I’ve recenetly started thinking about going on my own , but am not positive I have the knowledge needed. I’m in my late 20’s and have six years under my belt , for those veterans , how sure of your self do you need to be . some guys tell me to do it when your younger , before kids come . any guidence would be greatly appriciated.
kman
Replies
Need more information. Do you have a business degree?
Tim Mooney
or how solo does he want to go...
Life is not a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaiming
WOW!!! What a Ride!
no, I don't but I've been a sub for two years now, so i've got my tax id and an accountant takes care of that end . not that it's that much , but I wasn't worried about the bussiness end , it's getting the buss. and keeping it coming. I also don't want to be a handyman carpenter for ever. I know I'm not going to get the big jobs at first but would like to know that some day they'll come.
did it after kids, just how it worked out
had a good supportive wife that when times were tough, her job kept us fed. mortgage was low, biz insurance was cheap.
keeping work coming in, thats the trick even when your established, and all the time on bids, contracts, look sees, and still have time for work and family. hard
advertise, ( however I think yellow pages are going down hill) keep a clean act, keep everyone happy, dont burn bridges, dont step on toes
Me, I Had others encouriging me to go solo, including my boss ( and we are still friends sending work back and forth)
( hey from my other thread, maybe he was just trying to get rid of me, actually we traveled a lot , gone days ata time and I had a farm and two kids in elementry school so a travling job did not work for me)
Isamemon I'm just asking because I think it helps us all learn something but when you say "had a good supportive wife that when times were tough, her job kept us fed. mortgage was low, biz insurance was cheap." was your business a drain on the family economy when you started.
I wasn't married in my late twenties when I first started out for the first time (and heck I still not married today but I guess that's a whole other topic) but I am sure if was married at the time I would be divorced today. I know the financial maelstrom that was my business back then sucked the life right out of the relationship I had with my girlfriend at the time and was also burden on the family I grew up a part of. I was this hot shot carpentry and painting talent (that's illustrative painting as in murals and faux effects) but I didn't know squat about running a business or pricing jobs. I sure thought I did but it took some real hard lessons to learn my lesson(s).
Even when I thought I was learning how to do things correctly (I took a seminar taught by Walt Stoeppelwerth on Markup) I still got in trouble because while I was using numbers for markup that I picked up in that seminar I didn't really learn or understand the underlying concepts and got caught in a trap of my own making because of that naivet'e. Sticking with the flawed Traditional Estimated Total Volume Based Markup that I learned from Walt Stoeppelwerth I got burned when my work we were doing shifted to labor only installations of architectural woodwork and a year later I found myself hundreds of thousands of dollars in the hole. (That's why I am such an ardent proponent and preacher of what I've been calling the PROOF-Differential-Labor Based-Schedule Based Markup methodology.) The recession that followed the Black Monday Stock Market crash of 89 certainly contributed to the problem I was facing when my clients became slow to pay their bills but my lack of financial concern and education did nothing to stem the problem and I think in retrospect was probably at least half the problem.
"keeping work coming in, thats the trick even when your established, ..." I don't think that's really a solution at all. I still had had tons of work coming in back then (leads and contracts) but because I really didn't know everything I should about financial management they weren't profitable jobs and having all that work coming in was just building my coffin faster. If you aren't making any profit on your work you aren't ever going to make it up on volume. Geez isn't that the dumbest thing I ever thought or still hear contractors think and say today.
I say minimize your thinking about volume and maximize your thinking about making every job profitable and you will make it. Unfortunately reading Kman post it sounds to me like he is thinking volume is the answer (Kman- "...it's getting the buss. and keeping it coming") and isn't really thinking about how he is going to make sure what he's doing is profitable.
"Me, I Had others encouriging me to go solo, including my boss ( and we are still friends sending work back and forth)" So I'm wondering really why do you think he was encouraging you to so off solo? I know a lot of contractors who do that because they just don't want the responsibility or costs of having employees. They think having solo operators as subs is a cheaper option in that they then aren't on the hook for all the variable overhead costs that are associated with having employees such as Workers Comp and the like. But then again they also don't want to pay the real rates that a real genuine subcontracting operation would charge them. They don't want subcontractors. They just want independent contractors as temporary employees. Was the case with your old boss? Or anything like that?
"
( hey from my other thread, maybe he was just trying to get rid of me, actually we traveled a lot , gone days ata time and I had a farm and two kids in elementry school so a travling job did not work for me)" What was the other thread? If you can direct me to it I'd like to read it.
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" but I wasn't worried about the bussiness end ,"
Most arent in the beginning.
No one can answer your question unless they had all the information. Looks like you dont have all of it yourself.
Tim Mooney
I say jump in ...
you never know if you're gonna fail till ya do ... sometimes even then ya don't know ...
besides ... you can always go back. One good thing about this profession ....
giving it a shot and backing off isn't really looked down on ...
one thing you wrote caught my eye though ...
