I got a call from my chiropractor the other day. I have done a lot of work for them in the 3 years I’ve known them, just finished up two outside islands for their new patio. In January-February I did a large remodel on some new office space for them, needing more room you know. I took care of the carpentry, drywall , and he took care of the plumbing, electrical, sprinklers. They had to have their own painter, instead of mine. Man, were they sorry about that one.
On Monday I went in to their office to get paid for the island job, and they said they have this new project for me, do I have anything else coming up. I said sure, what are we talking about here? I have a basement and some remodeling structural work is the works right now, but let’s talk.
They tell me they are getting a new space for their offices, 3 times more space than they have now. They tell me that they want me to do the work, so they can focus on the business, not on the remodel. We’re talking about 8000 sq ft of space for treatment, x-ray, physical therapy, media rooms, etc.
I say “Sure I can do the work, I know plenty of good guys to do this with.” I can do anything, or I know someone who can. This looks like more of a general contracting job than I’ve ever done before. I am getting better on bidding the work itself, even though it’s metal studs, drop ceilings, soffits etc. I’ve spent most of my career as a wood framer, but learning more and more commercial stuff as time goes by. I guess I’m not sure how to get paid for the “not getting dirty ” part of the job. The phone calls late at night, and on weekends. Taking care of the other trades, not just my own guys anymore.
I’m feeliing a little nervous, scared, but excited at the same time. We’re just getting buy over the last year since getting laid off from the framing company I’ve been with for 12 years. I wonder what to do next. Most of the guys I read about here have already been doing this for a long time. I learn alot from this site, just like at a real-life jobsite I used to work on.
Any thoughts, or advice would be appreciated. Thanks in advance.
Replies
I'm on the other side of the equation, I am the owner's rep and i hire the gc. get a set of plans, stamped by an architect. get bids from all the various subs, select the ones you 1: are comfortable with, 2: have the best price. Add a perce3ntage for overhead, and a percentage for profit. Don't do any of the work, just manage the subs. it will be a full time job. I am used to paying 15% overhead + 10% profit, plus reimbursement for permits and fees (sewer tap, etc)
"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
That 15% overhead, who shows you what numbers?http://www.tvwsolar.com
Now I wish I could give Brother Bill his great thrill
I would set him in chains at the top of the hill
Then send out for some pillars and Cecil B. DeMille
He could die happily ever after"
Usually we don't see the numbers, until a change order, then we see the sub's invoice and the gc markup."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
so it's 25% markup? I don't think I'm following.http://www.tvwsolar.com
Now I wish I could give Brother Bill his great thrill
I would set him in chains at the top of the hill
Then send out for some pillars and Cecil B. DeMille
He could die happily ever after"
purple....
here's some tried, but trues...
risk = reward
work like an optimist but bid like a pesimist
as a GC, you own it all.... if a sub doesn't perform , you still own it and have to make it good
now... do you know your numbers ? pull out your 1040 and look at schedule C
thay's a good place to start
there are a whole list of deductible categories... wether you use those deductions or not....you should be operating your buiness as if you had to cover that overhead
most successful remodelers mark uo 50% to 67% ( ie: Cost x 1.5 or Cost times 1.67 )
part of your costs are in-house Labor Burden... a typical burden will be 1.5 (50% ) to 1.6 (60% )Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Mike, I'm trying to get a handle on the remodeling thing, since that's where most of my inquiries are coming from now.In new work, I don't mark up subs per say. I figure the job cost, including overhead, how long it's going to take, and how much I want to make for that time. Profit seems to come out about 12-17%, if I'm lucky.So say on a $350,000 job (cost) that takes 10 months, that's about $50,000. I am also part of my sub cost, since I'm doing some of the work. It comes out a little less than your numbers, but fairly close. Remodeling seems to be more work on me, especially herding the subs. Lot more clean up time, being careful time, and certainly more schmoozing. Figuring out the time part of remodeling is the hardest thing for me. Whaddya do when the HO specs an Elkay drop-in sink , then sees a Rohl farm sink in a magazine and has to have it... and it's 3 to four weeks out?I gotta learn to sell the value, oy.http://www.tvwsolar.com
Now I wish I could give Brother Bill his great thrill
I would set him in chains at the top of the hill
Then send out for some pillars and Cecil B. DeMille
He could die happily ever after"
Mike,
I feel like the professor is talking personally to me, thanks for the reply. I haven't had a business tax return yet. All of my income to this point has just been 1099 from other guys, or paid cash. I've never been big enough to get into all the official stuff. I've been feeling convicted this year to get insurance, start a "real" business. People want to hear that their carpenter is licensed and insured, but then they talk about how much it costs when you have to charge to cover all that stuff. I have always hesitated to get all in, wondering if I would be able to get enough work to cover the increase in cost to me. Now, since being let go from the company I've worked for all those years, I have been thinking I could make a go doing all the things a large framing company can't do.
