I am considering setting out my shingle in remodeling. I do not have the capital to custom home build, but more than enough to remodel. My monthly expenses etc. are in line to allow me to do this, hire labor as needed, etc.
Found out I was passed by for a promotion at the construction company I’m at and I’m thinking. I have good trade experience, a GC license & contractor’s insurance. I need to investigate a plumbers license / HVAC license for my state and pass them to do this. Also would have to find a master electrician to sign off on my work.
I had a business before for about six years and went bankrupt. It was a mechanical contracting niche business (energy audit & upgrade) and I understand what happened contributing to that failure.
I don’t work the fastest in a trade. I do good quality work. I’m around the trades constantly and it blows me away how fast people who do one thing do it. Like drywall, or electrical, or finish trim. This might be a problem. I have a good cabinet shop and adequate tools / vehicles.
My biggest concern seems to me insurance. My wife is stay-at-home and that is important to us. My question: How do you handle health insurance at a reasonable price? I pay $250/mo now for family. My COBRA from last co. was $750/mo!
Also pulling in initial work I’m not sure of. It seems like word of mouth makes on-going business well, on-going. All the talk recently about GC’s not returning phone calls etc. seemed promising for a good business guy, but I’m not a great salesman.
thanks in advance,
remodeler
Replies
As far as getting started with initial work, go where the people are! 60-75% of my work comes from one place - my church (Methodist, avg attendance total about 500 on a Sunday for 2 services).
Civic groups, church, anywhere you (and/or wife) can meet and talk to new people....you don't have to be a salesman to sell your work. Most of it will come by TRUST and word of mouth.
About half my work is remodeling, and as far as sales are concerned it seems to be a trust issue. If the client is going to be living in the house during the work, they have to see you as a nice guy to wake up in the mornig to, they also feel exposed and vulnerable cause your in their home. For me this has meant that occasionally, when there are small setbacks etc..the C gets more upset then one would usually expect(plus they're around alot asking boring questions). It's hard to work on speed when you're multitasking, the only thing I know is that I need to make lists all the time to keep track. The problem with hiring labour when you need it is the good guys have steady work and occasionals have a hard time getting into the groove. I work really hard at dust control, and finishing on time and word of mouh seems to keep me busy. Oh yeah everything takes longer than expected, it's easy to lose $ on a job, that's when it pays to be working alone, you get pretty fast too when you're trying to race yourself to breaking even. Cost plus is the way to go, but only half my jobs are like that. One way of helping yourself is to make a certain part of the work hourly (like the plumbing or another aspect that is an unknown). That way if the job is going long there's a chance to recoup some travel time by showing up to do plumbing and at the end of the day doing those two little things that went sour/missing whatever. Don't know about health insurance, in Canada it state run, don't pay for nothing, actually it's a big relief and one of the reasons I don't work in the states. Sure I pay more taxes but we're all warm and healthy up here.
Good luck with the biz, try to have fun, it's all in the details, details, details.. oh yeah, as you probably remember the real problem with running your own biz is waking up at 4 in the AM going over details details details, this is something that never happened to me when I had a boss.
Patrick I really like where you say "It's hard
to work on speed when you're multitasking,..." (and you probalby don't
have any idea of just how true that really is, ever hear of the Theory of
Constraints?) and "I
work really hard at dust control, and finishing on time" but
where you lost me was with "Cost plus is the
way to go". I'm not a fan of cost plus or T&M work at all. To the best
of my recollection I've done only two projects like that 13 years. By any chance
have you ever read Michael Stones 22
Reasons Why You Should Never Do Cost Plus (C+) Or Time & Material (T & M)
Contracts Or Billing For Construction Projects. I'm wondering what you
might agree or disagree with on that.
(and for Remodeler and anyone else too you all might find it interesting to
read Michael's
10 Cardinal Rules for Construction Companies. some good stuff there too and
some it confirms some of the good advice I hear here too.
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"Function is based
on more than utilitarian factors. Ambiance invites use."- Sarah Susanka
One of the most effective advertising methods I have used is printed notepads, appx. 5.5"tall and 4.25" wide (1/4 sheet) with my company name, address, phone, email, etc up at the top of each sheet, and a bulleted list of specialties at the bottom. About 25 sheets per pad (glue bound at top) with a cardboard backer. I give them out freely, my last order has been over 2 years ago, and it was 10000 pads. I still have plenty left. Final cost is about .20 per pad, but they keep the business coming in. I give them out to anyone who will take a handfull.
Better than a business card, because at some time or another, whoever you give a pad to will write a note, and give it to someone you would never have had contact with.