" I also don't want to be a handyman carpenter for ever"
is this what you are doing now? If so ... and you haven't done much other work ... how do you plan to have the knowledge and skills it takes to move on ... plus ... convince potential customers that you can do their more involved work?
If that is the case ... I'd suggest moving on to a company that does the type of work you'd eventially like to pursue on your own ... work for them a coupla years ....
then take the dive.
"high end" customers are much more educated about their projects than the average "handyman" customer. You gotta be on top of your game or they'll eat ya alive ...
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
no , I've been doing big remodels and new construction since I started but I figure I'll be looking at smaller jobs when I first start like roofs , doors , windows.
in that case ...
just try it.
whadda ya got to lose?
just don't take on any debt trying to get there ....
that way ... U can always hang it up on a Fri and be working for some on the following Mon no harm/no foul.
while U have a steady paycheck at the moment ... I'd think about figuring out which lumber yard you want as your primary and set up an account. Even $1K is a good start. Plus ... for going solo ... find a "labor ready" in your area and get an account with them too .... I can charge my basic hourly/daily rate ... and still walk away with a few bucks in my pocket for a day of watching two other guys hump debris into the dumpster all day .... and on days when U actually planned ahead to have them there ... you make your labor plus what ever percent you charged on top of them.
As soon as U go self-employee ... your credit goes down ... a steady paycheck helps get things set up before hand ...
may as well buy that years worth of insurance up front too ....
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
Kman,
1) just do it and quit talkin about it
2)Have a REALISTIC idea of how many hours you are actually going to work-----and know how much money you need to generate per hour of production.
3) keeping #2 in mind----don't be to proud to do " handyman type work"---as long as it meets YOUR price. For instance ,I know I need to work LESS than 1000 hours a year as long as I get my price. It really doesn't matter to me if I am cleaning out a gutter, hanging a door or re-building a cornice return----as long as I am getting my price.
4) keeping #3 in mind----it is MUCH easier to get your price by retailing your services directly to homeowners than it is to work as a sub.Working as a sub may relieve you of some sales responsibilities-----but sub work will cost you a LOT of money in the long run. LEARN to sell YOURSELF----in time you will have hundreds---even thousands of satisfied customers referring you to others--- that's security. You won't be able to generate that kind of customer base as a sub.
5) be very carefull the first few years about the quality of the work you do. these first customers will be the foundation of your referall base for YEARS. If it takes you an extra hour to do the job BETTER than expected---then spend the extra hour. Delivering more than the customer expected is what will sell your future jobs.
6)cut your hair,cover up those tattoos,get rid of the earings and body piercings and be compulsive about keeping your jobs neat and clean----keep the customers house and yard cleaner than you keep yours. Remember every job you do is a live performance and audition in front of the neighbors for additional projects down the road------Put on a first rate show.
Best wishes, Stephen
how'd you know I have tats and long hair , thats a little wierd
thanks for the info though
kman
Don't sweat it.... I've got a half-sleeve tattoo and other pieces all over the place including a 4X6 American flag tattoo in the center of my back. That with the crew cut, long goatee, two earrings and a nipple ring make for a great first impression.
Actually the tats and odd ball piercing are covered most of the time..... 'cept the summer of course.
They're right though...... books do get judged by their covers. Good thing I'm so sweet. ;)
That last point is SO important! I can't tell you ow many comments I've had from people about how impressed they were with the cleanliness of my jobs.They see that as a sign of order safety and organization ( gottem fooled )
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Stephen in all this talk that's now getting going I don't want to skip over saying I think that's a great list. So where ya been? I haven't seen you round here in a while. Are you going to be spending more time here now that it's winter-time? Happy New Year.
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Kind of you to ask Jerrald.
I had some minor knee surgery 12-9-04------------so mostly I have been listening to cd's while riding my exercise bike to re-hab the knee. also seem to be spending a lot of time in the basement flat on my back trying to push ever increasing weights up off my chest----boreing stuff like that.
started a small direct mail campaign to market carpentry,plaster and drywall repair services directly to insurance agencies this year.
Reading a lot of books
the wife and I took a 5 hour round trip drive yesterday to buy some slate for some spring projects-------had a nice lunch out--------If you ever have the chance to try something called a scotch egg as an appetizer---go for it----everybody otta try one of those at least once!
treated my self to some sort of pricey hand tools for some personal woodworking projects( at my age of 42---and given my family health history---I know that I will either be dead within 10 years or so---OR that I will live well into my 80's-------So---either way I deserve nice tools!
