Sort of.
I have been self employed for the last 12 years but by and large the drive has been to get customers, enjoy my work, set my own hours. These are real tangible benefits but as I am facing 40 years old I need to examine my “strategy”.
A saleable business… A fully funded retirement….A legacy…Sweet vacations
All options or ideas are on the table.
In the last 12 years I’ve done everything from change the guts in toilets to put together a 1 million dollar log cabin.
My current set up is a two man show, two trucks, a set and a half of tools.
I use few or no subs, have no office/shop location(other than my house and brother let me tell you that is getting old) I carry comp on my employee.
He’s not particularly skilled but he is a great worker who likes flexible hours. He has alot of strengths but will never be a lead carpenter.
Still doing everything. My ad in the phone book includes the line “YEAH we do that”
Going for and getting mostly larger remodels and additions but have a list of regular customers that we do just about anything they ask.
All the details work is mine from laying out a wall to installing a counter. I had my guy build a shed for a customer last year he did OK but a couple of things happened that makes me reluctant to head in that direction again.
I had a partner few years back and while we had work it was profitable and fun but I brought most of the work in and did all the paperwork on the work he brought in.
I am completely intrigued by the idea of “selling jobs” and getting paid for a proposal.
This is rambling and disjointed on purpose. I’m looking for suggestions, opinions and strategies.
Already I have raised my rates based on info from this forum.
Replies
Congrats TMO on surviving with that scattergun approach for the last 12 years. I almost laughed out loud when I read the part about setting your own hours! If I know, what I think I know, you've been a slave to your business since it's inception.
I'm going to suggest some serious thought to committing some time to seminars or home study. Do you read? I'll suggest The Cashflow Quadrant. This book will explain yourself to you, so you can seriously decide which way you want to go from here.
It's a good thing you started thinking about this at age forty. Studies have shown that most wealth is created by men when they reach the age of between 45 an 55 and last 10 to 15 years or so. You're getting a good head start.
blue
Just because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Blue my earlier career was in restaurant managment. I logged some heavy duty hours there. I grew to hate it and had some carpentry experience. The memories of that grind still make me feel like I won lifes lottery by quitting the restaurant. Of course, occasionally the grind in this business is tough but at the end of everyday, even the shi$$y ones, you are closer to to finishing another project and have accomplished something.
Jeff, guess what showed up in my mail box yesterday. If you guessed "The E-myth Contractor." you win a prize. By the way, I think I read somewhere here that you use some subcontractors. Does that work for you?
What about a business location? Anybody have opinions about that?
To you older fellas' is there one particular thing you would point to as changing from a hustling carpenter to an honest to God business man?
I can still remember the day and the particular moment I knew I was going into business for myself. A moment of scintillating clarity in which I knew If I offered my services on my own I would find customers and clients. One of my employees at the restaurant wanted her house painted, I smiled and said I'd like to give you a price.
Haven't looked back since.
To you older fellas' is there one particular thing you would point to as changing from a hustling carpenter to an honest to God business man?
Get that book The Cashflow Quadrant. That will help you to understand who you are.
Some people are born to be employees. Some choose a different path. In the end, we're all hustling in some way or another. Some people choose to hustle a little more intelligently. It sounds like you're crying for info. Get to the bookstore, do some reading, then follow the leads and suggestions.
There's no shortcut, unless you possess the skills naturally, or can work directly with a mentor.
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Some people are born to be employees. Some choose a different path. In the end, we're all hustling in some way or another. Some people choose to hustle a little more intelligently.
Blue,
Are you suggesting that by reading this book, you will journey to discover something about yourself and your suitability to being s/e etc.?
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
[email protected]
Eric, I mention that particular book because it breaks down the differences between employee, self employed, business people and investors. He mentioned wanting to transform himself from carpenter to businessman, and I'm telling him that the key to doing that is to fundamentally understand the differnce.
The book will become his starting point for his roadmap.
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Blue,
I'm on it. I just got the E-myth and once I'm done with that I'll track down a copy.
In the mean time can't you boil it down to a sentence or two and maybe I can save the $20 :)
Edited 2/26/2005 3:58 pm ET by TMO
I use subs for mechanicals ... plumbing/electrical/HVAC/painting/fireplace/brick and block laying/etc.
most of that ... I've done myself. In my usual area of work ... I need a licensed electrician and plumber ... there's new codes about gas line work to .. special certificate .. my plumber/HVAC/fireplace guy all are gas line certified.
I still got no problem tapping and adding a tee at home! I was taught by Dad to check for gas leaks with a match .... I ain't scared. Wired hot out of a panel at 12 yrs old ... it's all in the technique. Which might help with my success with my subs.
