Replies

1. 
   Gunner | Jan 09, 2005 05:46pm | #1

   I'd just do it and not waste time worrying about dividing the money amongst yourself.

   Who Dares Wins.

1. 
   SamT | Jan 10, 2005 04:32am | #13

   Gunner,

   Thanks,

   SamT

2. 
   woodguy99 | Jan 09, 2005 06:35pm | #2

   Sam, have you read The E-Myth?  In it, Gerber advises to keep track of your own time and write job descriptions for each of the kinds of categories you mention.  You might already know this.  Every business will have wildly different times for each category; really the only way to do it is by trial and error I think.

   When you say you plan to pay yourself the going rate for the hours you work, do you mean just production, or do you mean you'll pay yourself a secretaries' wage when doing that work, and an accountant's wage when doing that work?  I see problems with both methods.  If you're paying yourself for only production, you can't do the other work for free, you need to charge for your overhead time. 

   On the other hand, if you are paying yourself a secretaries' wage when you could be working for someone else doing carpentry at a carpenter's wage, why take the risk of self-employment?  And how can you justify paying yourself an accountant's wage when you (presumably) don't have the experience to warrant it?

   I don't mean to be harsh, I'm actually in a similar position to you at the moment, including some past "failures" (I like to think of them as unprofitable learning experiences that I was smart enough to get out of.  Failure sounds so defeatist.)  I'm not sure how to go about this either.

   From what other contractors here have said and my own experience, 30 to 35 hours of production a week would be normal, and 50 to 60 total hours a week.  That seems like a lot of overhead time, but in the past I didn't allocate enough hours to running a business.  Typical story.

1. 
   SamT | Jan 10, 2005 04:35am | #14

   Mike,

   Yeah, I'l figger my pay seperately for each hat in order to test my pay system. If it works out more than I need for beans and bacon, I'll dump it back into Captital Investment.

   SamT

3. 
   Sphere | Jan 09, 2005 07:48pm | #3

   seems to me..a hooker can make 100 bucks in ten minnits, a drug dealer, about the same.
   what you need to foster is the lumps received for energy expended, and the rest will work out..be a secratary, a gofer..it all works out in the wash.

   selling a service is not easy, selling yourself is worse.

   wear the big sombrero, and cover all bases, work in the shade.

    

   Spheramid Enterprises Architectural Woodworks

   Watch out for the edges, it's really fast out there...

    

    

1. 
   SamT | Jan 10, 2005 04:36am | #15

   Duane,

   Hunh?

   SamT

4. 
   blue_eyed_devil | Jan 09, 2005 09:00pm | #4

   Sam, you are wise to attempt to quantify all your real expenses. Since you are probably the only one that knows what kind of business you're running and what it all entails, you are the one that has to fill in the guesstimates.

   Just allocate an amount that you actually think will work. Extend your business plan out from there and have at it...if you're wrong, you'll still be a lot closer than if you don't figure it at all. In the end, it will all come out in the wash and when you start hiring your replacements, you'll be able to quickly determine whether it makes financial sense or not, depending on your revenue stream.

   The most important number is billable hours. If you figure that you will have 3000 hours available to bill, you'll probably be working every single available hour in each year to survive. If you base your entire gross on 5OO hours of skilled work, you probably won't be competitve, but if you can manage to survive and sell those highly priced hours, you'll be much happier.

   I've done quite well on as little as 900 hours...and found myself starving on 2700.

    

   blue

   Just because you can, doesn't mean you should!

   Warning! 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. According to him 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!

1. 
   SamT | Jan 10, 2005 04:40am | #16

   Blue,

   I know I'm the one thats gotta decide which numbers to use, I looking fo an idea of what's realistic, fer instance, I don't want to plan bookkeeping at 2 hours a day when the guys here could tell me that they only spend 2 hrs/week.

   I may be igornant, but I smart enuff to no it.

   SamT

5. 
   Isamemon | Jan 09, 2005 09:08pm | #5

   First thing that comes to mind is the movie "multiplicity" if you havent seen it, every self-employed contractor should. It is a contractor that has a sloution for the "many hats"

   starting a biz. This is my umpteenth. I alsways learn from my mistakes or failures.

