Jason mentioned this book in thread # 36549.4. I was glad to see it, because I’ve been intending to start a thread on this.
I’ve been in the position of many carpenters over the years who ending up going into business for themselves, and then slowly having to learn business management, accounting, sales, customer relations, cost tracking, etc. by necessity (and not necessarily because it’s fun). Then the inevitable happens — we’re working on the job all day and sitting in the office all evening and weekends. (And, I’m sad to say, not always making any money and not sure why.) Lately I’ve been stumped about how to change this situation. Then I picked up Gerstel’s book and I’m ELATED! I’ve finally got a plan and can see where things need to go.
Has anyone else worked out of this book? How’s it gone?
My big downfall is poor job tracking and labor estimating. I’ve got to focus on that. (But first I’ve got to hire a good carpenter so I can spend more time in the office . . .)
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I bought the original edition 10+ years ago when it came out, read it, liked it, loaned it to another contractor, and never got it back. I bought the revised edition recently and have not had time to read it thoroughly, but will. The author is one of the most respected builders in the SF Bay Area. I know him, worked for him as a sub, and played pickup basketball with him many times. He's a highly intelligent and hardworking guy who figures out good systems and makes them work. On the subcontract I did for him (build and install a houseful of cabinets) he caused me to tighten up my own paperwork and procedures quite a bit as we went through the contract and change orders on the job--one of the few for whom a handshake would not suffice. He was highly detail oriented and clear on everything. He does not take 'mental breaks' at work, ever, as far as I've seen--he's 100% drive. I believe it's a combination of his work methods and his personality that make him successful. You can read the book but you need to apply methods like that diligently, and your ability to do so depends a lot on your personality.
I'm curious how you're estimating and then tracking your costs. Software? You need to invest in software and learn how to use it. I haven't read Gerstel far enough to know what his current approach is.
Thanks for your post. It's helpful to hear from someone who's familiar with the author and his work.
Estimating is my downfall. Up until the recent past, I did most of my work in a rural county where permits were lax, handshakes and knowing "who your family is" is sufficient to get you a job. Our reputations make or brake us where advertising does little good. Everyone knows everyone so you had to do a good job.
The point of all that is that I worked off of estimates for T&M almost exclusively. And I never looked back to check the final job against the estimate. So now, I have no reference to prepare more realistic proposals except memory. And I'm almost always optimistic about the time it takes to do something. So now that I'm in a more metropolitan area where things are more complicated (not to mention that building technology is more sophisticated now than before), I find that I need to contract for my work. Also, this is one of the two most lawsuit-happy counties in the country (Madison and St. Clair in IL).
Gerstel, I believe, recommends carefully noting your own work in detail -- conditions, crew, particulars of the job, estimated time, actual time, etc. -- for future reference when making new proposals. That is my most pressing task. He says that estimating software is useful as something to compare your own work against, but sometimes (occasionally, usually) inaccurate for one's own particulars. All it takes is to plug one big underestimate into a contract and you're in a big bind.
I'm pretty thorough on estimating material, but my time estimates suck. Plus, I had no clue about charging for overhead and profit. I used to figure that I should only make money on my time spent on the job. Duh.
Another point, a lot of the conflicts I see discussed here on BT between clients and builders could have been avoided with a contract such as he describes.
When I say software, I mean Excel, QuickBooks, or Master Builder. I've used Excel and MB to do estimates. I don't mean that the software does any estimating for you--you have to enter the unit cost and the number of units for EVERYTHING. It just does the math. But if you set it up well it can be a way of helping yourself be realistic. The last two companies I worked for had very complete lists of work categories, and as long as you checked the list carefully and included all of the applicable categories, you got a pretty good estimate, or at least there was very little chance of missing an item (if you blew it on the hours required that was on you). If you like I will email you a list of cost codes as an example.
Regarding record keeping, I had a lead carpenter who kept a very detailed journal of every day on the job. He had created a one-page log himself, and filled it out at the end of every day--conditions on the job, # of workers, what they did, client interactions, material deliveries, subs on the job and what they did, inspections, problems, issues, etc. Naturally I often asked him to go back and get a piece of information for me because he kept more info than I did.
Edited 11/14/2003 1:48:05 PM ET by davidmeiland
Edited 11/14/2003 1:49:18 PM ET by davidmeiland
David,
Thanks for your post and I apologize for the delay in responding.
Yes, I do use Excel. I've set up my own spreadsheet that I use as a form or template for estimating. It calculates the extensions for me after I've plugged in the item description, count, and piece cost.
The daily log is what I'll start doing. Now. Right now.
Well, maybe tomorrow. Man, I need a lead carpenter in a bad way.
Excel, did someone say Excel????
Tim,
In addition to Running.... and The E-Myth, there is another good book for one or two man operations that I found much easier to read than Gerstel and much more beneficial to me as a sole proprietor...I can't remember the name but I will drop ya a line the next time I'm on BT with the name.Jason Pharez Construction
Mobile, Alabama
General Carpentry, Home Repairs, and Remodeling
When quality is your only consideration
Thanks Jason. I look forward to it.
Ok now that my office is finished and my books are out of the closet, it's another Taunton book called Smart Business for Contractors. I got it at the HD a few weeks back on one of their little book racks. A forewarning, though...it's not nearly as detailed as Gerstel's, but serves to give a good review of his book.Jason Pharez Construction
Mobile, Alabama
General Carpentry, Home Repairs, and Remodeling
When quality is your only consideration
THanks for the reference, Jason.
Sorry it took me so long to get back to you. I appreciate your trouble.
