Okay Piffin, Mike Smith and anyone else who usually runs bigger projects. How’d ya get there.
I understand you have to pay your dues and it takes time, but it seems to me that everyone I do estimates for is on such a tight budget they would balk at the prices some of your jobs command.
I looked at the threads Mike Smith put up on his new construction houses and thats where i’d like to be. Alot of whats in them would be considered extras to standard construction and its kind of a bummer when you cant do all you’d like to cause you’re stuck with too small a budget.
Any advice?
Replies
MSA1,
You didn't direct it to me but I'll answer anyway. I have run a $200k project and been part of a $1.4 mil church renovation. A host of ones around $100k+ in the past few years too.
All were either by someone knowing someone who knew me or just called me up after seeing some of my other work.
Sadly, haven't seen one of those jobs in over a year.
Mike
Alot of whats in them would be considered extras to standard construction and its kind of a bummer when you cant do all you'd like to cause you're stuck with too small a budget.
Sam Kinison pretty much summed this up in a routine about Africa. "If you're starving to death, move to where the food is".
You can't get million dollar residential addition jobs if there aren't a quite a few 2-3 million dollar houses around.
You gotta find the customers with a big budget. One way is thru the architects. See dieselpig's framing thread in the photo gallery.
http://grantlogan.net
Who got Bo Diddley's money?
Never thought Sam would show me the light.
I never considered going to talk to an architect.
Thanks.
well.... you know what john dillinger replied when asked why he rob bed banks...." cause that's where the money is ? " if your clients cvan't pay your rate , you gotta find different clients that can
1st...ain't no big dog...usually it's me & 2 1/2 carps.... the 1/2 come from flutuating between 2 & 3
2d we do about $500K - $600K every year.... wether it's remodeling, additions or new
3d .. we started out building houses on contract after about 3 years working for someone else... we started in '75... and it was hard.. no money
4th we had in-house design ability... wether we were working on the drawing boards or.... since about '97.. with Chief Architect.. i think having in-house design ability gets you better work.. wether it's kitchens.. additions... remodeling .. or new
5 we seldom do competitive bidding.... it stopped making any sense to me... we do work differently that our comp.... we are never bidding on the same thing
we bid it all the same: (labor + burden.....plus materials... plus subs ) + overhead & profit
design work is separate... we don't make a lot of money.. but we do pay all our bills and we continue to improve our reputation
you have to price your jobs so you can deliver your customers expectations... never promise more than you can deliver... then deliver what you promise.... if the job isn't priced to do this , then you either lose money, or you disappoint your customers
both , or either, is deadly
some business is set up with subs... we're set up with employees
we sub site clearing, excavation, foundations, electrical, plumbing, major plaster , tile, major painting, some roofing.......
we do all of the rest in -house
it was hard in the first 10-15 years, when we were not pricing our work for a profit
it got a lot better when we started pricing our work to make a profit
getting to that point is the problem
i've seen top-50 contractors almost go under.. i've seen lot's of companies who were eating our lunch, fail
i'd guess the golden rule would pretty much sum up my business philosophy..... do unto others as you would have done unto you.... it all comes back
Thanks for the reply Mike.
I think number 5 hit what i'm trying to get to the best. Getting to the point where you have built your reputation and your price is your price, not having to worry if Joe 6 Pack will come in $100 cheaper.
Actually your company model is very close to what I have now (sub-contractor speaking).
I didnt mean I want 100 carps I was more leaning to the reputation that brings you to "number 5".
it was hard in the first 10-15 years, when we were not pricing our work for a profit
What size jobs did you do those first 10 years? Did you have any employee's at that time?
Mike Smiths post is a good summation.
I quit a partnership in 83 that had started in 71. We ran ours much like his in terms of subs vs. in house work. Design for us was problematic, but we had several archies that thought highly of us so that took care of that problem.
We developed a name among artists and those interested in energy efficient building at a time few builders were doing it. We were "different" in our approach, telling people the house was their house, not ours, they got to choose what the finished product looked like , not us, we were just the tools to get them there.
I know of no one who gets into high end true custom without putting time in the trenches getting there. Every job was aimed at trying to land the next one up the ladder.
Bid for the quality you need to provide to satisfy the clients. failure to do so will as you said be the end of you one way or the other. The biggest thing I notice is that most builders who come from pre-sold style building backgrounds don't grasp is that that style doesn't fly in the true custom market.
They can't get your Goat if you don't tell them where it is hidden.
Bid for the quality you need to provide to satisfy the clients
Thats generally when I hear, "so & so will do it for 1500 less".
Funny that you communicate with clients as you do. I do the same thing. People ask me what I think and I usually tell them, its their house. I can tell you but i'm not waking up to it everyday.
