Place I used to work for…
and used to sub for .. is one step closer to folding.
The best crew … just out of framing a whole house remodel … all got laid off today.
The company is keeping one lead … the one making the least hourly … and the lowest paid helper … to finish this and a few more jobs.
So here’s my thought ….. I know this guy still has a ton of jobs lined up.
Company has a bad name with the current customers .. they can see the writing on the wall … but still have a good name with those looking in from the outside.
If the outstanding jobs were bid right …. and money could be made thru the construction….
My plan is to offer some $ amount to the owner … to “buy” the jobs that are lined up and waiting.
Do ya think this can be done?
I think fair would be to “pay” for their advertising and marketing that snaged the customers … the time that was spent working with the customers … definitely for the design time …..
Basically all the “up front” leg and office work.
I could get my hands on some money by cashing in one of our 401K/IRA’s …
have one that can’t be rolled over tax free … gonna take some sorta hit no matter what happend to it … so an “invertment” like this just may work.
Anyone ever hear of such a deal?
Not buying a company but buying their signed contracts?
Left a message for the owner today … we’ll see if he calls back ….
Just said let’s try to make this profitable for the both of us …
I’m pretty sure he’d sell the whole company …
But I can’t afford and don’t want that.
And if he does call back interrested … goes without saying the next call is to the accountant and lawyer ….
Jeff
Buck Construction Pittsburgh,PA
Artistry in Carpentry
Replies
If you cash a 401 before retirement age you going to lose almost 75% in taxes and penaties
The best employee you can have but you wouldn't want him as a neighbor " He the shifty type"
I don't know if this is available to the self-employed, but I can borrow from my 401K, and pay it back (with interest, accruing to me). It's not a bad deal, particularly if you can make more with that money outside the 401K than the market is currently paying.Andy Engel, The Former Accidental Moderator
If it turns out that these contracts are assignable, and if the builder files for bankruptcy, I think there's a very good chance that the contracts would be considered part of the bankruptcy estate, and he would no longer be able to dispose of them on his terms. Even if the bankruptcy court or trustee did see the wisdom of selling them on the same terms the builder would have, they might not be able to do it in a timely manner. You don't want to rush into anything, but if you really think he's going under, you don't want to dawdle, either.
Very good point about the status of the contracts in bankruptcy. Even without that issue I'd try to do this on a referral/commission basis. The clients are referred to you and sign your contract. The GC is paid a referral fee of some sort once the contract is signed. I assume he would want a set amount rather than a % commission since he doesn't know what you'll make on the job, and you don't necessarily want to have to open your books to him anyway. Maybe 1-2% is what I'm thinking... a couple of grand to hand you a $100K job sounds about right...?
Jeff, HE has a contract with his name on it. I don't think it's a saleable item unless the client agrees to use you instead of the original guy.
If he had bid the jobs right maybe he'd still be in business?
Whatever you are willing to pay is more than zero, which is what he has now, so I wouldn't offer much. And until the client agrees to transfer the contract to you, pay nothing.
People doing business with Buck Construction sign a contract with you. If somebody else showed up to start the job, what would they say?
Joe H
That's understood ... only works if everyone sits down and re-agree's to things.
Unless a lawyer could come up with some "sub .. but the client pays me" ... kinda deal?
At this point in time ... I'd not even sub for the guy ... no money is a bad thing.
If he's going to file bankrupt ... he'd have to notify them anyway ...
So I'm thinking given the option of their contractor going bankrupt ... and getting their dream remodel completed .... at least some of them would be willing.
Complicated though.
This will be interresting if he calls back.
JeffBuck Construction Pittsburgh,PA
Artistry in Carpentry
It's definitely worth persuing, the jobs are waiting. Here they'd be at the back of the line waiting for someone to come talk to them about a bid.........They might jump at the chance to get it done as scheduled.
Joe
This could be a great deal. Rather than pay him up front maybe you could pay him a comission on every job he can get to sign with you. This could be payable at the time of the first draw etc. so that you don't need to come up with any cash right now.