This week I am going to tidy up the end of last years paper work
Once a week or so I go out and sell a roofing project to be done in the spring----and I have the materials for repairs for 2 different long time customers sitting on my truck waiting for a break in the weather---about 4 working days
and I have been looking at some investment properties I may possibly buy at auction on 1-17-05
Oh ,yea----and every once in a while I come here and get myself in an argument.
Best wishes,
Stephen
Maybe it's just me, but I think a lot of you folks are making this seem WAY more complicated than it needs to be.
Remember there are different strata's of business----and some of the lower levels can be quite profitable and require minimal organizational skills.
some folks might find this insulting---but they likely aren't thinking small enough
If the original poster has a truck and modest tools, maybe $1000 cash, VERY modest trade skills and 1 hour of time on his hands---he can be in business and on his way.
Spend the hour driving up to Office Depot. Buy a pen,a pocket calculator, and a Dome Simplified Weekly Bookeeping Record.
BINGO---you have EVERYTHING you NEED to manage your small start up co.----EVERYTHING else you can learn as you go. You certainly aren't ready to build $450,000 houses---------However----you are certainly qualified to hang a door for mrs. murphy today, and to re-point some areas on My. Kuhns' chimney tommorrow----and to replace the porch floor on the Smiths' house next week----after that you can put a new roof on the Robertsons garage----and on and on.
you start out working like that and you will enjoy EXCELLENT cash flow because each job is of very short duration, with a minimal investment in materials---and you are paid as soon as you are done with the project. You aren't juggling multiple projects and stroking a lot of subs----and if you keep busy you might actually be out earning the dude who tries to build the $450,000 house.
I wouldn't even suggest reading a business book untill you have been working like that for a year or so----it will only fill you with despair that you aren't "Ready"
along the way you will learn to deal with the troublesome customers, to sell your services on something other than price, insure yourself and your customer against catastrophy, invest the INEVITABLE profits---etc.
Somethings you are NEVER ready for---marriage, having kids, starting your own business-------------none of it is rocket science however. virtually EVERY guy here has more talent than I do---and I am dumb as a box of rocks. If I can do it ----you CERTAINLY can-------how far you take it---and in what direction is up to YOU.
BTW----you have those tatoos to overcome. Nothing you can do about THAT dumb move---what's done is done.
However---what I would do is work on the contrast between the negative attitude the tatoos will generate with Sally Homemaker------and the qual;ity and "aura' of your work. Be a fanatical craftsman, be opinionated about high quality levels of work and materials---be incredibly neat. Always, ALWAYS return calls and BE ON TIME. If you do that a lot of people will see the tatoos as part of a whole "artistic" package that you might be able to cash in on. It wouldn't be my style---but you have to play the hand you dealt yourself.
Very best wishes to you,
Stephen
Thank you for that Stephen, very well said. This is a good thread, lots of good advice and maybe should be required reading for anyone thinking about going for it. A book idea? Hmmmmm?
I survived my first five years in business mainly because I'm stubborn and ignorant. That and because I love this stuff and feel very lucky to be doing it. How many folks can say that about their job? but ignoring the Jerrald Haye's and the Tim Mooney's made things much harder than they needed to be. When our knees and back give out we'll all wish we were better business people. In fact I'm going to go back and read, or reread some of those books in one of theses posts. Right now I'm looking at one of my friends, a GC in his mid fifties who was out about five months last year with health problems. His business kept going and made money the whole time. I wouldnt be able to do that.
Like I said I love this stuff and I enjoy reading what you folks are saying about it and, oh yeah, this is Fine Homebuilding right? Not "Success with Subdivisions" or something like that. Good luck out there.
Tom
I think I'll get a tattoo, just to fit in out here!
How would you like to guess how many of us wish we could go back to being "just a handyman carpenter"The money is great, the hours are your own, there is less pressure, and the market is wide open.I started back on my own again in '91 with a business plan to be a handyman and work alone. Today I had five guys on the job besides myself and tonight I will be working late on paper. My average job size is over a quarter million...Do it right and they will come to you.
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dont ask.....just "DO IT"!
Be well
####
The secret of Zen in two words is, "Not always so"!
When we meet, we say, Namaste'..it means..
http://CLIFFORDRENOVATIONS.COM
that's telling him..
Life is not a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaiming
WOW!!! What a Ride!
Went out on my own 1 1/2 years ago or so. Fortunately my wife has a good job, because while I've made money, don't think it would have supported us. The actual carpentry becomes about 50% of the job, the other 40 hours a week are on learning estimating, billing, advertising, time tracking, bookeeping, etc., etc., etc.............
Nice to be your own boss, but the buck stops at you. Mess up and you have to eat the mistake. Very rewarding when it all comes together. Best part is if I want to sit down and take a break, I do, without wouying about what the boss thinks.
Understanding wife of life partner a major plus, mine does my books too.
All the best, cause in the end do what you gut tells you, but don't fool youself on it being easy.