MSA1
I can't tell you how many guys that have gotten big have told me something like " I wish it was just me and my brother again doing small jobs again. We go thru alot more money but we make anymore than we did before. Just more headaches."
Growth without the right pricing and the right employees is not always desirable.
Rich
You make a good point. You have to grow into growth. Once a company gets bigger, management has to change. You cant run a twenty person company like you can a 2 person company.
Sounds like you got some great answers.
Grants trying to send you where the money is. He doesn't know that you ARE where the money is in the Bloomfield area of MI. Of course, I don't have to tell you that the competition in MI is fierce. Maybe the word fierce is understating it. I think the better way to describe it is "stupid".
I do think that Mike is pointing you in the right direction. The only reason I've been eating the last few months is because I bought the Chief Architect program and decided to save a few bucks by drawing things myself. Instead, I've picked up a few 3500 design packages, which are leading me directly down the path to the bigger jobs you speak of.
Then, you gotta start advertising. If the big jobs aren't seeking you, you have to seek them. Don't count on a high closing rate though...but unless you want to spend five years building your "name", you have to publicly brand yourself and put some proposals out there.
And, as Mike has pointed out, bid them with a profit in them.
Bob's next test date: 12/10/07
Grants trying to send you where the money is. He doesn't know that you ARE where the money is in the Bloomfield area of MI. Of course, I don't have to tell you that the competition in MI is fierce. Maybe the word fierce is understating it. I think the better way to describe it is "stupid".
What I was also trying to say is whgt you said in your last statement:
you have to publicly brand yourself
Right. If there's 15 guys selling apples, you need to get some oranges. Set yourself apart and sell that distance.http://grantlogan.net
Who got Bo Diddley's money?
How much did the Chief Architect program set you back?
That has been a problem before on a few estimates i'd gone out to do. I end up having to ask if they have any drawings and that does sour them right from the start.
Any suggestions on self branding? I try to put my name anywhere I can as it is. I'm in two local phone books, wear my MSA shirts everywhere but church, and pass flyers and cards out till I cant see straight.
"I didnt mean I want 100 carps I was more leaning to the reputation that brings you to "number 5"."You have to bring the confidence that you are the best candidate for the project with you. It starts with your self belief. If you're not bringing that attitude with you on every sales call, you need to revamp your belief system. Look at the strengths and advantages that you bring to the table, then explain them. Sell the benefits of being you and using your services. If I were selling Mike, I'd sell his lengthy experience, his hands on methods, his personal attention to detail, his safety record and efforts to prevent injuries, his competence related to his continuing education in the study of new methods and techniques, his long term relationship with subs, his employees long term history and stability, his accumulation of equipment which is essential to a quality job, his record of accomplishment with regard to passing inspections and probably several other areas that I haven't thought of. All of these points would have an entire page in a presentation book, along with the benefits that they deliver. I'd then explain that all those qualities result in delivering the Best Price and Best Value. When the inevitable quotes come in and they have several other lower bidders, I'd simply explain that often, the lowest price doesn't deliver the best value. They'd want me to explain why our price wasn't
the Best, as promised and I'd explain that if Mike didn't have all those qualities, the price would be undoubtedly much higher for the quality of the services rendered. They'd get to pick between the Yugo or the Lexus. Yes, one has a lower price...but which is the best value? You have your own strong points. You have to explain them all in a normal conversation before you get down to the business of estimating and quoting. Once you've sold your clients on YOU, you then enter into a relationship that delivers the most services for their budget. You're not really competing with anyone else. You are now partnered with THEM and sharing your strengths to bring their project home and on budget. Bob's next test date: 12/10/07
You hit on the V word. I do try to impart that on my clients but some just want it done.
Its funny there will be a brand new Caddy in the driveway but when it comes to their house, low bid wins.
