Hello, all. I’ve posted a little here and there, but have mostly been a lurker. I am a 38 yr old supervising carpenter, or project manager, for a GC here in Seattle. 21 years in the trades. I am finally getting ready to set up my own buisiness. My boss supports me in this decision, and has offered to keep me on as a sub for as long as it works for both of us, and has made it clear I will always have a job if things don’t work out. I am soliciting any and all words of wisdom about my venture you fine people feel like sharing.
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The only thing I would say is make sure you keep the office side of the business in order . speaking from experience there are a lot of great carpenters that stink at business. not to mention it takes the fun right out of it.
And it is cool to say I have fun doing it and get paid to boot!
So have fun and be smart.
ps. it also sounds like you have a good situation with your G.C.
Rich offers some good insights. Let me supplement.
Make sure when you 'pay yourself' to include funding for your retirement. In working with some of the local GC's, I'm amazed at how this is nowhere to be found on their radar screens. The attitude seems to be 'I'll worry about that when I get there'. Retirement planning should begin at a young age...unless your ultimate destination is a trailer park and Social Security.
The easiest way is a SEP, using the IRS model on form 5305-SEP. This approach gives you the most flexibility. But you can certainly use a profit sharing plan, a SIMPLE IRA, a self-401(k) or other plans. In addition, you can fund your own personal IRA or Roth IRA. But thsi is something that should not be overlooked.
I also second Rich's notion of insurance. Insurance reps get paid commissions..the more they convince you to purchase, the more they earn. As an independent, you need to determine your risks (on-site inury, fire, earth movement, flood, etc) then determine the liklihood these will occur...not the POSSIBILITY they MAY occur, and then get the appropriate level of coverage, with a deductible you can afford without disrupting your business operations.
BruceM
Take a few minutes and sit down with the folks at SCORE. They will help you develop a business plan and help you to organize the biz in the right way.
Of course, you can also hire a consultant to assist.. but most SCORE offices will help you in a manner that is just as quality as what you will pay mucho deniero to get.
Next... hire a good attorney and make sure your contracts are in line. Also be sure to have a good accountant (preferably a CPA) to assist in setting up your bookeeping.
Next.. always remember you have to pay your own taxes. Common issue with many business owners is forgetting this "small" detail. They don't budget for it... and all of a sudden... no money to pay taxes.
Next... be sure your business can survive without the business being offered by your boss. This is a good way to start the business... but you must be diverse enough to survive without his help. Hopefully things will continue on a fantastic basis... but stuff-happens. Don't be subservient to one client... otherwise, you may as well continue to work for him and allow him to take the risks.
Next.... budget budget budget. And when in doubt... budget. And when you second guess yourself... budget. If you need that new tool... is it in the budget to buy it? Do you have a contingency fund in the budget to replace the table saw when it gets tossed off the truck and ends up in a million pieces? Your CPA can assist you in developing your budget... take him/her up on the offer... and then... STICK TO THE BUDGET!
Next... Insurance is the most frustrating animal to ever live. Be sure you are properly covered.. but don't fall prey to "insurance creep" (purchasing insurance coverage that you don't need).
Next... safety. One major OSHA fine can bankrupt you. Have the safety gear needed and use it! Have a safety plan and follow it!
next... ALWAYS sign your own checks. Don't get a stamp with your signature... don't give the payroll company your facsimile signauture... sign the darn things yourself. And actually look at them when you sign them. It's amazing how often mistakes are made. BTW... don't sign checks as you write them. Write them all out... walk away for a few hours... then come back and check your work for accuracy, sign the checks, and send 'em off.
Do as Reagan suggested... trust but verify. Even the best of friends/companies can have issues... don't let THEIR issues become YOUR issues. Business is business.... friendship is friendship. Be sure all parties understand the difference between the two.... especially make sure that YOU understand the difference.
Next... pay yourself. Sounds simple... but is FAR from it. If ya can't pay your bills AND pay yourself... change whatever is preventing you from paying yourself.
Next.. after 5 yrs in business... pull all personal guarantees from all credit lines as they are renewed, and from all loans as you refinance them. If your business cannot support the credit required to do this... you have a problem. If the bank/supplier will not renew without personal guarantees and the credit and business outlook is good... find a new bank/supplier.
Next... talk to your attorney and CPA about trusts and if they are applicable to you and your situation. MANY good reason to do so... to numerous and detailed to list here. Each situation is different... thus the need to discuss your specific situation with your attorney and CPA.
Next... pray for guidance from whatever higher being that you respect. Might help... might not... but never hurts to try. Sounds trite... not intended to be... but it seems that when things are the bleakest that somehow, an epiphany comes to every successful business owner. It has to come from somewhere.
Next... learn that there is no such thing as "too much education". Learn from every experience.. from every person yo come in contact with... and yes... even some of that there book learnin' is good fer ya.
Best of luck to ya.
Next...
Edited 3/3/2005 12:04 am ET by Rich from Columbus
rich... good post..
i'd add:
incorporate or go LLC
and use a payroll service.. don't waste your time or someone in your office's time with payroll and payroll tax returns
read the threads in the business folder here and at JLCMike Smith Rhode Island : Design / Build / Repair / Restore
Sometimes it seemd like there's a thread here about once a week like yours. Searching the archives will net you quite an education.
Just a note on contracts and estimating. It`s appealling when you first start out to take jobs on a Time and Materials or Cost Plus contract,because a lot of us didn`t have enough estimating experience ,so it was comforting to know that at least you weren`t going to lose money. So document all your time to come up with numbers for estimating. It`s like brushing your teeth, you have to do it. Only take T&M or Cost Plus if you don`t have enough business going yet.