Let's not confuse the issue with facts!
Decide that you are going to succeed. Convince yourself of that first, then go do it. Trial by fire, just that easy, . . . or not.
Seriously. The biggest obstacle to overcome is in your own head. All the other stuff is trivial. If you're young and too ignorant to know what questions you don't know to ask, great. You'll get a heck of an education along the way. If you fail, try it again. I'm not advocating jumping in and just flopping around. I'm advocating deciding that you want to do this, you will do this, and you will succeed, and devoting every molecule of your energy towards creating a gameplan that will yield success. The hardest thing to counter is often persistance.
"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain
There's never a "perfect" time for anything.... if you wait around for it, you'll never do it. Jump in... the water's warm! LOL. Seriously, go for it. I don't know what your life situation is right now, but plan on not making a nickle for six months.... it may not turn out like that, but at least you won't go under before you ever got a chance to swim.
Pick brains. Pick lots and lots of brains. Bug the crap out of guys who have the sort of business you'd like to have. You'll win some jobs, you'll lose some jobs. You'll feel like you hit the lottery on some jobs and you'll take a beating on others. Screw it.... tuition payments. Let yourself make some mistakes..... BUT NEVER MAKE THE SAME MISTAKE TWICE, OR IT'S YOUR OWN DANG FAULT. Learned that the hard way. I'm still learning along the way myself.... sometimes from my mistakes and other times from other's mistakes. Some days I wanna hang it up.... but most days I can't imagine it ever being any other way. I love it.
The way I see it, I have unlimited earning potential. Where else you gonna get that? I could also fall on my face, but at least I know that chances are if I run a legit business, don't screw anyone, and turn out quality work in a timely fashion..... I'm probably gonna do ok. So far, that's how it's worked out. I had a pretty dang good year..... best year of my life financially anyway.
What sort of work are you looking to do? Start lining up work right away.... long before you quit your current job. Same goes for setting up the business, getting a tax id #, setting up bank accounts and credit accounts at local yards, establishing contacts and letting 'em know you'll be doing your own gig soon. Start running your business now.... long before you plan on pounding nails.
If you think you're ready.... you probably are. There's alot you don't know yet (I put myself in the same category), but it's not exactly like there's a ton of places we can go to learn the things we need to learn about this sort of business. OJT brother. And don't let the old-timers scare ya, they just forget that they didn't know it all either when they started out.
thanks i appreciate the input , I actually am trying to line some stuff up tonight doing installs for the depot too keep busy , but Idon't plan on leaving till march or when ever we finish the project,again thanks . If you know of other avenues to do sub work I'de appreciate it also.
kennedy
Did you just get canned by Isamemon?
Who Dares Wins.
LOL.... that's pretty clever...
Seems the constant here is "supportive working wife". I'm no exception.
I was doing quite well driving truck, then one day the company closed up. Every other driving job I found paid about half of what I was making so I decided if I was going to be broke I might as well work for myself.
Its been just over two years and while I certainly wont be retiring anytime soon, I have been able to pay my bills and somehow keep work coming in(must be a faith thing, cause work is always there when I need it).
Its strange one month I cant work fast enough then no calls for a month. Weird.
I say go for it and Good Luck.
Maybe someone else has already said what I'm about to or parts of it -
There are three parts to that question - or to the answer.
There is the skill part. You know what you can do. The rest you can learn. That never stops. This is like learning to rollerskate.
There is the business part. From what I have seen, the guys like Mike Smith and Sonny Lycos who had some business or management experience before getting around to finding out they liked driving nails and burning wood seem to do the best quickest at the money making part of it. The rest of us had to learn by experience - which can be costly. This too is like learning to rollerskate.
Then, there is the fun part. Selling yourself because you love the work and what you can do and provide for folks. Confidence in youself is a big part of the makeup of any sucessfull entreprenuer. And some of that comes from having successfull projects behind you.
A lot of use started by doing smaller side jobs on evenings and weekends. that way you have the solid job to fall back on for awhile until your reputation starts bringing you work.
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Taunton University of Knowledge FHB Campus at Breaktime.
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Excellence is its own reward!
This may sound like it a little harsh and not very encouraging but I think its a question that really needs an answer is what makes you think you are QUALIFIED and PREPARED to go out on you own?
The answer to that question tell us a lot of things.
I see some people here giving you some hints, advice, and encouragement (and that great) but they aren't asking about or checking what qualifies you to run your own business.
I read your reply to Tim Mooney's questions regarding what you know about the business end of the business:
And I'm sorry but having a Tax ID and an accountant to "take care of that end" is a shockingly incomplete if not wrong answer to give. Just saying your going to leave financial management up to a accountant is pollyanna and a certain nail in your coffin. I don't think you even have an idea of how much are you going to pay this accountant to run your business? And just how do you plan to come up with that money to pay the accountant. You're not "worried about the business end"!!! Geez you better get worried real quick because nothing you said there tells me your ready at all.