Warning, shop around on this....I did, got about 15 quotes....I did 2 color print (black and blue ink) on white 20# paper. I wrote up all the specs (paper weight, colors, number sheets, pad size, pad backer, etc, and faxed to many printers. I paid 2000, for 10,000 which was low bid. Most bids came in about 4000 +/-500, the highest was $92,450.00!!!!!! This was from Kinko's, which stated in their yellow pages ad that they did bound notepads!! I called to check that one, and mgr confirmed the bid.
Mine came from a company in St. Paul, MN called Warehouse Printing. Looks like they may be out of business now, since 411.com has no listing, and the website I had for them, http://www.warehouseprinting.com is now a dead link. I was real happy with the quality, sorry to see they may be gone. Anybody in the area can maybe find if they sold/renamed or whatever?
EDIT:
I just looked at whois, here is the registrant info for http://www.warehouseprinting.com
Anybody wanna play detective?
Registrant:Warehouse Printing (WAREHOUSEPRINTING-DOM) P.O. Box 65553 null US Domain Name: WAREHOUSEPRINTING.COM Administrative Contact: Johnson, Dewey (DJ2807) [email protected] Warehouse Printing P.O. Box 65553 St. Paul,, MN 55165 612-242-8864 (FAX) 612-665-9785 Technical Contact: O'Brien, Dan (DO99) [email protected] ComputerPro Internet 209 W. 1st St, #202 Duluth, MN 55802 US 218-722-4245 218-722-4522 Record expires on 05-Feb-2003. Record created on 04-Feb-1998. Database last updated on 13-Feb-2003 23:38:59 EST. Domain servers in listed order: NS.CPINTERNET.COM 209.240.224.1 NS2.CPINTERNET.COM 209.240.254.1
PB
Edited 2/13/2003 11:41:51 PM ET by ProBozo
Interesting idea Pro. I may just do that ( with my web address on them). It
does look like your old print shop is history but there are tons of them out
there (they let their domain expire and no one does that it seems). What exactly
is it your company does? What were the specialties you had listed along the
bottom?
The best ADVERTISING move I ever did was sending out postcards to
a targeted mailing list that I had developed of neighborhoods I wanted to work
in back in '97 when I first put up my web site. I think both because of the
quality of the card (glossy) and the early novelty of the web at the time i
couldn't handle the leads I got and I think I blew it letting a lot of projects
slide by. I getting set to do that again (with a newer revised logo) but this
time I have a much better set of business systems in place to handle any spike
in qualified leads that we may get.
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"Function is based
on more than utilitarian factors. Ambiance invites use."- Sarah Susanka
The link on cost+ & T+M definatly points out some problems, though to be fair, most of them can be sorted in a decent contract. Arouind here when we do renovation, we just don't know what we're getting into when we start doing structural/plumbing etc with a 100+ old house. As the article points out, cost+ kinda lowballs the client and can lead to over-runs, the other side is contracts that lowball the contractor and he ends up working for free. I know more research into the job would help stop this happening, but if I have to spend 4 + hours making holes in walls and ceillings just to begin the makings of a bid I'm already working for free and also working for the next guy who comes along to make a bid. Finally, there is the issue of "you get what you pay for" .....if you're working and they're paying they're getting the best out of you. if the client doesn't think you're worth it they can hire someone else.
At the base of most business relationships is trust, contracts are an attempt to solidify the trust, but we all know how quickly any contract can go south once one of the parties gets pissy. Given the time and $ almost anyone can litigate me into the ground no matter what the contract says, cost+, T&M, etc... I try to communicate with the client as much as I can re: cost, quality etc...change work orders.
Now that I'm thinking about this it really is true about the misunderstandings possible in cost+, thanks for the heads up, it's good to be aware of the pros and cons of both sides of the issue.
I'll give you props on the 22 reasons. First time I read it got things introspective here, since probably 80% of work was T+M. I still do T&M jobs, but just having that list to look at does help in the avoidance department. More and more has been going to flat rate, and the ones that don't are spelled out clearly enough, no grumbles.
There is a rationale for T&M when the vast majority of things simply can't be estimated. I know, its rare, a good estimator would . . . but there's still times. Investigating every unknown in some cases is basically the same as all the demo work on the job. I'm fortunate enough that on the job I've been on since Jan, T+M was the customers idea, and it's panning out great. It has certainly saved headaches on both ends. I'll still concede that there's strong precedent not to make it a habit." To the noble mind / Rich gifts wax poor when givers prove unkind" - Wm Shakespeare, Hamlet, III,i,100
I wonder how regional the T and M mind set is?
Around here.....most everyone expects a number before ya start. I've worked T and M as a sub for other contractors...but never for a home owner. Portions of a job yes..but never the whole job.
I just say......this X price for X work..and if I find more...it'll be X more.
Maybe that's a hybred.
