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I am looking for opinions/experiences in different business arrangements for a growing custom building/remodeling business.
Like most of you, I am a small, primarily one-man operation. I have a part-time (20-40 hrs/wk) man who helps but is relatively inexperienced. I am having a difficult time being 100% in charge of all production, sales/promotion, estimating and bookkeeper/office manager.
I am beginning my second full year in business and will probably more than double my sales from last year to around $200,000. I am getting in to some fairly complex estimating situations (which I feel pretty fine with) but am otherwise knee-deep in estimates and can’t find time to get them done in a reasonable time period. I have potential customers who are waiting 2 and 3 weeks for their proposals.
I feel pretty capable of handling the production end of things, if that’s all I had to worry about. But my reputation has been sliding lately because I simply don’t have time to spend tending to my customers (ie. meeting/designing/estimating etc.).
I desperately want to be able to exert a reputation of professionalism with my company and feel unable to do so when so much of my 7am-7pm is spent in production mode.
Given the nature of the business and the different aspects, I’m not comfortable turning over the customer interaction, sales, marketing or estimating to a newcomer. I feel this is where the rubber meets the road and I want my customers to see me and feel that I’m on top of their job. The only area I feel comfortable turning over to someone else is in the area of production.
I have learned recently in a local building/remodeling seminar about the growing popularity of the “Lead Carpenter” approach to this business and I must say it sounds very appealing. I am curious to know of anyone else’s real world experience with this arrangement. Any and all experiences would be appreciated.
Thanks in advance,
Donnie C.
Cunningham Building Co.-Austin TX
Replies
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This is only a superficial comment.
You are absolutely correct, when you base your opinion that, your most important focus should be on customer satisfaction.
You are relunctant to hand over the reigns of this aspect and that's understandable.
However, having employees may be a problem that you may not want at this point.
A good reliable SUB-CONTRACTOR under a well define contractural agreement may be the way to go.
It's easier to change contractors in most jurisdictions than to change employees.
The record keeping for past employees will sometimes bog you down in paper work that is none productive.
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Donnie,
I share your dilemma, as I'm sure many of us do.
I'm still trying to work out the best arrangement, and it would seem to be some variation of what Gabe has suggested.
The difference between a sub-contractor and an employee lies in how we distribute the following: responsibility, liability, supplying of equipment& materials, etc.
For example: If I sub-contract a piece of work to someone, and they screw it up, they do not get paid until they fix it at their expense. But if I have an employee do the same piece of work, and they screw it up, I have to cover the loss.
For that reason I expect to pay more for a sub-contractor than an employee, because I have one less thing to worry about.
In a perfect world we would be free to define our business relationships in any terms that work for us. See what limitations your local juristictions place on you.
There is more to be said than I have time for right now. Hopefully others will chip in.
Steven
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You are right to be concerned about your reputation. An abnormally slow turn around will spread ill will like a wild fire. You have worked very hard to get where you are and now you jeopardize this by weighting yourself down with paper. Something better change,and fast.
Let me see if I have this right: you had $100K +/- receipts last year and expect some significant growth this year. You have one part time, inexperienced employee. And you hate to turn down work.
I suggest you earmark some of your profits towards buying even a part time CPA or cost estimator or salesman. Which one of these positions to hire out is determined by which aspect of the business you don't enjoy or by which causes you so much downtime in increasing revenues.
See, you are now in the trap of being the owner and the key employee. I suggest you quit being one of the other. I know it is hard to consider you may lose some control of your business, but you have to make this step.
Subbing out work is a good idea, whether it be to a construction contractor or construction related contractor. Keep in mind though that you may suffer a loss of quality in the field if you are not careful in picking who will do the work.
One tool to insure quality is the mandatory weekly meeting involving everyone in the company. Each person should come prepared to ask and answer questions. They'll know the meeting is a safe forum that allows discussion of sometimes confrontational issues and to share thoughts. They will come to think of the company as "theirs". This will increase loyalty and performance.
You don't have the time right now to train a new person, so you should expect to pay for a qualified individual. Don't cheap out here. Stay away from commissions, pay salary with bonuses.
Go get 'em tiger.