In fact I'm shocked that no one here (except perhaps Tim and maybe Piffen) is telling you you're not ready because in mind you're certainly not. I'm sorry Kman but I don't think your prepared at all unless there is a lot you are not telling us.
My suggestion is you need to ask questions here about the business aspects of the industry so people can fill you in and direct you to the business resources and/or education and training you probably really need. If I was you I would spend at least the next six months but even better a year planning, and getting really ready to go into business for yourself so you'll have better preparation and a rolling start into it.
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jerrald it sounds as though your angry . Is every thing ok , are you sure there buddy?
Edited 1/3/2005 10:00 pm ET by kman
Ok... you guys are reminding me of my age...in my mind I am 18 forever, and it seems like yesterday that I started.
Worked for about 20 different contractors for 2 years. Worked in the union and they saddled me with 5 apprentices. I started in 87... sure doesn't feel that long.
Being in business isn't always easy. Economic turmoil, injuries, and numerous other setbacks can happen-and likely will. I started out expecting half good and half bad luck in equal measure.... bank on 90 % bad and 10% good.
My reccomendations are based on an old book by "Sun Tzu". When preparing to do battle it is expected you will take 100 times what you expect you will need. 100 times the intelligence, manpower, support and firepower. Then you cannot lose.
So, in summary: 1 Read "Built to Last", "Good to Great" and "The Art of War" by Sun Tzu. Then begin to plan your strategy for success. Without a business plan in place do not turn a wheel towards starting a business. And realize that your business plan will look very different 3 years from now. A business plan is simply the act of thinking about what you want to do and how. Less about goals than how you will attain them.
Losers go into a battle unprepared-and business is very likely the most protracted conflict you will ever endure.
How is my business doing? Have a peek... Boe's Site
Excellent! You gotta quit being so shy around here.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Guess how often folks ask Qs about pergola's! that site of yours has most of the answers
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
click on your name, go to your profile and fill it in, including leaving a link to your website there.Please? Pretty Please?
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Those are great books Boe ("Built to Last", "Good to Great" and "The Art of War") but I think they are more strategic and I'm thinking Kman needs stuff that is more tactical. The business basics so to speak. From another post I made here just a few weeks ago in a topic called Starting Out:
Anyway I'll cut to the case and give you my version of a syllabus for Contractor 101 Going into Business as a Building and/or Remodeling Contractor.
Read The E-Myth Contractor: Why Most Contractors' Businesses Don't Work and What to Do About It However it might be a good idea to read the The E-myth Revisited first so that you get a better more thorough grasp about the importance of what the book is getting at. What is the book getting at? That you have to approach designing and setting up your business operation so that it could run turnkey by itself without you in it. Seems nuts to even think about it that way when your setting out on your own for the first time but there is very good reasoning and logic behind that thinking.
Cutting and pasting from something I just wrote about these books here the other day these next two sort of go together and work even better together as a package Where Did the Money Go $19.99 and How Much Should I Charge? also $19.99 by Ellen Rohr who is a well known writer and lecturer to readers of the roofing, electrical and HVAC trade magazines. You can order them through her Bare Bones Business web site and one of the great things about getting them than way is in addition to getting a paperback version of her books sent to you you wont have to wait for them to arrive in that right after purchasing the books she'll send you an email with a URL where you can download a PDF version of the books and start in on reading them right away.
"Where Did the Money Go? will teach you the accounting basics you need to keep track of your business...and find out where the money goes!". In it you'll follow a character Bob Bird as he sets out on his own as a first time business-owner-contractor and it will give you a basic overview of the accounting principles you absolutely need to know and understand. In the section of the book entitled If My Accounting System Is Computerized, Do I Need To Know This Stuff? she writes " You don’t need to know everything about accounting. You do need to know everything in this book...as a bare minimum!" and I wholeheartedly agree.
Her other book How Much Should I Charge? which I just noticed is temporarily out of stock with her distributor but available through Amazon (I just ordered through Amazon and got a copy for one of my contractor consulting clients in just three days) is about the actual mechanics of how to set your hourly rate and price.
When you ready to get down to the actual work of setting you hourly rate there is an Excel spreadsheet I created that you can download from one of my company websites. I've been calling it the "The PILAO Worksheet" which is an acronym for PROOF/Indexed/Labor Allocated Overhead. It works right along with the principles that Ellen Rohr talks about in her books and Irv Chasen of PROOF Management Consultants talks about in his seminars. You'll probably want to read an article Mr. Chasen wrote about this type of markup method in last January's JLC called Allocating Overhead to Labor Makes Financial Sense.
