Hopefully this does not degenrate and end up in the Tavern.
Some responses to Jim’s thread about loving the roofing business got me thinking. Then today I was out taking a ride on my motorcycle and pondering how much more swiftly it responds to input than the 800 Pound Harley did…………………………as well as pondering my need for a Titanium Akropvic exhaust system………………When I rode by row upon row of Townhouses with back doors blocked and just ledger boards nailed in place of where a deck should/will go.
Anyway, my wife and I always talk about opportunities, simply because one day I will retire from the Army but still need to make a living. I joke about handing out stickers to kids at walmart or selling Harleys.but the truth is I’ll probably go back to work for myself.
TODAY….I saw opportunity.
Only a few different plans/conditions to work off of, “Standard Townhouse” size, close to home and close together.
SO I see it this way.
I can advertise/market, do the selling, pull the permits, schedule the jobs, provide/arrange for delivery of material, supervise the work.
But my question is this. I have at least two friends at rock bottom. No where to go but up. Both do good work and can be trusted. I can do the work myself, but have no desire
If I present to them the plans and have them give me THEIR price to do the work, I add on to that my costs, overhead and profit, land the jobs, manage the jobs, pay the subs WHEN THEY FINISH regardless of when I collect the money?
Is that an ethical business model that is fair to the trades and supports a way of life?????????????????????????????
That is EXACTLY what I’m going to do……………but I’m trying to understand a certain mindset.
Replies
Robert,
I think its a fine idea. I do that now with some of my friends. I have the license, insurance, exposure, etc. I assume all the risk. They tell me how much they want, I add a percentage and it works!
We just need more opportunites and more folks to callbuy to make it work even better.
Good luck!
Mike
Sounds like a good plan, but why do your friends need you as another layer of management and overhead?
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Sounds like a good plan, but why do your friends need you as another layer of management and overhead?
Both are very talented. Neither has ever been successful at selling or marketing on their own. Neither has had much luck with actually managing a project or projects.
Also. neither is in the position right now to do much but work and get paid.
A lot was lost in the translation from Jim's thread.....................SO many subs are subs because of their own short comings, not because they have been taken advantage of.
I kept records of almost every job I did when I worked for myself. Looking back. I made money when I worked on the job. I made money when I managed the job as a GC................................I lost money when I tried to do both at the same time.
Only part I have a problem with is part of the the statement: "SO many subs are subs because of their own short comings,..."
and my problem is one of semantics. Why label their decisions as being based on short comings? I believe that many simply aren't interested and are wise enough ( which last time I looked wasn't a shortcoming) to not go there.
Use of the term "short comings" automatically sets off images of "capable of being responsible " tiers in my mind.
Do those who have no recognizable music/art talent have "short comings" that cause it? Like I said just semantics but it bugs me.
They can't get your Goat if you don't tell them where it is hidden.
Maybe "shortcomings" has a deragatory tone to it............................
But the truth is that many subs are very good at what they do.
There is also a defining quality that sets the two groups apart.
When I installed stair rails....I sub'd from three or four different shops at any one time. I also did my own work.
What I learned from that was....when it came to framing or trimming I had the ability to work with the customer, be it the homeowner or the builder or designer and make things work out.
But when it came to replacement stair rails.......and the yuppie couple couldn't decide between "baluster a" and "baluster b"? And a 45 minute debate ensued while the husband and wife paraded the balusters around and held them next to pieces of furniture in the room......................I DO NOT of the capacity to deal with that sort of nonsense!!!!!!!!!!!!!!!!!