*Donnie, it sounds like a case of time management problems and a lack of qualified field help.You should be getting those proposals done promptyly. If you don't need the work, quit bidding. Don't waste your time on needless quotes.You say you are doubling your business? Did your double your workforce? Maybe staying at, or near the comfort zone would be better for all.Maybe you should be satisfied with the 100,000 and try to double your profit margin.Good skilled help is hard to find. Don't just assume that someone will waltz in and take over your field operations. Subs can make you or break you. Choose them wisely. They aren't available here though. Most already are working full tilt.Why are these estimates taking so long? Are they estimates, or formal proposals? Are you getting paid for your formal proposals? Blue
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Donnie
If you can find a "lead carpenter", which isn't easy 'round here, you could be a happy and rich man with minimum headaches.
I is one. I work for a home remodeler as lead man as well as tending to my own "specialty" jobs.
I handle all day to day business on the job such as performance, coordination, my crew, dealing with the homeowner and keeping them happy, subtrades supervision and quality control, working with the architects, etc. product and materials procurement is shared with the bossman if he is available. I do superior quality work, rough to finish and demand the same from all others, whether it's raking debris or installing that new 5,000$ geochron clock.
the "boss" really only has to meet with the customer maybe once a week for his payday meeting. and he has to be available on the phone if needed for anything. He is free to handle new work,proposals, estimates, meetings, billing etc. this works pretty well 'cause the last thing we want is for the guy to come out on the job and put on his tools. he just doesn' come up to standards that way anymore. I had quit working for him in sept. to go do a couple other cool jobs, but he called me a couple weeks ago to deal with a tough job and tough customer, I said OK, he gave me a quick rundown on the job then says" by the way, I'm going out of town skiing for a couple weeks, have fun, bye.
So what I'm sayin is, yeah donnie, if you can find a good "lead carpenter" life will be a breeze for you. keep in mind though that it will cost you fair.This past xmas my bonus from 10 months work and rewards from customers gave me nearly half a years wages, on top of the excellent wage already earned. OK, there's the low down on the lead carp thing. so go ahead, try it! but know your man, be sure you can trust him and by all means, share the wealth!
Carp.
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Donnie,I might be a little over my head on this one ,but it looks like from the job description carp gave you,a lead carpenter would be classified as a mid-level executive if he were working in a white collar enviornment.His pay might really eat you alive at your current and projected volume.Give strong consideration to mr. blues insite on doubling your profits instead of doubling your volume of work.Doubling your volume and adding another full time worker might quadruple your work load and actually shrink your personal pay.I am not saying that can't be done,just that you should consider if you are primarily in business for your benefit or your employees benefit. Staying small and happy as a clam,Stephen.
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DONNIE,
I"VE BEEN BUILDING FOR 27 YEARS. READ A BOOK CALLED " THE BUILDER'S GUIDE TO RUNNING A SUCCESSFUL CONSTRUCTION COMPANY " BY DAVID GERSTEL. IT'S A GEM. HE EXPLAINS A LOT OF WAYS OF GETTING JOBS WITHOUT BIDDING.
MY EXPERIENCE HAS BEEN NOTHING IS WORSE THAN TAKING ON MORE WORK THAT YOU CAN DO.
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Donnie,I am in the same boat,only a little smaller(canoe?).I too am in my second year on my own,I have one full time,one part time employee.Worked good the first year,but my name is starting to spread(thank GOD).Now I am also doing alot of bidding & estimating.What I did was got hooked up with another young contractor who is just starting out himself.We are both independents,with our own jobs and seperate businesses.When we get jobs that require more than our own bodies,we team up.We agreed on an hourly rate to charge each other(though we usually just swap hours).So far it hasn't caused a problem,though I'm sure it will at some time.I am in agreement with Blue.I don't bid the jobs that I don't really want,although I do PROMPLY return calls and look at the job to feel the people out.Sometimes a crappy job leads to a gravy job!I have decided to stay small,because I don't want anyone else doing customer relations,bidding,bookkeeping,or espacially the actual carpenter work.In other words, I want to have all control over my reputation.I still enjoy doing the work of construction,so lead carps are not an option for me.The last company I worked for had 3 lead carps(myself as one),seemed like the owner was always disapointed and threatening us that we could all be fired and he would work out of his briefcase with subs doing our work!!I don't want that headache.I specialize in new homes & additions,finish/trim work,& drywall.The fellow I spoke of earlier with whom I teamed up with specializes in concrete,ICF's,masonry,& shingling.All areas I do not especially prefer.Sometimes I will give him jobs that I don't want or have time for, he does the same for me.I guess you just need to decide how big you want to get.If you see yourself as boss of a corporation in 5 yrs,not doing any construction yourself,then go with the lead carp system(it does work).If you like to control all aspects of the business,stay small and either pick and choose your jobs or up your rates to make more on the gravy jobs.Hope I made sense and helped a little.Keep us posted as to what you decide.