I think the stuff I've mentioned up to this point while perhaps the most important stuff for someone just starting out is not necessarily what really interests them but BELIEVE me when I say IT IS THE MOST IMPORTANT STUFF TO GET DOWN AND UNDER YOUR BELT.
Then you can move on to David Gerstels The Builders Guide to Running a Successful Construction Company. One of the really good things you'll find in this book is in the first or second chapter he he presents a suggested step-by-step month-by-month plan for setting up a company with things to do and take care of before you really takeoff. I have a few changes and additions I would make to the order of things he presents but it pretty close to perfect for where you're at as far as a getting a startup plan of action.
Look over and read The Contractor's Legal Kit: The Complete User-Friendly Legal Guide for Home Builders and Remodelers by Gary Ransone. There are some excellent sample agreements in this book with instructions on how he suggests you should use them and after looking at them and thinking about them you can go to you attorney and talk to him or her intelligently about any modifications he or she thinks you should make with them. Do not just go out and literally use them without having an attorney look them over first though because different regions of the county have different laws that you will need to comply with.
And while we're on it another good book on the legal aspect of contracting is Smart Business for Contractors: A Guide to Money and the Law by Jim Kramon. This has some really great information on insurance that doesn't appear in any of the other books that I can think of in addition to it's general content.
Managing the Small Construction Business A compilation of JLC articles with builders and remodelers describing the techniques that have worked for them. Just a general great resource.(you can get it from JLC-Online)
Mastering the Business of Remodeling by Linda Case A good overview of the business of remodeling that will introduce you to marketing your services in addition to what it has to say about the general managing and operation of the business.
These next two books I have at the bottom of my list only because they emphasize using a method of markup that I think can be problematic especially for a startup contractor who probably will be doing a good bit of labor only contracting. This is what Justin was referring to in his post where he mentioned "Their are two different approaches that come to mind. Find Gerrald Hayes and research his methods and then find Michal stone over at JLC and research his methods. Decide for yourself what method you are most comfortable with and then apply that pricing religiously..." The method I use and advocate certainly isn't my invention but I have written a little bit about why I think and feel it's a better more precise and safer method to use. See my white paper: Markup: Comparing the Traditional Volume Based Markup vs. the PROOF/Indexed/Labor Allocated method and then comne back and ask your questions here about it and there are plenty of other PROOF method practitioners that can help explain things to you.
Regardless of the differing point of view on which markup method to use to price jobs I still think these last two books have a lot of good useful financial and sales information in them that makes them still very worthwhile.
The Remodeler's Guide To Making & Managing Money: A Common Sense Approach To Optimizing Compensation & Profit- by Linda W. Case
Markup & Profit: A Contractor's Guide by Michael C. Stone
There are still more great books on the business especially regarding project management that I haven't mentioned just yet but I think that is a pretty good sized reading list for anybody so I'll leave it at that for now.
And then I think if he's smart and really does want to really go somewhere some day he'll discuss all of that stuff here with some people who have made the mistakes already. Geez been there and done that all ready. I made the same stupid mistake when I was 29 thinking an accountant was all I needed. Boy was that a mistake.
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I don't believe he is angry. He is expressing alarm and amazmwent with a wise word of caution. I told you things to help you research, think it through, and decide for your self, I don't know enough about you to know whether you should be "going solo" or not, but i read some of the same yellow caution flags that he does.The one that stands out strongest to me is that I get the imnpression that your primary source of self employment income is from HD and call yourself a sub.Someone else asked you if you had other working history to get skills and experience from. A teacher, model, or whatever. I don't know whether you answered that or not. But if you are a self-employed sub contractor, you are out on your own now. One of the basic stipulations the IRS uses for defining a self employed sub is that they do other work than for only one entity. I am hoping that HD is not your only work.you would do well to look back and read other threads in this business section. Click on the blue bar "Business" title block on the left to see more.
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piffin - "I don't believe he is angry. He is expressing alarm and amazmwent with a wise word of caution. "
Yup you got that right. I can't believe all these people here are reading where he says his "accountant takes care of that end" and "but I wasn't worried about the bussiness end , it's getting the buss. and keeping it coming." and they aren't concerned. In fact they are all just telling him to go ahead!
I think a good analogy would be "Hey I just put this car together and I'm going to drive it." and everyone telling me "go ahead have fun" "live it up" and "go for it" without anyone every telling me there aren't any lug nuts holding my wheels on.
Everyone there was just cheering him on. He may not want to hear my cautions and advice right now.
But give him a year or two and I think he'll remember what I said.
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kman - " jerrald it sounds as though your angry . Is every thing ok , are you sure there buddy?" No problems here, doing great here Kman. In fact today was fantastic, a really great day to start off a new year. Just trying to give you some real advice. So.....
...what makes you think you are QUALIFIED and PREPARED to go out on you own?