And that was very much MY SHORTCOMING.................it also meant that I sub'd from the guy who did have tyhe ability to deal with that nonsense and he got to make a few bucks off of my shortcoming
when it came to replacement stair rails.......and the yuppie couple couldn't decide between "baluster a" and "baluster b"? And a 45 minute debate ensued while the husband and wife paraded the balusters around and held them next to pieces of furniture in the room......................I DO NOT of the capacity to deal with that sort of nonsense!!!!!!!!!!!!!!!!!
hahaha. Classic! The stuff we have to put up with!View Image bakersfieldremodel.com
it also meant that I sub'd from the guy who did have tyhe ability to deal with that nonsense and he got to make a few bucks off of my shortcoming
Thats the synergy I talked about in another thread. It makes perfect sense. I did the same thing when I chose to eliminate the retail customers from my life and only work for builders.
The only glitch I see is that you are employing/hiring "friends".
My big question is this: what part of your plan do you think "might" be unethical?
I've been in business with both before. no worries there.
As for the unethical part? That's why I'm asking. I'm more looking to understand a mindset. The one that says that by doing as I'm GOING to do I am somehow taking unfair advantage of the sub.
There seem to be two different mindsets..................the one that displays disdain for anyone that isn't actually doing the work themselves. And the one that thinks anyone who hasn't figured out that you have to run it as a business and step back from the work and run it as a business is foolish.
I know two guys that might have a problem. Marx and Engels.
I'm not saying there won't be ethical questions. What happens if your buddy badly underestimates a job? What happens if the customer tells your buddy she also needs a deck at the lake house? What happens if the neighbor across the street asks him to build her deck too? What happens if your buddy learns what the customers are paying and starts "working backwards" in his bids, cutting way into your margin?
There is no way to be absolutley sure that those who get work from you won't fish in your pond.
All you can do is protect your designs and business name.
As for underbidding. Like I told someone else here. I learned a long time ago that you never really gain from accepting a bid you know is grossly short, not in the long run anyway. It's in your best interest to ensure that your subs are happy.
I have a faiur idea of how long it would take me to do the work, as well as how long they would usually need.
It's not worth it to me to accept short bids...and I guess if that comes up I would have to have aheart to hearty discussion about it....................with the short bidder.
As for fishing in my pond? The work is very much right there out in the open. We all go by it on a regular basis. But the guys I have in mind, for some reason shy away from putting the deal together. I suspect maybe costs.
"I know two guys that might have a problem. Marx and Engels."
And if you read any of his recent encyclicals you might want to add the Pope.
Absolutely nothing unethical about this. This is how most business models work. Some one gets the reward for forming the organization,performing sales,administration, return on investment etc. Not only is there no shame in profit, it's what keeps things alive.
Look at it this way. YOU are offering an oppertunitty to your freinds that for whatever reason they don't have. It sounds like they need it while at the monent you don't. How is that unethical? IF you give them work, pay them a price they agree too, take away all the hassle & greif associated with trunning a business, how are you taking unfair advantage?"this dog may be old but he ain't cold. And he still knows how to bury a bone."
Lattimore
http://www.rehmodeling.com
If there are only those two choices of mindsets, then I can't post in here because I'm not buying either one of them.
So, getting back to the point...I guess you are thinking that you might be unethical for accepting bids from someone with free will and free choice?!!! I wouldn't fret that so you can slot me anywhere in your two choices LOL.
We all have different ideas about how much money is important to us and if you apply your money thinking to someone eles's situation, then you are creating a false reality.
I think your bigger dilema is: how do you guarantee that you will be able to sustain your level of service if you start your business with guys that are giving below market rates? For instance, Haz has talked about guys doing roofing for $30 per square. That number is substantially below the rates we are paying. If someone suddenly showed up in my office and offered to do roofs at $30 per square, should I set up a business model based on that? Should I put out ten, fifteen or fifty proposals based on $30 per square? What happens when the guys wake up and find out that they are working substantially under market rates? What happens when they fold their business and take a job at Home Depot? Wouldn't I lose money on those fifty jobs that I've bid?
To answer your question directly: no, it's not unethical to pay a sub what they ask.
Heres a question back at you. Is it unethical to hire someone on salary and then ask them to work more than forty hours unpaid? Millions of white collar workers do that every day.