All "my guys" ... are really my guys. I trust them 100%. I've also learned that the guys I've picked to work with ... are all the most expensive guys on the block. But I'm not a price checker when it some to subs ... why bother? I just tack on 20% and that's the cost. Doesn't cost me any more to have the best. I picked them each because it's insuring my reputation. I've never had one problem. My guys are the best ... they correct the architects and inspectors. Plus ... I have a great relationship with each. I was friends with half of them as we subbed for the same GC's before I "hired" them for the first time. I still use that friendship relationship to my advantage.
They are the experts in each individual field. I've worked in each field to a certain extent ... but I realize I don't know the field. In the end ... they are the decision makers ... not me ... not the customer.
I get their price first ... then add the percentage on top .. then present it. I may "adjust" my prices ... but never a subs. If that's what it costs ... then that's what it costs. I've told more than one customer ... OK .. my guy is more expensive. U want your guy ... I'm adjusting my contract .. because I'm sitting here ... guaranteeing that your "cheaper guy" in going to cost us both time and money in the long run.
Just sign off on these "cover my #### conditions" ... and we'll use your guy.
I tell a little story ... always say ... if and when things go wrong ... plumbing or electric ... it's going to be Fri nite ... around 9 or 10 pm ... and U are going to be sitting on the toilet. Either that drain is going to back up .. or the lights are going to shut out ... but trust me ... U will be sitting on a toilet when this happens. So .. yer gonna be pissed .. and yer gonna call me ... late on a Fri nite. And I'm going to have to call either a plumber or electrician ... late on a Fri nite. I can call my guys .... and half jokingly say .. get yer F'in a$$ over that GD job site and fix that sh!t ... NOW!...
or . call your plumber/electrician ... and politely explain who I am ... and quietly ask when they think they'll be able to make it there ... hopefully by the next afternoon?
and if they think Monday is best .... what recourse do I have?
I've met both my plumber and my electrician on Sat mornings at problem sites ... I've driven to the supply houses to get that one problem part so we can all go home ...
I've also driven both my plumber and electrician straight to the bar for a late dinner and beers after a service call ...
and I'm not gonna do that with your plumber ... so maybe the extra cost "might" be worth it?
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
Thanks Jeff.
While I haven't fully embraced using subs yet I think it is a direction I will have to head in the future. Mechanical subs are required in certain areas 'round here so I have some guys that I use for stuff like that but when I'm in locals that have no code covering it I am likely to do it myself.
The Question Du Jour---
BTW I'm still looking for input on the office location shop thing-
Written contracts, how complicated, sources of, payment schedules etc..
Advice in general about writing contracts.
my "office is in my house" ...
and all customer contact business is in their homes ...
but ... a smart man once told me on the subject ...
everything related to running a business should make U money ...
so instead of renting a shop/store front ...
get a mortgage on a property U can work out of, while charging others rent to pay off your building.
made sense to me.
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
based on your desires ... I'd suggest reading two books.
I just said I didn't care for either in another thread ... but ... I'm not their target market.
Selling the Invisable
and
the E Myth Contractor
Mike Smith started the thread ... about books ... marketing ...
couldn't find it on a quick search. But for what you are looking to do ...
I'd say both are right up that alley.
I'd be interrested to hear "the other side" ... so keep this thread going ...
never know when I'll change my mind.
Jeff
marketing 101 ... there it goes. Anyone know how to flag down Sonny to this thread?
Buck Construction
Artistry in Carpentry
Pgh, PA
Edited 2/26/2005 1:40 am ET by Jeff J. Buck
I'm in exactly the same position as you and I'm 47. My liscence is a little over 1 year old. For the first time I'm thinking of how to place myself out there rather than move forward in a helter skelter fashion. I havent got it figured out yet. I dont know what my business is or should be.
My helper is young and wants to learn but I cant leave him alone on most jobs.I'm commited to keeping him but I dont know how to keep him busy when Im designing, estimating or otherwise setting things up.
My helper is old, same age as you, I think ;) . Same basic problem though, it is tough to keep him busy with his level of knowledge.
One thing I do is advertize. Phone book, newspaper, local high school year book etc. Odd thing about it is I don't return most calls I get currently. 80-90% of the jobs I do are from people I know or have worked for in the past.
You don't return calls? According to some, that would be bad form. Anytime someone comes into contact with your company, they are going to come away with some type of perception about you, whether they work with you or not. By not returning calls, you are allowing potential references to go out the window. Is there anyone you could refer to those people that call? If not, at least, let them know that you are "too busy" to provide immediate assistance with their project.