You seem to be avoiding or running around the business questions from Tim and me. But I can't help you if I don't know what you know and don't know.
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I agree with you Jerrald, but I just didn't bother to comment.
My thoughts are summed up this way: if you have to ask, you're probably not ready.
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
blue_eyed_devil - "My thoughts are summed up this way: if you have to ask, you're probably not ready"
That's really pretty funny you say that. That's actually just what I thought to say at first. But given my penchant and reputation for writing long detailed posts I thought if I wrote something that short and succinct everyone here than knows me and knows my style would think I was now just trying to be a smart a$$.
Plus I guess I was thinking that kind of warning would be dismissed and overlooked too.
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Jerrald ...
what you say is true ...
but it isn't right for everyone.
If someone follows your lead ... they have a much better chance at staying in business and actually making soem money ... but it's not the only way.
I was talking with my Plumbing/HVAC guy the week between XMas and New Yrs ...
He met me on a site for a quick qoute ... we hadn't sat down in a while so we BS'd ...
He's already booked as solid as he'd like till this summer. He'd just set up one maintenence contract with a HO Association and turned down 2 others ... either not enough money or they wanted to use their contract as opposed to his ...
3rd going into his 4th year ... he just bought the last of his old boss's metal shop ... trying to work out a deal on building his own shop but so far likes the rates on the place he leases ... he leases the whole complex, and rents out the half he doesn't use.
Buiness wise ... he's more than a guy with some tin snips and a van.
But ... ask him any "business" question ... he'lls ay he doesn't know. Had a fight with a supplier about uping his account limit ... he's never been behind .. always pays in full and early ... just trippled his business one month due to flooding and he needed 3 times the amount of furnaces ... they told him he'd need to fill out a cardit ap and get a P and L sheet from his accountant.
He said He's his accountant ... if they wanna know how much money he made call at the end of the year .. the balance in his checking account is what he made that year!
According to your definition .. he's no businessman ...
But he's making monay hand over fist .... is investing ... has liquid money available ....
Basically doing everything he "should" be doing ... but doing it his own way ...
He'd never take the time to read a book on business .... not his style.
BTW ... he went "on his own" ... when his old boss bought into a franchise and he didn't see it going anywhere ..... told the boss he thought it a bad idea ...
Boss said what do U know?
He's building a solid business while the old boss is selling off equipment to pay the rent ....
For some people ... jumping in is the best idea.
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
But he didn't have to ask first, did he?
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no ...
but if ya asked him ....
he'd have said Hell No!
First year or so ... he hated being self employeed.
Just coming around to the idea now ....
Funny to ask a "new guy" .. Hey, How's it going?
and hear .. This sucks. Too much work .. too much paper work ... wish I had my van and moring job list back ....
at the time ... he looked around .. no one would pay him as much as he decided he wanted ... or ... pay less but give more freedom/flexibility ....
went on his own as a last resort ... he'd have said he wasn't ready ....
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
For one thing , he knew the business . For another hes in high demand just because of the field hes in. They are drawing top money here too, but you know what ? They dont live in a fancy looking pad , they dont drive a new truck thats paid for and their wife dont drive a new rig. Ok, so what . Well, its management .
Liking and being able to do the work is one thing . That includes being accomplished in a field.
The demand is another. Carps are a dime a dozen here in handiman class. A carp that does all kinds of different work , such as fine finish, tile , wood floors, stairs , etc etc etc, makes top dollars.
If they cant handle a crew, payroll , taxes, insurance, and be able to bid to make a good profit and geter done , what good are they in business? When you get that big , it isnt about carpentry. Its about business.
Jeff , I can hire the work done . Thats not a problem. Ill always say that the work is no problem. To make money at the work over expenses is where its buttered. To be able to sell a product thats competitive and still have a good profit margin and be able to expand it , is where a business man wants to be. If you started a business that was structured to make money and did , and all you had to do was hire people and trian them to expand with the demand, you would be set. Then if you needed to scale back and cut expenses , it would be just that . You would still be successful and you would still have a lucrative job.
If a carp wants to carpenter , its a lot easiar than the above. The above is not about carpentry. Thats where most people fail. They get good at doing something and go into business . Business is not about doing what they were good at . Its a different trade all together. They really need a business degree, or some training. Would I want to serve an apprenticeship as a lawn mower mechanic to be an accountant? Of course not because its not even related.
Tim Mooney
We could sum up that difference by comparing the guy who denigrates himself with the attitude, " I'm JUST a handyman"
with the guy who proudly pounds his chest with, " I'm a damn good HANDYMAN because my customers all tell me so and I make a good living for my family at it."