I'm with Blue 100% on this one.
In the other thread, guys are being crucified because, God forbid, they're making a profit on *GASP* someone else's labor. For shame.
That's the basis of business. Period.
I would second Jim's point as to underpricing, however. While they may be friends now, 1) if they find out what their work is "retailing" at, it may cause (unfounded) ill feelings. 2) Bottom line, if they walk, you have to be in a position to have someone else finish what they started, for the same price if you're locked into a fixed bid or selling price......
I look at the "low bidding" question the same as a lot of guys have mentioned....Assuming that the sub has comp, pays taxes, etc......Look at it this way....If you know that he tries to return $85 per man hour, bids a job at $8500, and does it in 70 hours, would you expect a rebate? No. Ditto if he needs $85 per man hour and it takes him 120 hours. Tough ####. It's called being in business, if you want a guaranteed $ amount per week, per hour, whatever, GO WORK FOR SOMEONE!!!
This reminds me of the twit with the roof job that couldn't believe that people do fixed bids on roofs, regardless of material over/underages. Please.
Never feel guilty by making money on someone elses back....If the job goes great, and you feel that someone porked themself....Kick em a bonus as a thank you. I did a lot of sub roofing for a period, working by myself for the most part. I didn't feel guilty doing raised ranches for $60 a square that I did in 6 hours and made better than $100 an hour any more than the GC felt guilty for paying me $60 a square for 50 square on a chopped up 12/12 pitch that I returned $30 dollars an hour. It balances out in the end. I know that I should have been getting more than the $60 per square on the tough ones....That's how I learned that point.
Hope this helps
Bing
Your friends do good work.
Do they do good estimating?
Is it ethical to accept their too low estimate?
Em Ah tawking out my a**, Sarge?
SamT
A Pragmatic Classical Liberal, aka Libertarian.
I'm always right!
Except when I'm not.
Do they do good estimating?
Is it ethical to accept their too low estimate?
Both have a solid idea of how long something should take. SO for the purpose of just estimating labor? Yes.
Something I learned from my father.............you never really benefit from a using a sub's bid if they have bid themselves to close or even below their costs.
MAkes for a bad relationship, cut corners and hurts YOUR reputation, not the subs
I don't think you can categorize a business model as "good" or "bad" based on the information you provided. You have to find a model that works for you, in your locale. While your oversimplified description sounds good on paper, the real world, with its myriads of unforeseen contingencies, will determine if it will work or not.
I would caution, as others have, to get a few other bids, in case your workers bail you'll have a backup.
Yahoo had a story today about starting a new business. http://smallbusinessanswers.yahoo.com/overrated While not addressing the contracting business per se, it had some good points that apply in principle.
One quote from the story worth repeating: Many (new business owners) struggle with time management problems, spending so much time scouting work that it's very difficult to earn steady income. "The difficulty many face is they go through peaks and valleys of having work," says Prof. Ceru. "When the engagement ends, they are frantically looking for work," which may take weeks or months.
A possible solution: "A successful (new business) needs people to find the work, grind out the work and mind the work. Unless you know you can do all three yourself, you potentially expose your business to great risk."
A possible solution: "A successful (new business) needs people to find the work, grind out the work and mind the work. Unless you know you can do all three yourself, you potentially expose your business to great risk."That's good, Huck.Find
Grind
MindI guess a shortcut would be to do the one you excel atand sub the rest. not a bad business model
Nothing wrong with your mindset or ethics.
Do make it clear with your friends/subs that the customers are your customers, not theirs. You solicited the job, sold the job and any other potential work to come from that relationship is yours first.
They are not to discuss any business matters with the customers. They should immediately and always refer the customers to you.
Lay it out at the beginning of the business relationship with your friends so that there no questions later. It will help keep their ethics in line with your business relationship.
Might be worth investing in some yard signs to put in the front and backyards so that neighbors taking a look can get your contact info from the signs and not your subs.