That's real smart intelligent advice. We should hear stuff like that a lot more often. It's incredibly simple but incredibly valuable.
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don't be afraid to learn to bid.
And go in knowing you'll burn yourself a few times before ya start learning ...
and also go in knowing, depending on the type of work, I'm speaking remodeling here ... that it's still more an art than science ... the bidding, that is.
track all your times and costs ... then actually review and use that info.
Short story on that thot process ... I worked around a company for a coupla years that was always pulling in top notch jobs ... and always robbing peter to pay paul.
very easy cycle to get into, btw ...
at one meeting .. as the whole carp staff was yat again being yelled at for the office mistakes ... one owner said ... and I quote ....
"For the last 3 years, you guys in the field have been consistently 15% over on time and costs ... just about each and every project has been over budget by 15%!
So if U can't all figure how to be 15% faster and more productive ... yer'll all gonna be fired!"
My buddy Joe couldn't take it anymore ... so Joe raises his hand ... casually and calmly says ... "U ever think of raising the rates 15% across the board? U know ... draw it up ... add it up ... add in the "correct" percentages ... then ... when you are sure U have the right number ... simple add 15%?"
Kinda makes sense to me?
didn't make sense to the bosses ... Joe got chewed out.
they went bankrupt about 2 years ago ...
all the books said X amount of time, and Joe was consistently 15% too slow ... the books were right ... 7 years of time/cost tracking was wrong ... it was just tracked to prove how slow and stupid the employees were ... not to actually use in future bidding.
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
good one , jeff.. took me a couple years of tracking costs to realize no one elses numbers matched mine..
took a couple more years to realize.. mine weren't going to change..
finally started using my numbers instead of someone else's..
bottom line got real good after thatMike Smith Rhode Island : Design / Build / Repair / Restore
I want to thank everyone who posted here. A lot of great advice, and I appreciate all of it. Thank you all.
...............to understand how
their companies are organized, although
few could specify all the pros and cons of
every alternative. For those details, they all
bow to the advice of their accountants and
attorneys.
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Here, we provide a few examples of how
members have set up their companies,
with a plain English explanation of what
each might mean to you and your business.
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SOLE PROPRIETORSHIP
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None of the xxx questioned responded as
subscribing to this type of organization. The
sole proprietorship is an easy way to start a
business, because it says, "I am a company
and I am open for business." There is no dis-
tinction. however, between the owner and the
company or between personal and business
assets. This can be helpful when trying to get
your business started, but it does not provide
you with personal protection. Any lawsuit,
creditor, or the like can reach right into your
personal bank account.
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"C" CORPORATION
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A "C" corporation works best when dealing
with a business that has numerous owners.
The corporation is a separate entity, and no
owner is held personally responsible for
corporate activity. There is no limit to the
number or type of shareholders (owners), so
the company has room to grow indefinitely.
The government sets certain rules for "C"
<!----> <!---->
corporations that the corporations must
follow. These include holding an annual
meeting of shareholders and directors and
keeping minutes at each meeting. Failure to
follow these rules can result in personal lia-
bility for the owners. Corporate profits can
be paid out as dividends to owners, but this
creates a "double-taxation" because the cor-
poration pays taxes on its income, and
the shareholders must pay income tax on
dividends they receive. This type of double
taxation is often not noticeable in a large
company but may be difficult when the
company owners and shareholders number
just a few. Unless the company is a large
corporation with aspirations to grow beyond
75 shareholders, there are few benefits to
being a "C" corporation. In fact, the outcry
over the double-taxation policy, and its un-
fair affect on small, usually family-owned,
businesses, led the government to create the
Subchapter "S" corporation.
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SUB "S" CORPORATION
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<!----> <!---->
A company must first become a "C" cor-
poration and then apply for "S" status.
In this case. the taxes are paid not by the
business but personally by the owners,
eliminating the double-taxation. The num-
ber and type of owners is more limited, and
the "S" corporation is subject to the same
rules concerning meetings and minutes as
the "C." However, in an "S" corporation,
any gain or loss the company incurs will be
<!----> <!---->
documented on the personal income tax re-
turn of the owners. Smaller, singularly held
companies are often "S" corporations be-
cause the owners can keep a close eye on
the movement of the company and who is
investing. The benefits are plentiful: The
shareholders actually net more money
from their company's profits and are pro-
tected from its losses.
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<!----> <!---->
<!----> <!---->
LIMITED LIABILITY COMPANY
<!----> <!---->
<!----> <!---->
The Limited Liability Company (LLC) is be-"
coming one of the more popular options for
small businesses everywhere. A relatively
new development, it has almost no downside
for a small business. The LLC is quickly be-
coming the choice over Limited Liability
Partnership, the Limited Partnership, and the
Partnership. It provides the pass-through
profit or loss quality of the "S" corporation
and the protection of a "C" corporation. The
LLC shareholders are called members and
none are held personally responsible for
company issues. (Generally, there must be at
least two members.) The fact that these cor-
porations are so new means there is less pre-
dictability and less history to look to in case
of a problem. Many times, the LLC has to
have a dissolution date and cannot have a
perpetual existence. Careful drafting by a
skilled attorney can help to avoid these issues
and provide for the continuation of the com-
pany in the case of death or withdrawal of
one or more members.
<!----> <!---->I Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
[email protected]