I almost forgot to answer the CA question. I think I paid $3400 for two licenses. My designer/estimator has one. I have the other. She's done some small hourly projects and uses the program for some basic sketches. In that sense, she has not taken full advantage of it. I've designed and delivered enough plans to pay for both programs and earn me some food money. We've also used the services of a licensed Architect to deliver plans when the process was over my head. I'm still learning so in one case, the client demands were greater than my skill and the client is too significant to risk a poor performance on the plans. The best thing is that my designer/estimator (sales agent) has figured out how to move the discussion into getting a full set of construction plans drawn to put a hard number on instead of selling a job based on vague talk. At first, she couldn't understand the concept but one job turned the corner. The high level client told her that her bid was higher than the other guy. He was only talking to two of us. She countered that the only way to properly evaluate the bids was to bid the jobs on an apples to apples basis and the only way that could be done was to do that on detailed drawings. Since he was a sophisticated buyer, he immediately agreed. She then offered "We have an Architect that we use and he's very reasonable. We could deliver the construction drawings for only $3500". That made perfect sense to him and he immediately signed the design contract.That exchange showed her that she doesn't need to lose jobs to low bidders without a fair fight. We are now in the drivers seat on several larger projects simply because we've done the design packages and have developed a personal relationship with several clients. We've also landed several of the jobs, without first selling the packages but it helped that we were prepared and ready to do them in lieu of doing the entire job. It solidified our abilities in their mind as compared to the other bidders who DIDN'T offer to do the design packages. They put themselves in the position that doesn't make sense to those with bigger projects. They wanted to sign a deal without the plans first! That really doesn't make sense, does it? Branding doesn't mean just advertising your name. Branding is the process of explaining who your are, what you do and everything associated with those ideas. When you present yourself to the clients in the first phone interview, you start to brand yourself. Your first meeting further establishes your brand. The main thing is that you have to take control and stay in control...because that is what your brand is all about! Can you explain why it became a problem when you asked about drawings? If the discussion is properly discussed, I don't see how it would sour the conversation. What is your approach on this question? Bob's next test date: 12/10/07
Woof-woof!BarkBarkBarkBarkBark!Rrrrrrrrowrrr!Woof!Nhhhh! Nhhhhhh!
Forrest - excuse me, I speak dog
Its hard to sit here and even envison what you guys have to look at every day. Mikes wrote a lot, so him I can pretty well guess but I dont know anything about his client base.
I dont really have a clue about you exactly. Not that it matters I dont guess but I know you moved outta a bad deal.
I do envision this would be a bad time to get started investing money in contracting in many places. Be a very risky bet here .
I sold my house today . Actually went to closing after a year and got a check. Made me sick. I guess they cant all be winners .
Reading this thread made me think about that house . I wouldve gone broke building them for a projected profit that didnt come in. What if the people dont pay you in a contracting business ? Lumber yard said my order didnt come in on the truck that was scheduled to be here . I told them my payment would come as soon as the truck got here as a joke but to make a point . How do ya know youre gonna get paid by contract ? Cause you normally do ?
The people signed a document with no money down that took my house off the market . I paid for the house and they had nothing in it . I guess thats where I shoulda asked for 50,000 down payment but I didnt . I asked for 1,000 dollars and lost the customer . So the next one comes along and they offer with out anything down. I took it but it was a bit of a small risk. A months time is all. Id be sweating if they owed me for half the house and it was in their name . Shriek!
Tim
"I do envision this would be a bad time to get started investing money in contracting in many places. Be a very risky bet here .""What if the people dont pay you in a contracting business? I told them my payment would come as soon as the truck got here as a joke but to make a point . How do ya know youre gonna get paid by contract ? Cause you normally do ?"I'm looking at it exactly opposite from your vision. I see contracting as a foolproof way of mitigating the risk involved in the payment schedule. Remodeling and General Contracting can be a cash business. It doesn't have to be run on credit. The key to making it a cash business is getting the payment schedule right. Fortunately, my estimator has a very aggressive attitude about the payment schedule. I'm a softy...she's not. She writes the contracts to get ahead of the game, stay ahead of the game and leaves very little on the back end. She's not afraid to simply say "NO", when a client balks at a substantial deposit to secure the time slot or a substantial payment when the actual construction commences. The danger of getting too far ahead in the money is that I might not be conservative in how I spend the money that the client has entrusted with me. If I take big deposits and then spend the money on a new cabin cruiser, I risk running out of money and not being able to finish the job. I then risk a stay in jail too...so I'm not looking at any cabin cruisers right now. So, to answer your question...if a client doesn't pay according the the draw schedule, the contract explains that work will stop and the appropriate remedies will kick in. The remedies are slanted in my favor though, so I'm really not too worried about that because when the work stops, I'm still ahead in the money game. We, in the contracting business, create or manage our own risk as far as the contract language is concerned. Bob's next test date: 12/10/07
Do you live and work in a market that supports the jobs you aspire to?
And if you do, do you project the same business persona that the folks do who do get the jobs you want?
"Doubt is not a pleasant condition, but certainty is absurd."
~ Voltaire
Edited 6/6/2008 10:09 pm by hasbeen
Yes. I focus on Grosse Pointe and there is still alot of work going on in the area.
Just last week I drove past a (at least) 5000sqft new const project. Am I ready for that? Maybe not quite yet, but i've been GC on about 7 whole house renovations.
I like the GC hat. I thrive on too much to do.