I know that I need to talk to an insurance guy about general liability. I wonder where do I go next, to a lawyer, or an accountant? This is all very basic to you guys on this board, I know. I appreciate your input.
well... download a 1040 schedule C and take a look at it
it's like taking a primer course in business....
Sole proprietor would use a schedule C
if you decide to jump in , you should probably think about LLC or "S-Corp"
we became an "S-Corp" about '98 after being a sole Prop since '75
Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
You've presented your question well and received several excellent answers. Makes me wish that I'd had a group like this to call on, back when I went out on my own.
Of course, everyone's experience is different, according to many factors but no matter what, I would've been much better off financially if I'd gotten advice like Mike Smith has given you.
The only thing I'll add is that the chiropractic field has expanded greatly in the last few years, in the same way that your client is contemplating. There are now machines which do amazing things...for a price.
I have a chiropractor friend, someone I've known from cycling for six years or more, who gave up manipulating by hand completely and has focused on two machines as his entire practice. The course of treatment, as I recall, is $10K or more, over several months but it's something that a trained technician can handle.
As I was riding my bike down the street the other day, about 3PM, he went past in his new BMW, honking the horn and waving. I didn't recognize him at first because the car was so impressive, one of the bigger models and very shiny.
You have the good fortune of being on the inside track for this job, due to your own efforts on behalf of this client. It's a very fine opportunity to see some serious profits. From my experience, I'd suggest that you make the best use of it.
You are right about the way me about the chiropractic field changes. They tell me about new things they are going to start doing every time I go in.
When they told me about the new offfice, they told me that they want me to do the job, they weren't looking for anyone else. They have been very pleased with all of the projects we've done together. Last time they never even asked how much the job would cost. I got started before we even had a bid done. I know that was dumb, but I knew they would take care of me. That's when you wonder if you left money on the table. I want to make a good living, give them a fair price, and have everyone go away pleased. How do I go about making the most of this situation? I would welcome your suggestions. Dennis
Having tried to make money in construction (as opposed to just earning a living) for a several decades, my basic philosophy now is to make hay while the sun shines.
There will be more than enough lean times, along the way, to make you wish that you had maximized your profits when you were able, instead of giving someone a "friendly" discount, when you were already hired.
Giving a client a five percent discount is really giving them twenty-five percent, or more, of your income. That's a simple fact about gross vs net that's hard for some guys to grasp, or to remember at crucial times. So leave plenty of room for contingences.
Others who have answered your question are far better qualified to give you a basic course in business accounting; what to include in a bid and what percentage of profit to add.
As I said before, if you listen to Mike Smith, you won't go wrong.
good point about discounts.... same thing with errors
discounts and mistakes go right to the bottom line
very hard to make upMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
A major deal when dealing with these type spaces is the location and specifications for equipment.
Installers for that stuff are often a special trade, they have very specific needs in terms of power/water supply, outlet location, switches, equipt. location etc.
Make your self have everybody provide submittals drawing that have all the specifications on them , review the submittals with owners. Then follow (or have the other subs follow ) what is given as needed in the submittals to a "T".
I made the leap to specialized commercial work and that was one of my biggest hurdles and learning curves. There is simply less room for corrective measures when dealing with doctors offices than with residential .
You are right about dimensions, and placement being critical. The x-ray room had lead lined drywall, and man was that stuff expensive, and heavy!! That room had three layers of 5/8" on the walls where there wasn't any lead. Very different from residential where you can just move something, or change a room size and nobody will know. It's a whole different set of problems, but that is the kind of thing I'm good at, doing the hard parts, and solving problems (opportunities). I really love my job, I just want to make some real money with the business, not just wages. Thanks guys.
Dennis