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I see a difference in thinking "I'm JUST a handyman" versus "I run a handyman business" Interestingly there's a handy man operation I see advertised a lot locally that even has offices customers can walk on in to in two downtown areas here. I was checking out their website (HomeServicesShop.com) and I was reading about the founder
The guy didn't come up through the trades at all!he came from the banking industry! Nothing at all wrong with running a handyman business. What is perhaps the best known and most successful franchise operation in the building and remodeling field is Case Handyman.
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I dont see it that way with this guy.
He doesnt want to be a hanyman. He wants big work in the future , but is willing to start anywhere . His main goal is to be in business , not to be a handyman.
My point and Jeralds story about the banker turning a handyman business is the same. Its a business , not a trade anymore. Two different things such as black and white.
If a man wants to be a handyman or a carpenter then work with the tools . If ya want to be in business , then put the tools down as quickly as you can and concentrate on running a business.
The most successful contractors I know dont strap on aprons , though they do have the knowledge. The most popular singers dont play lead guitar at the same time.
When you strap on tools it limits your business oportunities.
I thought I wanted to sell realestate and build houses. Theres a problem with that . Realestate people dont build houses , they hire them built while they are selling houses. They stay with their business.
Tim Mooney
Looks like I'm a little late to this party, but I'll chime in nonetheless ;) Like you Kman, I'm going out on my own, although from a different business entirely. Like Jerrald I'm pretty scared by what seems like nonchalance about how important business knowledge is to any start up.
I've been in the photography business for almost 30 years, and also have dozens of contractor friends and have noticed one big similarity. A lot of people become skilled at a craft and strike out on their own without the necessary business knowledge (I've worked at this studio, or GC, for 10 years and know it insode and out so I'm ready). The fat is a lot of these folks do OK in the beginning because they are naturally motivated to start their businesses when things are good. The sad truth is though that few of these guys survive when things turn bad. Right now it seems like darn near anyone can at least survive doing some form of contracting with little or no business background. But look them up when the next recession hits and things dry up.
Do yourself, and your future, a favor. Look through the list of books that have been suggested, sign up for a basic business seminar at SCORE and make sure you aren't one of the thousands of guys who are going to have For Sale signs on their trucks when (not if) the economy turns South in the future.
Good luck with your new venture, I think it's one of the most challenging and exciting things one can do.
PaulB
Sage advice Tim... bravo.
L
Well I agree with you to some extent. Some people jump in, luck out, and make it but the statistics (according to the U.S. Small Business Administration) are that over 50% of small businesses fail in the first year and 95% fail within the first five years. And while those statistics are for all small businesses at the top of the list for the highest failure rates you'll find contractors and restaurants battling it out.
With regard to "For some people ... jumping in is the best idea. "
I don't think the best idea is quite the best way of putting it. Like I said some people jump in and just luck out. When the odds are only 1 out of 20 ( that 5% that do survive through the first five years) just jumping in can't possibly be the "best" idea.
I think the best idea is to plan and prepare. You wouldn't build a house without planning and preparation would you.
Why build a business that way?
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Edited 1/4/2005 6:17 pm ET by Jerrald Hayes
This discussion and some of the replies to it bring to mind a quote by Abraham Lincoln that I recently came upon.....................and don't anyone go and steal it for your tag.............
If I had only one hour to fell a tree, I would spend the first 45 minutes sharpening my axe.
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
Well would it be okay if I put it into the rotation as one of my e-mail signatures?
The quote I was thinking of which comes from another American President Dwight D. Eisenhower:
"In preparing for battle I have always found that plans are useless, but planning is indispensable."
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Do what you like...........I don't think Abe copyrighted it!!
I always appreciate your thoughts and advice, as well as what it provokes in others.
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
Then there was President Jeff Buck - "Damn the torpedoes, Full speed ahead!"
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That was actually my very first thought too. But who knows whether he needed encouragement, business advice, or real skills to be ready? or all three. So far, he's gotten at least two of the three by starting this thread.
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To add to all the advice allready given.
I started on my own 1.5 years ago after working for others for at least 16yrs.
The freedom and flexiblity of being your own boss is great.
The best jobs are word of mouth.
Listen to your gut if you think the client or the work its self is going to be a major pain in the butt. You dont need the headachs no matter how hungry for work you are.
Have some side work for the slow times. For instance that piece of furniture you always wanted to refinish. Or you line up a job making a bed or table for a friend that is not in a hurry for it. It will keep you from going stir crazy . Or you sub your self out to general contractor for a week or three untill yor next big job is ready to roll.
Also work on putting together a portfolio to show to potential clients. This takes awhile but can really help sell a job. If you dont have any photos, go to clients houses and ask if you can take some pics of the work you were directly involved with. This can sometimes lead to work with that home owner.
Edited 1/4/2005 4:46 pm ET by reinvent
People in life who never take a chance will never sit at the top of the mountain. If you think you can honestly make all your bills while building up your business reputation then go for it.
I have to warn you, once you cross to the other side you can't go back