What are some good books to teach business skills applicable to the construction industry – particularily the renovation industry. My husband and I are getting ready to move on from our sub contract/employee position and so be self employed – “for real” so I refer to it. We are cautioned that the little guy that is a good builder will not make it in this industry and so I am out to sharpen my knowledge. What can you recommend? What are some keys to success? Are there more specific industry standards than all of these crazy variables in how we charge our customers, what percentage we mark things up by, etc.? Where can I get this information? Do these estimating programs guide builders as to what to charge for what? Are there courses that can teach me not about marketing or accounting but about the industry, how it is structured?
Many thanks for any input and advise.
Nicky
Replies
Nicky,
It sounds like you are going to be the "Office" and Your DH will be the "Field." This is an excellent arrangement to insure that your business and you relationship are successes. Or failures. Whichever, they'll be big time.
Estimating; There is the Jeff Buck "That'll Take Abouta" method wherein you look at each part of the job and say "That will take about a day/3 days/ three weeks and price accordingly.
There's the "Sticks and Bricks" method where you try and count each component, price them out and markup you material to see how much you will earn.
There's the "Database" method, most accurate, where you track all details of each job, building a historical knowledge base.
Finally there is the "Marketplace" method, which may get you started but will quickly, or slowly, drive you out of business, if you don't modify it as soon as possible.
For what to charge, search here at BT and over at JLC for PILAO. Think of everything youo must pay for as a business;
Your salary + taxes+sickpay+SSI+UI+vacation+education+medical Insurance+WC++
His Salary as CEO+++++++
his wages as GC++++
same for chief carpenter+++++
and as Salesman++++
Your wages for different hats+++
Employees +++++
All office expenses
All tool costs
Capitol equipment
phones, advertising,gas, etc.
Contingince funds
Profit (for the business, not your pocket.
Figure that for all year. Guess at the Billable Hours the company will be able to charge in a year. His will be around 30/week if he works 60 hour weeks. Yours will be 0 unless you also go to the field. Depending on you practices, even your employees will only generate 30-35 hours/ week Billable, and only 40-45 weeks a year, at that.
You now have total yearly income needed for the biz, and total Billable hours (maybe at different rates) Now you know how much to charge per billable hour.
Sticker shock time. Expect to see something like $50-$100 per hour per man.
In the biz I am starting, I want to take home $36k/year after taxes. With a three man crew I am charging $87.50/ hour.
SamT
"Markup and Profit" by Michael Stone.
Also check out his thread in the JLC bulletin board. Invaluable info on the business aspects of construction.
Cliff
I'll throw in a vote for "Markup and Profit" by Michael Stone. I'll also recommend "Contractor's Legal Aid Kit" by Gary Ransone and "The E Myth Contractor" by Michael E. Gerber.
More good reading would be last month's "Remodeler" magazine, the cover story was "Closed for Business". It chronicled, in detail, what led to the downfall of 5 seemingly well established contractor's and their companies.
Another thing that has really helped me, was sitting down for an informal discussion with my business insurance agent. After about 6 months of being in business I came to the conclusion that I really didn't know how much I was making or if I was charging too much or too little. Some jobs I scored big on and others I seemed to be barely making wages. Part of what I did to figure out what was going on was this sit down. I carefully read through my policies and made a list of questions up for my agent. He was great and really explained all the ins and outs. He's got 27 years in insuring contractors. He's seen it all. He was good about telling me what has worked for some guys and what he's seen kill others. You might already have a good grasp on how your insurance policies effect your pricing, but I didn't. I thought I did....but now I actually do.
I've kept rediculously accurate daily job logs detailing who worked. What got done. What should have got done but didn't. And what got done that I didn't figure was possible to do in a day. This has made estimating much easier and if I keep at it, will continue to help my business immensely.
Absolute best possible advice I could possibly give you is this... stick around here as much as possible. Read everything you can. Ask as many questions as you think you may need answers to. The only dumb question is one you didn't ask.
Hope this helps. Jump in! (the water's warm) ;)
Craftsman publishing and "means" estimation books with c-d's you will have a world of at least 1/2 way pallatable examples for estimation comparisons... In fact... drag out your own boxes of past estimates and re-judge them for your business plan... ( put together your cost & overhead and all other variables ) find your real BUISINESS PLAN...
Scribe once, cut once!
Nicky,
There is no single book that will show you what to do. The best overview/outline is "Running a Successful Construction Business" by Dave Gerstel. Available off Taunton's website. In the back of the book is a list of further resources.
Other books and resources I have found usefull:
1. Journal of Light Construction CD of all their back issues. Take time each day and read all the business related articles. (This will take weeks or months to do). Note any articles you may think you will need in the future. There is a series of articles written by a husband and wife team that do renovations. (March '97 is one of the articles). Also read all the columns and articles by Paul Eldrenkamp.
2. Another vote for "Markup and Profit". I don't completely agree with the author, but I love the attitude he writes with. order it from http://www.craftsman-book.com.
3. Another vote for "Contractors Legal Kit". It is an eye opening read about the legal issues you will face. available from JLC
4. "Smart Business For Contractors" again from Taunton. Thisbook is a more detailed overview of financial and legal concerns of the construction industry. Written by a lawyer, it is pretty dry reading, but usefull information.
5. Another vote for E-myth Contractor. However, read "The E-myth Revisited" first and "Contractor" will make more sense. The first chapter of Contractor is on the E-myth website. It tells about a guy going on his own, growing the business, then going bankrupt. http://www.e-myth.com
6. In the sales department I like "How to Master The Art of Selling" by Tom Hopkins, and "Secrets of Closing The Sale" by Zig Ziglar. Both of these books give examples and phrases to use, and when to use them. These techniques are not just for selling to customers, they help when dealing with anybody. Note that these books are not written for the construction industry, but the tips and techniques are universal.
7. Also brush up on your people skills. After reading your other thread, your hubby is allowing himself to be stepped on. If he is not able to handle this one GC, how will he handle multiple GC's,inspectors, suppliers, bankers, etc. Realize that part of business is being able to tell someone to go to heII, in such a way that they look forward to the trip. Try the book "How to Win Friends and Influence People" by Dale Carnegie. Probably at you local library. Also your local Community College or Tech school may have courses on Human Relations, Assertiveness, or Goals, or something like that.
Deiselpig referenced the article about "Closed for Business". There is a link to it in the "Bankruptcy" thread.
NAHB has an online bookstore at http://www.builderbooks.com .Looks to be many interesting titles.
Two other keys to success are motivation and self-discipline. Best defined as "doing what you need to do, whether you want to do it or not."
As far as courses are concerned, the only ones I know about are available thru the NAHB. I took the Introduction To Business Management course. It was primarily an overview, with way to much information being stuffed into a 1 day course. In talking with some of the other participants, it seems the amount of info offered should have been spread over 3 days. I think the best part of it was networking with other builders at breaks and at lunch.
Good Luck with it all,
Bowz
Thanks for the tips.
Nicky
All of the above is VERY good advice. I also took a "How to Start and Run a Business" course from a local Credit Union that sharpened my office skills and gave me a clear direction. Just writing a good business plan is also a good way to know EXACTLY what you want to build. Don't take the attitude that you'll take any job that comes along, find you niche and get good at it. A successful business is about 50% doing the work and 50% managing capital.
Good luck,
Norse