You should budget around $500,000 or more if you want to successfully start a standard asphalt business. An asphalt business can be considered capital-intensive due to the cost of acquiring the needed equipment.
An asphalt business is broad; it involves the production, paving, repair, and maintenance of asphalt surfaces. An asphalt business may choose to engage in the manufacturing of asphalt products, such as asphalt concrete, as well as the application of these materials for constructing or repairing roads, driveways, parking lots, and other paved surfaces.
But it is important to note that apart from the amount quoted above, some key factors can determine the total budget of starting an asphalt business and that is what we will discuss in this article.
Factors That Determine the Cost of Opening an Asphalt Business
Your Choice of Location
The truth is that the location of a business will determine how much you will spend on rent or lease, the amount you will spend on labor and related costs, the amount you will spend on acquiring licenses and permits, the amount you will spend on utilities, and every other cost associated with locations.
The Cost of Licensing and Permits
You cannot legally start an asphalt business in the United States and most countries of the world without first obtaining the specific licenses and permits needed to start the business.
You should make plans to apply for a business license, contractor’s license, asphalt license, trade name registration, environmental permit, zoning permit, air quality permit, hazardous materials permit, stormwater discharge permit, Occupational Safety and Health Administration (OSHA) Certification, fire department permit, and zoning permit et al.
In case you are not sure of the required licensing permits to start an asphalt business in your city, then you should check with your local government or regulatory agencies.
The Cost of Insurance Policy Cover
As an asphalt technician or business owner who engages in the manufacturing of asphalt products, it is expected that you go to sites to work. In some cases, you will be required to access places that could be life-threatening.
Aside from the inherent risks associated with similar businesses and operations, there are other risks that asphalt technicians are exposed to including exposure to harmful gases, machinery accidents, falls, and physical strain.
Environmental hazards, such as unstable ground conditions and unpredictable weather, further contribute to the occupational risks in this field.
In essence, asphalt businesses typically require liability insurance and workers’ compensation insurance to protect against potential risks and liabilities that the business is subjected to by the nature of the business.
Note that the cost of insurance policy coverage will depend on factors such as the size of your business and the coverage limits you choose.
The Cost of Asphalt Equipment, and Tools
The fact that you will need various equipment and supplies of asphalt and aggregates means that you should make a budget for them.
As expected, you should make provision for an asphalt mixing plant, paving machine, roller compactor, asphalt distributor, asphalt paver, milling machine, dump trucks, front-end loader, asphalt sealcoating equipment, asphalt rake, grading equipment, traffic control devices, and safety equipment (personal protective equipment, first aid kit, etc.).
As expected, the amount you are to spend on equipment, and supply of asphalts will depend on the size of your business and the asphalt projects you are handling at the time. But the bottom line is that it is a significant cost that will influence the overall cost of starting an asphalt business.
The Cost of Purchasing Utility Truck (Vehicle)
Note that depending on the size and location of your asphalt business, you may need a dedicated utility truck for transporting your workers, equipment, and supplies to and from job locations.
It is important to note that the cost of a suitable utility truck will depend on your preferences and also your decision to settle for outright purchase or lease. Note that the business vehicles for your asphalt business can also include company cars, commercial trucks, and vans.
The Cost of Marketing and Advertising the Asphalt Business
If you have plans to start an asphalt business, then you should do all it will take to secure steady asphalt contracts such as the production, paving, repair, and maintenance of asphalt surfaces and, in most cases, before you can secure a contract, you should be able to market and promote your services.
In essence, promoting your asphalt business through marketing and advertising efforts is essential to attract clients. Even though there are no specific costs attached to marketing and advertising a business, the bottom line is that if you want to launch a business that will win a fair share of the available market share in your location, then you must be ready to invest a significant amount to promote your asphalt business.
This is a key aspect of your budget because you cannot operate an asphalt business alone. So, as you plan to hire key professional employees such as:
Asphalt application technicians, project managers, equipment operators, environmental engineers, safety officers, truck drivers, and administrative assistants, you should also consider their salaries, benefits, and training costs and this can be a large chunk of your budget.
Note that your staffing expenses will vary because it will depend on the number of staff members you want to hire and their qualifications.
But generally, you should have a reasonable budget estimate that can cover this cost because it varies based on staff size and salaries.
Operational Costs or Ongoing Expenses
Although there is no fixed amount you are expected to budget when it comes to operational costs, the truth is that it can be a significant part of your budget.
Note that apart from expenditures for raw materials like asphalt and aggregates, fuel for machinery and equipment, labor wages, insurance, and licensing fees, your operation costs will also include ongoing expenses such as:
Office supplies, utilities, transportation costs, replacement parts for equipment and maintenance expenses for your equipment and tools.
We cannot categorically estimate what you should budget for your operational costs because it will vary based on your business size and the volume of asphalt contracts you carry out per time.