*Donnie, Congratulations on how well you've done in your first year. I have a few thoughts on your situation. Be honest and don't overpromise anything. If you can't get a proposal done for three weeks, tell the potential customer it will be three weeks. People like to do business with a winner. The delay shows you are busy, and you will gain instant but subtle respect. It is not uncommon for a contractor to promise too much out of fear of losing a potential customer. This approach often leads to too much work in too little time, disappointed customers, and a bad reputation. You may want to consider working on site for four-ten hour days each week. Use the other day, and whatever part of the weekend that you want to devote to your business, for office work. Tell your customers about your system so that they don't wonder where you are the other day. The four day week is very efficient because you eliminate the time it takes to get out/put away tools and job site clean up for one whole day each week. You would probably get 30-40 more minutes of actual working time out of the same forty hour week. Your ultimate goals for your business will guide your hiring practices. If you are going to be big, you may want to hire carpenters that you can groom into crew leaders. If you always want to maintain an on-site presence you do not need to hire a lead carpenter. For now, you do need to hire someoone at least good enough to leave alone for a day if you need to stay in the office. Good Luck
*Blue, can you expand on the difference between estimates and formal proposals? I have a feeling I give the latter, and although I think that putting a lot of time and detail into the estimate often gets us the job, I too spend too long getting quotes out the door. Reading this thread with interest....
*Well, a formal proposal would be the primary document in a formal contract. It would include all the details needed to make a good contract. It could take you 30 hours or more to present a good one.An estimate is a guess that is based on very loose commitments. You can make an estimate in a few minutes, or at the most a couple of hours. You can provide these free, but a proposal should be payed for. If they can't respect your time upfront, they aren't going to give a hoot later. A formal proposal can be submitted after the estimate is accepted.The client will gladly pay for the proposal, after they have decided that you are their contractor of choice, based on your presentation, after your first consultation. Too many contractors think that they have to sell a job based on price. With the amount of horro stories floating around, most will gladly pay a higher price to a contractor that they trust.Blue
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I am looking for opinions/experiences in different business arrangements for a growing custom building/remodeling business.
Like most of you, I am a small, primarily one-man operation. I have a part-time (20-40 hrs/wk) man who helps but is relatively inexperienced. I am having a difficult time being 100% in charge of all production, sales/promotion, estimating and bookkeeper/office manager.
I am beginning my second full year in business and will probably more than double my sales from last year to around $200,000. I am getting in to some fairly complex estimating situations (which I feel pretty fine with) but am otherwise knee-deep in estimates and can't find time to get them done in a reasonable time period. I have potential customers who are waiting 2 and 3 weeks for their proposals.
I feel pretty capable of handling the production end of things, if that's all I had to worry about. But my reputation has been sliding lately because I simply don't have time to spend tending to my customers (ie. meeting/designing/estimating etc.).
I desperately want to be able to exert a reputation of professionalism with my company and feel unable to do so when so much of my 7am-7pm is spent in production mode.
Given the nature of the business and the different aspects, I'm not comfortable turning over the customer interaction, sales, marketing or estimating to a newcomer. I feel this is where the rubber meets the road and I want my customers to see me and feel that I'm on top of their job. The only area I feel comfortable turning over to someone else is in the area of production.
I have learned recently in a local building/remodeling seminar about the growing popularity of the "Lead Carpenter" approach to this business and I must say it sounds very appealing. I am curious to know of anyone else's real world experience with this arrangement. Any and all experiences would be appreciated.
Thanks in advance,
Donnie C.
Cunningham Building Co.-Austin TX