Construction Startup Uses PEO To get to work faster

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How PEOs make life easier for construction startups


Many people hear the word “startup” and they automatically think of technology companies ran by young hipsters who are on a mission to create the next big thing. However, startups can be found in every industry, and lately the construction industry is helping change your thoughts on what a startup is. All differences set aside, one thing all startups have in common is their lack of a proven track record – and that can be a huge hurdle to overcome when seeking payroll, workers compensation, human resources, and employee benefits….specially in the construction space. 

The construction space has a higher degree of risk associated with the type of work they do.  Heavy equipment, power tools, hard materials, and many other variables that impact workplace safety.  In addition to that, it can be difficult to create a steady flow of income due to construction companies requiring a variety of insurance companies before landing an actual job.  Patrick Moraites, partner and VP of Axis Group, breaks down what boxes need to be checked for a construction company to get up and running and how to simplify the process. 


“If you’re a general contractor, in order to get your GC license, you have to show proof of insurance coverage,” said Patrick Moraites, “It’s fairly easy to get general liability coverage but the challenge comes when getting workers’ comp coverage and typically you can’t bid for a job or a project unless you show proof of workers’ comp. Well, it’s hard to show proof of workers’ comp if you’re a startup and you have no employees.”


Additionally, Moraites noted, traditional carriers are often wary of underwriting startups because they don’t have a history.


“They don’t have anything to go off of on how you are from a risk management standpoint and how you manage a worksite,” he said. “They just don’t want to take that chance.”


The good news is that construction startups do have an ally out there, and that ally is a PEO. A PEO, also known as a Professional Employer Organization, is a single-source provider of integrated business services that enables business owners to responsibly and cost-effectively outsource many of their human resources, administrative, and employment-related tasks. Plus, and perhaps most importantly for construction startups, they can also help with workers’ comp.


Without the backing of a PEO, Moraites said, many people in the construction space are forced to go to their state’s Joint Underwriting Association for coverage which can be both costly and restrictive.


“They can be almost impossible to deal with and can really be a hindrance for a lot of startups,” he said.


Mark Hayes, the president and CEO of New York-based Construction Trades Staffing and a client at AXIS Group, agrees.


“The state is the most expensive and the hardest to work with,” Hayes said. “I paid through the nose for coverage and it was absolutely horrible.”


And though many people in Hayes’ position have been turned down by carriers who were leery of taking on a client in the construction space, PEOs welcome them with open arms and are ready to help support them on their journey to becoming successful.


“PEOs aren’t scared to take on that type of risk and work in conjunction with the business owner to help put a safety plan in place, hold their hand through that process and provide them the coverage they need to bid jobs so they can put people to work,” Moraites said. “That way, you can go into business looking like a Fortune 500 company and you can focus on building your team and driving revenue.”

Utilizing a PEO solution for employee management, workers compensation coverage, payroll support, and human resources is proven to help construction companies reduce risk, increase employee retention, stabilize cash flow, and save immense amounts of time so contractors are able to focus on getting more jobs to increase revenues and overall growth.  


Interested in finding out how a PEO can support your construction startup? Contact the team of experts at AXIS Group and we can create a plan just for you.

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