The Gross Pointe market is a very hard market to tap into. It is all old money. I think they are far more closed than the Bloomfields and west side. You don't land a 5,000 sf project there without some serious relationships or history. I could see getting a name there by doing some small stuff...Pella window replacements, Marvin...some roofs etc. It's still very tough though because of the economy. The old money know how to stop their spending. Bob's next test date: 12/10/07
I've been working in Grosse Pointe for about five years. The ad I have in their Blue Book has carried my company so years, but I know bathrooms are different from whole house renos.
I keep working the area. Some people ask why I continue to hit that area when i'm now on the west side.
My reply is that i've already worked hard to get in over there as far as I have. I dont know if i'm ready to start over on the west side.
I know "Who Moved My Cheese?"
a friend and I got in with a guy who had a two state franchise with Lindal Cedar Homes........He sold the homes, we built them. Some as big as an Amish barn, some small cabin types......All post and beam and expensive.
We did pretty good, but after a couple years I sold my half of the partnership to friend cause....well, partnerships are like love affairs and the honeymoon only lasts so long.....we parted friends....he still builds Lindal....and did quite well till the building bust......
My personality type is only happy when dealing with HO directly and building one house at a time.......ALL my clients (that I can remember) became friends.
being a big dog as you say only works for certain types of people......first thing you gotta ask yourself is "Do I fit the mould?".......you might just get what you pray for and begin to hate living.
I think some are misunderstandng what i'm asking.
I dont want to be Pulte, I want to get to the stage where my price is my price and I dont have to worry about getting underbid by some guy who doesnt know what he's doing.
I want to get to the stage where my price is my price and I dont have to worry about getting underbid by some guy who doesnt know what he's doing.
You'll never get to that point. What you have to do is seperate yourself from the herd so you're getting asked to do the project without having to bid against someone.
I probably shouldn't have jumped into this thread. I thought it said "big dongs" instead of big dogs. My bad.http://grantlogan.net
Who got Bo Diddley's money?
Unfortunately you cannot control an uneducated client who will just select the low bidder. Try not to waste your time on those. If you work in areas with design review, you can contact those owners thru a letter early in the process. Get your name and interest in the job out early. Owner info is public. I got several jobs
that way.Personally I was a poor businessman. I found out I was much better as a second man to someone who knew how to make money. I got paid a lot more money and didn't have to bid any jobs or pay any bills. Just did the fun part of running the jobs. Much easier. Plus I had close up experience with a good business model should I choose to go back into business.John
John, your point about partnering with someone with superior skills is a lesson that comes very hard to most independent thinking tradepeople. They view every relationship as a threat, instead of seeing the positive results that could result. The relationships don't have to be partnerships to take advantage of the different set of skills. A tradesperson could just as well hire a business manager but they rarely see their business as something that could benefit. They look at their business though very narrow glasses. If you ask a carpenter if he could make 500k a year owning a General Contracting business...they will say no. If you ask a Business Manager if he could make 500k per year owning a General Contracting business, they say yes. What's the difference? The carpenter thinks he has to make every dollar with his own hands. The Business Manager sees the number as the end point to a much larger equation. Bob's next test date: 12/10/07
well that's easy.......it will never happen. :-)......soon as you run out of relatives who love you that is......And if by some stroke of luck or genius you do find that place in this dog eat dog business......don't tell your competition .....
"I dont want to be Pulte, I want to get to the stage where my price is my price and I dont have to worry about getting underbid by some guy who doesnt know what he's doing."That will only come with substantial capitalization or a steady backlog of work...or... an unshakeable positive attitude and blind faith that you will survive without every job. Bob's next test date: 12/10/07
Thanks again Jim, I knew it would take time but the rest of the pointers will be acted upon.
MSA,
I am going to jump into the fray and emphasize getting out of the competitive bidding aspect. I realized many years ago that everytime we were involved in competitive bids I was always the highest and I always lost-So why bother trying to be the cheapest-you do not make money that way.
I would also emphasize the design build as a way to get clients from the start and keep them captive and avoid the whole competitive bid. You must be able to perform really well at this stage otherwise you will lose the clients confidence.
You also need to be able to produce the results in the field. The following things have worked very well for me.
1) Very Clean Jobsite
2) Projects that are beautiful and fit or complement the neighborhood.
3) Make all you work product darn near perfect.
4) Fix and all problems right away. This is the best marketing tool I have. No BS or whining.
5) Thank your clients for the opportunity to serve them by hosting a house warming party-Spend $500 bucks on a party-invite all your clients friends and neighbors and I can almost guarantee 5-10 qualified leads.
6) Get out and network.
7) Ask former clients for referals and thank them when you get one.
8) Be humble, and grateful for the opportunity to do what you love.
Bruce
excellent post,
stephen