I'd scrutinize his bids to make sure these jobs are priced to be profitable. DW works for a company that is teetering on bankruptcy ( has been for a while ) and one of the problems is that the partner who did the estimating was bidding work cheap just to keep volume up during the last couple years. His judgement was a little clouded by booze, drugs and cheap women ............
Jeff,
I think the idea is great. I would be tempted to first talk to him about doing the jobs and paying him part of the profit. Say 20% of net at the end of the job. If he needs cash up front then maybe something else could be worked out but my theory is to always make the first offer totally in my favor and work from there. I suspect your approach is similar.
And I liked the post above that said he would be paid at the first draw. Again keeps you from having to come up with out of the pocket money.
What about all the help he is laying off? Anyone their you know, feel comfortable with and can sub some of this work too? If you are going to need help anyway nice to hire someone you know. Let us know what happens. DanT
Jeff, I tell/ask him, "If, it would help you out in any way, you can/could refer some of your work to me." A couple of things that come to my mind is , 1- waiting clients will/may think, that exsisting GC cares enough about them to refer a Quality builder- thats you. 2- gives exsisting GC a somewhat "honorable/feelgood" out. 3- No way would I offer any cash, to hard for me to come by, even if it wasn't hard to come by, still no cash. 4- Your phone is about to ring= more work. Whatever you decide to do, I wish you the best. Jim J
Jeff,
I would also think about whether or not any of the clients paid money to this builder when he signed contracts with them and what happened to it.
Vince Carbone
Why is this guy going broke?
Is it because his contracts are not profitable or some other reason like too high overhead?
I would offer him a sales commission/finders fee for taking me to his customers and explaining that he was going out of biz and introducing me and then I would make an appointment to sell the clients without him present.
SamT
I have a good idea just why things are going down the tubes.
I was an employee there for a year ... plus I've subbed a ton of work from them in the past. I don't wanna get too personal here ... but I have a good handle on what went wrong. It's a number of factors.
Someone mentioned the laid off guys ... and whether or not I now them well ...
Got the first call from my helper ... he worked form them FT M-F days ...
and was working for me a coupla evenings a week as well as every Sat for the last 2 months.
The lead carp they let go is one of my better friends as well. As a matter of fact ... he was the first guy I asked to partner with me when I was first laid off. He wanted to stick around to the bitter end ... he saw the hand writting ... but he had 8 yrs in ... so his instincts told him to ride it out and see what happened.
So .... to complete any jobs ... I have a complete ... very qualified ... crew that I could either hire as employees ... or most likely sub ... or even arrange a partnership with.
Just spoke with my buddy, the lead, today. He's gonna take his time and chack his options ... but the last thing he said was... He's not so sure he wants to work for anyone anymore!
"No-Job security" will do that to ya!
I told him it's about time he took the plunge.
He's actually one of the guys I'd bring in to help me run thru the numbers to see if the contract prices are realistic. He knows their jobs inside and out.
Got an email reply from the owner ...
we're going to try to set up a casual meeting sometime in the next 2 weeks.
This could get exciting.
JeffBuck Construction Pittsburgh,PA
Artistry in Carpentry
I think ideally I would do your own estimates before you even see theirs. If you look at theirs first to see if it works, you might talk yourself into it. That's what I would do... I'd be sitting there going, yeah, well, I can do it for that, that looks OK, making myself very optimistic because I want the work. Better to come up with your own independent figure first.
Don't cash the IRA and don't pay up front. Make his success in getting a dime outta them contingent on your success is getting them under contract. I can foresee a horror story where you hand him cash and then find out in a week or three that someone else got the contracts or he started a different company and transferred the contracts to there or something equally unpleasant.
BTW ....
He contacted me once with a short email ....
said he would call "first of the week" to set up a meeting ....
Never called .... I left a detailed message about my proposal ....
on the company ans machine ....
before I found out he filed bankrupt and cleaned out the office ....
Probably never even herad the second message.
Oh well ... wasn't meant to be.
Jeff
Buck Construction Pittsburgh,PA
Artistry in Carpentry
jeff, sorry to hear the ending... on to the next big adventure !Mike Smith Rhode Island : Design / Build / Repair / Restore
You're probably better off Jeff. It didn't have the right feel, to me anyway.Vince Carbone