I agree with that. I am fully aware that I am "screwing" myself by not returning calls. To the same extent I know how much work we can do and nothing sucks worse than having to much to do in to short of a time. It always ends up unprofitable and stressful. I may go the too busy route in the future but every time I've tried it people always beg for a bid anyway. I get annoyed promise to bid it waste a couple of hours measuring it up.
I dont advertize.(I'm thinking about it) Most of my work is word of mouth, referral. Its been a little spotty lately.Idont know what my helper would do if I was busy tracking down a bunch of leads. I'm thinking of specializing in a mostly t&m handy man style business.
farther.. i went in business for myself in '75.. started right off the bat with a helper..
trained him as i trained myself.. i've always had employees ever since.. and i'm always bringing someone along and trying to find ways of keeping them productive..
couple things to keep in mind.. once you get a guy.. and train him.. or them.. they can keep the production going while you're estimating , ordering , selling .. managing.
without employees.. when you're doing those things.. nothing happens on the production end..
i know a lot of guys who never wanted the headaches of employees.. but they eny me because i've got them..
if i broke my leg tomorrow..my jobs would go on....
oh,and one other thing.... it seems like yesterday.. i started.. but it's been 30 years.. time flys.. i mean flys !.. that kid you have, in one year..he'll have a year's experience.. treat him right and see he gets the right training.... in 3 years he'll be a whiz..
if he quits..... start over with the next guy..
either that or start figgerin how you're gonna run a one -man band... either with one man ... or with subs...Mike Smith Rhode Island : Design / Build / Repair / Restore
The only way you find out is by leaving him alone. I leave my guy alone often(especially in the summer) and I try to give him something that I know he can do well. Which is plenty. But I play to his strengths. He is maintainance oriented and quite capable in that department. He hasn't broke anything that can't be fixed but he has cost alot of money and time with some mistakes.
Hello TMO,Here is an idea for you and the others here, from Guy Kawaski (business start-up guru):He asks, "Have you crossed the psychological barrier of hiring people who are better than yourself?"He says, "A players hire A+ players. By contrast, B players hire C players. C players hire D players. Pretty soon, you're surrounded by...the Bozo Explosion!"I think many contractors make the same mistake customers make by going with the lowest bid contractor, except the contractors are going for lowest (or lower) skill employees so they can pay less (like the low bid). But of course, we get what we pay for.This is all easy for me to say (actually, I'm mostly quoting Kawasaki) since I have not taken the plunge of hiring employees. If I do hire an employee, I might wait until I find someone as good or better than me.Kawasaki states, "If they can't do their prospective jobs better than you, don't hire them.Something to consider.
Your advice has been ringing in my "eyes". Thanks for taking time.
Like I said, it's not really my advice (it's Kawasaki's), and I haven't really followed it myself. Someday I will. Maybe I already do to some extent, I always try to hire good subs to do what I'm not good at or fast enough at.Years ago a painter told me his boss said one day, when a bunch of things were going wrong, "Idiots, Idiots, I'm surrounded by Idiots!" to this my friend said, "Ray, why do you think that is? Why are all of these idiots around here?"
Of course he had hired them, so by implication he was the idiot.
Wow, I couldn't disagree with you, well not you but this Kawasaki guy more. I love hiring a new capable virgin. Teach them the right way (your way) to do things and the jobs hum like a well oiled machine. I don't advertise strictly refers I know what my clients want, they want the same quality job I did for their neighbor/sister/friend...this way I'm sure that's what they are going to get.
The problem I've had hireing "virgins" is they tend to get recruited by other contractors. For Example had a kid good worker quick with picking up skills paying him $8.00 to him 12.50 or so to payroll agent for comp and taxes. Some scumbag contractor offers him 12.00 cash to come aboard as a sub contractor. Obviously ####. He hired him as an employee but took advantage of the fact the kid wasn't worried about getting hurt or paying his taxes.
Happened twice in the same year. I had taught those kids alot ate alot of mistakes and then whamo.
TMO you can deal with the virgins by offering them a future. When the last batch of virgins I hired came aboard, I set up a 6 year pay schedule that ended with them getting full journeymen wages. I offered to escalate that schedule if they took courses that sped up their development. I explained how and why this would be better for them in the long run. I also let them know that in less than a year, they'd be able to jump ship and make more in the short term.
Both of the "virgins" hung out till the end.
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Wow, uh sorry TMO where do you reside?? I think... uh... I might be that scumbag contractor.