One thought I have on it....I worked a job as a bath sub..while another guy subbed the kitchen. I bid it. He was working hourly.
We got to talking about the differences.....and while I'd have loved to sub that as hourly...I knew the GC hated having to go hourly on the kitchen...but he was stuck. That guy did a decent job.....but wasn't ever called back..because the GC didn't like the hourly thing. And I couldn't blame him.
The other sub said he'd only work hourly..as how could he ever tell how much time was really needed on a remodel.....
where I asked myself...how could you ever start to think about and bid jobs...if you never HAD to? Without the pressures and learning curve involved with set bid pricing.....if someone agrees to hourly..why give it a second thought?
Knowing full well that half my work is directly thru homeowners....I'd be short changing myself if I tried to work hourly....and not pay attention to time constraints.
I think that guy was short changing himself....because even after 5 or 10 of the same job..he still doesn't have a clue as to how long things really take...as he's never had to track it.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
I do T&M on all jobs, but with a top and bottom ceiling. Contract will state T&M, but minimum job price is X, and the maximum is Y. Of course X is just there to look good, I've never used the bottom ceiling. The max ceiling is very high, maybe 1.5 to 1.7 of what I would have bid outright. So it is very rarely used. HO knows now that remodel project will cost them at least 2000, but no more than 3000. I usually wind up in the middle. All like it.
makes sense...T&M with a range.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Remodeler the health insurance thing really does suck I know because I am
in the midst of shopping around as I design a better benefit system for my
operation. What a jungle. What state are you in?
You mentioned "I have good trade experience, a
GC license & contractor's insurance. I need to investigate a plumbers
license / HVAC license for my state and pass them to do this. Also
would have to find a master electrician to sign off on my work." and
that makes me wonder. Why would you want to do all your own work rather than
subbing out the specialties. If you are going to seriously do plumbing, HVAC,
and electrical in addition to building all the other stuff you will be making
a rather sizable overhead investment in those trades (not to mention the
headaches you will then have with the differing insurance requirement and
qualifications for WC and liability insurance problems. I would really suggest
that you narrow your focus. Remember that if plumbing accounts for only 15%
of your volumes your overhead investment in the trade will be sitting around
idle earning nothing 85% of the time. Same thing for HVAC. Same thing for
electrical.
"I had a business before for about six years and
went bankrupt. It was a mechanical contracting niche business (energy
audit & upgrade) and I understand what happened contributing to that
failure." If you do understand what went wrong there maybe you
should then go back out as a mechanical contractor again. Specialize in that.
Just for the sake of discussion too what do you think it was that went wrong
before? If you tell me your I'll tell you mine (again.... I've already mentioned
my biggest mistake here once before but it always worth reviewing again)
"Also pulling in initial work I'm not sure of. It
seems like word of mouth makes on-going business well, on-going." Don't
trust or rely entirely on word of mouth, there are some real dangers to that.
Supposing the word of mouth is that you are "really inexpensive" or
really affordable"? That's kind of word of mouth you can't afford! Market
yourself and marketing doesn't necessarily mean advertising. What ProBozo
is talking about is really marketing. He's working the group generating his
own word of mouth but remember to keep yourself professional, not personal.
What possible other ways were you already thinking of to get the word out?
"All the talk recently about GC's not returning
phone calls etc. seemed promising for a good business guy, but I'm not a
great salesman." Learn it then! Take the time to learn the basics
of sales and salesmanship for sure (that was my second biggest mistake in
my business career). Funny thing is today I'm known as a really great salesman
and have even sold some projects representing other companies.(If only they
knew my past!). So what kind of estimating system do you have in place or
plan to use?
One last question for you right now. Have you read The
E-Myth Contractor: Why Most Contractors' Businesses Don't Work
and What to Do About It" yet?
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"Function is based
on more than utilitarian factors. Ambiance invites use."- Sarah Susanka
remodeler, I can tell you how to get in the business, but it may not be the business you want. Do small jobs and do them well. There are thousands of them everywhere. Smart customers use small jobs to check you out. Show up when you say, or don't say. We don't tell the next one we're coming 'til we get this one done. We work time and material.
The only time I advertized (over 30 years ago) I got some customers I didn't want. Reference is the best.
Don't figure on hiring new guys and bringing them into people's houses. Find another tradesman to buddy up with.
I don't have health insurance, never have. (Why ruin your health trying to pay for it?) I'm not trying to talk you into not having it, just telling you my perspective.
I think going the plumbing HVAC route isn't going to work well with remodeling. These trades are built on service. The customer isn't going to want you to leave right in the middle of their kitchen remodel.
but what do I know/ Fonzie
it appears to me me quite a bit:O)Half of good living is staying out of bad situations.
The other...proper application of risk.