built. Here's the complete picture.

Getting your GC license

General contractor licensing is state-regulated. Most states require:

1. Documented experience — typically 4–5 years in the trade, often requiring a journeyman's card or letters from employers
2. GC exam — tests trade knowledge, building codes, and business/legal requirements. NASCLA offers a multi-state exam accepted in many states.
3. Proof of insurance — GL coverage at state-required minimums (usually $300K–$1M)
4. Surety bond — license bond required by most state boards
5. Business registration — LLC or corporation in most states
6. Application fees — $200–$1,000 depending on state

States with the most rigorous GC licensing: California (CSLB), Florida (DBPR), Arizona (ROC), Nevada (NSCB). Texas has limited state licensing for GCs but strong municipality requirements.

Insurance and bonding — non-negotiable

GCs need more coverage than most trades because you're responsible for everything on the job site — including subs' work.

How to price a GC project

The GC pricing formula:

Never bid from gut feel or square-footage rules. Get actual sub quotes for every line item before submitting a bid.

Managing subcontractors

Your reputation is only as good as your subs'. Before putting anyone on your job:

• Verify their state license is current and matches the scope of work
• Get a COI and verify it's active — call the carrier if in doubt
• Check workers' comp coverage — if an uninsured sub is injured on your job, you may be on the hook
• Get references from GCs who've used them recently
• Use a written subcontract on every job — scope of work, payment terms, insurance requirements, and indemnification language

Contracts — never start without one

Your client contract should include:

• Detailed scope of work (what's included AND what's excluded)
• Payment schedule (typically 10–20% deposit, progress payments, final payment on completion)
• Change order process — how scope changes are priced and approved in writing
• Timeline with milestones
• Lien waiver language
• Dispute resolution process

The most expensive GC disputes come from unclear scope. Clients who add work mid-project and expect it included in the original price are the primary source of GC disputes. A clear change order process eliminates most of these problems.

Growing a GC business

• Referrals drive GC growth — a satisfied client who refers you to their network is worth $50,000–$200,000+ in future projects
• Before/after photos on Instagram and Houzz build credibility for larger projects
• Google Business Profile drives local search — "general contractor [city]" is searched frequently
• Relationships with architects and designers — they recommend GCs constantly. One strong relationship with a residential architect can fill your calendar
• Specialization — kitchen/bath remodelers, ADU builders, or historic restoration specialists command higher margins than generalists

Disclaimer: This guide is for informational purposes only and is not legal, tax, or insurance advice. Coverage availability and pricing vary by state and applicant. Always verify requirements with your state licensing board and confirm policy terms directly with your carrier before relying on this information.