Hey Tim:
Another real good book to get you thinking about how much to charge AND how to justify it ( a close personal problem of mine) is Michael Stones Markup and Profit. I remember reading Gerstels book about 10 years ago too, and lots of it seemed unneccesary, however after making lots of my own mistakes, I recently re-read it and it all makes sense now. Same with Markup and Profit. You may need to read it, sit on it, and read it again before you buy into it.
Cheers
Andy
HI Andy,
I imagine the reluctance to charge for a profit resonates with many of us. I recently had the interesting experience of presenting a contract to a potential customer. I openly explained all my direct costs, the fact that if customers didn't cover my overhead I would be out of business, plus the idea that I had to make some money out of it (profit) or I was working for free. They really liked the explanation and signed the contract.
Thanks for the book recommendation. I'll check into it.
Tim
Tim:
I've never gone into the full explanation of how $xx/hr only translates to $yy/hr in my pocket after expenses, benefits, sick days,,holidays... because i thought it would come across as to much whining. However, as you have just shown a little education of the client can work in your favour. Sometimes I think people just really have a hard time giving other 'people' money... they have no problem blowing 40-50K on some useless SUv that is 10x the car they need, but when an individual tells them their crown moulding in the living room will cost 700 bucks they choke at the thought of giving up that kind of money to an individual. I even had an electrician friend make the comment "wow, you charge almost as much as an electrician!!" when i quoted him for a deck.
Keep educating that consumer...
Andy
Please send me a list of the cost codes . I have developed a list to put on excel to estimate cost that has over 150 different calculations. Thanks Doc from Built Better Homes
Dave that's incredibly interesting reading your personal observation on David Gerstel. I don't think I ever thought about him in this way before but your description of him is what I want to be so I guess I am really trying to emulate him. I know I have a subconscious list of both people and companies I aspire to be like which I think is an very valuable way to think. And I should add there are a few contractors I either work for or work with that I see in those ways too as personal and professional mentors.
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Tim like a lot of people I think Gerstels Running a Successful Construction Company is in the "essential" category as far a business management in this industry in concerned. I have an an old green cover version and just haven't gotten around to ordering a new revised version until just three minutes ago. I think the first chapter alone, A Builder's Career is worth the price of the book, I especially like the way he spells out month by month a suggested 12 month start up plan and recommend that for anyone who asks me about how to start their own company.
Thinking again along the lines where you said " Then the inevitable happens -- we're working on the job all day and sitting in the office all evening and weekends. (And, I'm sad to say, not always making any money and not sure why.) Lately I've been stumped about how to change this situation. " have you also taken the time to read "The E-Myth Contractor : Why Most Contractors' Businesses Don't Work and What to Do About It by Michael E. Gerber?
"Has anyone else worked out of this book? How's it gone?" Well yeah but I wouldn't ever consider one book the definitive end on the topic of contracting or business period. I read a lot. I read everything I can. Books, trade magazines, hey I know ¢5 about plumbing but one of my favorite trade magazines for it coverage of business issues is Plumbing & Mechanical and I read it thoroughly with special attention to the articles in in by Ellen Rohr and Jim Olsztynski. I also read a lot of books on general business management too. Right now I'm reading Tom Peters new book Re-Imagine and it just psyches me up and gets my brain moving.
"My big downfall is poor job tracking and labor estimating." Hmmnn well that's a huge downfall but at least recognizing and admitting to it is part of the battle. I never had that problem, that's always been one of my strengths (if not an obsession) and it's help bail me out of or made up for some other glaring weaknesses I have. Long before I ever even knew anything about computers I was always tracking and logging everything and taking notes on what other people were doing and just how long it took them. I used to do this all on these little spiral bound 3x5 card notebooks that I would keep in a chest pocket or a small pocket on my tool belt.
The key thing I did with it I think was I would write an entries in like:
I just found this card the other day and it's from 1989! Funny thing is that reading it again all these years later I now recall a lot more than just what was on that card about that day and that project. That's enough to jog my memory to the point that I can I remember what the weather was like that day and where we ate (on the patio but I can't recall what I had). My point is that taking notes about something is often enough to jog your memory to the point where you can remember so much more.
You mentioned "Gerstel, I believe, recommends carefully noting your own work in detail -- conditions, crew, particulars of the job, estimated time, actual time, etc. -- " well that's how I did it and that was before I had even read Gestels book which didn't come out till '91!
While there is no mention of when I finished lunch I confident it was a half and hour pr pretty close to it so from the notes from that card and others I could determine the total time spent hanging and trimming doors on that project and then dividing it by the number of doors I had number I could then either use again for hanging solid raised panel doors and casing them with standard colonial casing but no locksets or I could compare that number against a Means or Craftsman books labor hour figure to see where I or we stood. I can also see i was writing down notes as to what to pickup at the lumber yard (the casing, Clear White Pine, and masonite) and what I needed to grab from my garage (the 2-1/2 nails for the gun, drywall screws and bondo). Richards is the lumber yard where I stopped on my way to the job the next day. Those numbers written next to that are prices I got for poplar 1x12 1x10 and 1x8. "Ar" next to the the 7:50 notation means Arrived and I still use that shorthand today. The only thing I can't figure out is whose phone number that or even if it is really a phone number. While those notes pertain to what I was doing there I had other carpenters keeping timecards and I also made my own notes about what they were doing too with intials written next to times and other entries.
Nowadays I still do use those same 3x5 cards on occasion but most of those notes now go into some FileMaker Mobile databases I keep on my palm pilot so I don't have to transcribe them, I can just sync them with my computer. I think I'm kinda like that guy davidmeiland mentioned. I've had other contractors call me at times to help them refresh their memories on just what happened on this project or that.
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