Nah, I don't pay in cash. But all my "employees" are sub-contractors, they all get paid by check, get a 1099 at years end, and have to carry their own insurance. If they are good about paying their taxes (some are,some weren't) They'll pay the comp. I've often thought about going the whole payroll route but it just seems like such a hassle and all I'll probebly get for my troubles is a couple of your same type stories. I've been in this area for 8 years now (north of poconos Pa.) and it seems thats the way its done up here. One problem I have encountered is teaching guys too much and they go out on thier own. Now don't get me wrong I would never want to hold someone back but two out of the three were not ready. Sad part is less then a year later one was back working for someone else. On agood note at least no-one has attempted to start his own business using my tools. I've heard those horror stories too.
do Ya ever tell them exactly what to do .. when to do it .. and how they're to do it?
Guess what ... yer in trouble!
how's that work never knowing exactly what time or day anyone's gonna show up?
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
jag...... gimme a call and let me know how exciting it get's when one of those "non-employees" gets injured on your job...
his personal injury lawyer will split your assets with your former "non-employee"..
and uncle will get the rest for back taxes...
the way it's done in the northern poconos is the same way it's done every where that people convince themselves they can get away with it..
why don't you just make up your mind that you are either going to have employees or not ?
another scenario that get's 'em is this one:
the "non-employee " doesn't pay his own payroll taxes..
three or four years later, the irs hauls him in.. lot's of tears.. then next they're calling you.. and you owe all of the back taxes on him... then the audit.. and you owe payroll taxes on everyone of the "non-employees"
get real.....
Mike Smith Rhode Island : Design / Build / Repair / Restore
How can you call an 18 year old a sub-contractor? If you check the law I'm pretty sure you'll realize that you have employees and you are simply skipping your legal obligations. Seriously I hope you don't get nailed . But if and when you do the numbers will be huge. Alot of "contractors" around here work it the same as you so I know its possible to continue doing it for a long time.
It may bite you in the #### but it might not.
How close are you to Binghamton?
BTW 1099ing someone doesn't protect you if they don't pay thier taxes. My accountant actually suggested I pass my obligations back to a contractor I worked with because as the acountant stated I was his employee and could prove it(I had a bit of tax trouble). Hopefully the 42 year Carp you fired isn't grinding an axe. Another question, how long will you be in business if one of your employees sues you and the homeowner you are working for when he gets hurt? Workers comp helps protect you and your customer from that.
Edited 3/30/2005 7:37 am ET by TMO
Edited 3/30/2005 7:39 am ET by TMO
My accountant actually suggested I pass my obligations back to a contractor
Probably 99% of "subcontractors" could prove that they were emplyees. When that happens, the IRS treats the 1099 money as net income after taxes were withheld. The ensuing tax obligation does not go away. I know of several contractors that lost everything they owned, plus future earnings.
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Nah, I don't pay in cash. But all my "employees" are sub-contractors, they all get paid by check, get a 1099 at years end, and have to carry their own insurance. If they are good about paying their taxes (some are,some weren't)
I hear a ticking time bomb.
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
JAG,
I hope I/we haven't chased you off. The advice and observations I have given and made weren't offered with malicious intent.
Edited 4/1/2005 8:52 pm ET by TMO
My post was in responce to TMO who, like many, has an employee that isn't quite up to the task and may never be...and is evidently limiting the operation in some ways that are aggrevating to the owner. My primary suggestion is find the best person for the job, don't settle. This doesn't mean you can't hire and train the young and inexperienced (somebody has too--those ads "only experienced need apply" always bugged me). But, you shouldn't keep someone who isn't going to master the tasks you are going to give them, even if they are cheap labor. I have worked with 18 year olds that "got it" and 40-year olds that never will. Surround yourself with people that "get it."
I couldn't agree more. I've got an 18 year old kid been with me six months who works and produces circles around the forty two year old "carpenter" I fired three months ago.
There must be some kind of bug that hits 10 years in that drives us to change direction dramatically at that mark.
Here's a case study for you.
My attitude was that doing flashy things that get the neighbors talking is the route to steady leads coming in. Turned out that if the work is showy enough you get all kinds of free marketing from magazines and newspapers. We had an article in the Chicago Tribune and the Toronto Star last year for free. This year it's "Style at Home Magazine" giving us great promo-just in time for spring-net cost, use of photos and a few hours of work.
When it comes to being competetive and getting a good price-doing something that noone else can even quote accurately on means zero competition-so there's more profit.
About half the guys that have joined up are salesmen/businessmen, the other half are traditional carpenters tired of the grind that want to make the transition to Businessmen. Being a carpenter will only net you so much profit-but organizing, training and selling has the potential to make you rich. This goes for many different businesses. General labour is only worth so much. Use your bean-not your braun.
Product-can be anything really. The crucial part is that it stands out from the competition and is immedietly identifiable as superior. Selling on best price is just no fun. I spent the first 10 years developing a product line that looked different... now, many people know it on site.
Competition- in our case, we compete with Architects and Landscape Architects who all sub out the work to be done with varying results. When they need a 25-50% markup on the work they are installing-even our price with lots of profit in looks competetive to the purchaser. If we were competing with local carpenters it would be a tough sell indeed. We get around that by charging for consultations and designs. That drives the price shoppers elsewhere but the amazing part to me is that 50% of those shoppers end up getting the consultation. Times are changing.
Marketing- As you all know I believe that all marketing is good and if it is low cost and high exposure it's even better. Learn to use the web and the phone rings with quality leads. A bad website could be worse than a yellow page ad for tire kickers. We get about 50,000 visitors a month through the site this time of year. Come spring that goes up. Hosting for a small website can be had for 35$ a month. Much cheaper than yellow pages.
Location- Less driving means more profit. Access to a strong market for your product is an absolute necessity.
Leads: Every lead must get followed up. It's in our code of conduct.
Warranty: 5 years workmanship. Anything you do wrong will show up in the first year-so what's the harm. It's another selling tool.
Hope this helps.
L
GardenStructure.com~Build for the Art of it!
Larry thanks for the reply. I like the way you think. I've considered getting out front of a trend like soapstone counters tops(if it turns into a trend). Probably not exactly what your are talking about.
So are you a landscaper or a carpenter or some combination of both.
I have had Ideas along the lines of what you seem to be suggesting.
Soapstone countertops sounds like a cool thing to look into... but it's much softer than marble, which is scary. Sounds like maintainence... have enough high maintainance women in my life let alone a countertop that needs polishing every week. Check into it though... betcha it'd be gorgeous, white or red would look great. Really different.
I am a woodwork designer/ entrepeneur/ benevolant big brother in the business... was a carpenter for 80 hours a week for 15 years, specialized in trim and outdoor woodwork but did project management-crews upto 120 men, built newspapers, million dollar tennis courts and houses with glass roofs. I write for a couple of magazines. Our builder network has 9 locations now... specialists located all over North America, Dallas, LA, Toronto.
office location shop thing- an office depends on what you want to do there... if you want walk in traffic there better be traffic going by. If you just want a place to do paperwork with the odd visitor, best out of the house and in a less expensive location. Obviously having a shop/office at your own location is the least expensive option, but it means being out of town normally.
Written contracts are normally a work in progress. A good lawyer will help you develope your own over time. We offer the guys a contract that covers you in the event of non-payment-reposession-liquidation, all perils, economic disaster, who gets permits, warranty issues, ownership-definitely written in your favor and yes, it has to deal with payment schedules, interest and payment terms. Writing a contract is part art-part legals-and part psychology. It shouldn't look daunting, shorter terms should be harmless fluff-since that's what people read. Even our contract which has been developed over 15 years should be checked by a local lawyer, since law morphs to a given area's needs and desires, legislation can bar some terms from being included.
Hope this makes sense.
L
GardenStructure.com~Build for the Art of it!
"A saleable business... A fully funded retirement....A legacy...Sweet vacations"
TMO,
Lots of good advice above. But if this is what you want then the quickest way to get there is to:
Specialize
Hire others to do the work.
Then hire someone to sell the work.
Then hire someone to count the money (accountant).
Collect the money.
Rich Beckman
Another day, another tool.
Does the sentence "I specialize in handling all aspects of construction and remodelling" make any sense? If so thats my speciality.
Im just starting out too. Im young...36. Came from landscape design and install, but have remodeled and handyman'd since i was 20 with my first house. Had fixers uppers ever since.
Got hit in the temple with a 4x8 of plywood, when i came out of the coma I decided I wanted to be in the biz for good. (crazy, i know)
Started my handyman/remodeling company and know im trying not to be skatter-brained about it and which direction to go. Thats why i spend too many hours on here at night reading.
Ive learned alot reading from alot of these guys. When they type... im reading. Its alot of help ( Thank you to you guys... you know who you are )
Im not making alot of money yet. but thats because Im still trying to figure it out. Taxes, expenses, overhead, profit, and how to close the deal.
One thing I have learned.... Its not that hard to keep one man ( ME ) busy. There is plenty of work out there for me. I find someone to help when i need it.
Its never hard to keep busy, it does seem somewhat hard to actually make money.
People are glad to pay you to do stuff they can't do.
I've learned alot here as well. Some of he best advice I followed was about taking the time to figure your overhead and costs of doing business. It was a real eyeopener. Have you taken the time to do that?
Edited 4/1/2005 8:51 pm ET by TMO