   However one thing I havent changed is waht I pay myself for each of thoise job descriptions you mention

   it works out like this

   Pay my guys well,

   pay my subs and suppliers on time

   keep my tools and truck in top shape

   pay my advertising and overhead

   put a little into a bank account for hard months

   pay myself whats left

   sometimes in each of yoru catoagories thats ZERO

    

   however I wish and plan to do similar . I try to bill myself out differently for design work, comission for sales, etc.

   but in reality it all goes into the same pot

   but someday, someday, someday over the rainbow

1. 
   MikeSmith | Jan 10, 2005 01:09am | #6

   sam... here's a run at it

   CEO            =   24  hours a year (1/ week )Sales          =    8 / weekAccounting     =   hire it &  your time with her  8 hours  / yearBookkeeping    =   hire part time.. work with Bookeeper 2 hrs/ weekEstimating     =   8 / weekDrafting       =   8 /weekSuperintendent =    8/weekPurchasing     =   8  /weekForeman        =   make the super do itCraftsman      =    20 / weekMarketing      =   2 / weekTool Repairman =   hire it/ drop off & pick up  2/weekSecretarial    =   rolled into ceo,acctg,sales, etc.Gofer          =    part of purchasingBill Collector =   2/week

   that's 69 hours a week... better hire some help  (craftsmen)Mike Smith Rhode Island : Design / Build / Repair / Restore

1. 
   blue_eyed_devil | Jan 10, 2005 01:26am | #7

   Mike, you forgot a category or two:

   Golfing: 120 hours

   fishing: 120 hours

   Hunting: 120 hours

   Beer drinking: 120 hours

   Goofing off:......

   blueJust because you can, doesn't mean you should!

   Warning! 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. According to him 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!

1. 
   MikeSmith | Jan 10, 2005 01:43am | #8

   all things in due time, grasshopperMike Smith Rhode Island : Design / Build / Repair / Restore

2. 
   SamT | Jan 10, 2005 04:52am | #19

   Blue,

   Dam! I just knew I would forget at least one VIH, but I didn't dream I would forget 5!

   SamT

2. 
   SamT | Jan 10, 2005 04:51am | #18

   Mike,

   Great! Thanks! That's exactly what I want.

   I already figure on hiring 2 craftsmen, but that means that for the first 2 weeks/1 job I'll have to put in 40 hours a week as foreman, the next job maybe only 30/week as foreman.

   As soon as I can afford to go to a resturaunt for dinners after work without touching any of the money I'm earning as a bookkeeper, I'm hiring a replacement for me! The same trigger for hiring all my replacements.

   SamT

    

2. 
   SamT | Jan 10, 2005 04:42am | #17

   IsaMe,

   I don't want to stay at zero for too long, do I?

   SamT

6. 
   Sasquatch | Jan 10, 2005 01:48am | #9

   I did the same when I started out last year.  Of course, I quickly dropped the idea of having employees.  I do plan to go that route again if I can get established as a Quality Framer/builder.  I found that the office tasks took about ten hours a week if I remained on top of them.  The main thing with taxes is to stay on top of the paperwork and get everything in on time.  You really have to be anal about that.

   I do the design on an ongoing basis.  I found, although I had taken accounting classes some years ago, that the accounting part is too difficult to jump right in to.  I used software called Simply Accounting, which is very good; however, learning how to set up the right accounts and making the whole thing work never worked for me.  That represented about three weeks of trying before I finally just went to a simple spreadsheet and started to keep records manually.

   I still plan to get the software working for me, but my motivation is low right now as I have my alternative method working.  I think they just make the software more difficult than it has to be.

   I also do not intend to pay an accountant.  What they can actually do for you is minimal as far as actual work is concerned.  They enter data and get things categorized and submitted on time - all of which requires little time.  The big thing is knowing what to do and when to stay legal.  That is really what you are paying for.  I got to the point where I am comfortable with that part and can handle the rest manually.  If I ever get the software to work, the accounting will be very easy, because it figures out all taxes and everything.

   I think the rest of the business depends on your personality, your networking strategy, and your business niche.  I am still seeing certain aspects look good one day and bad the next.  During the winter hiatus, I am spending my time on designing floor plans in AutoCAD LT and other little projects.  I am hoping Spring will bring in some business.

   Les Barrett Quality Construction
1. 
   MikeSmith | Jan 10, 2005 02:17am | #10

   sam.... best thing i ever did was sign up with a Payroll service... they file and pay all of our payroll taxes..

    it not only saves time.. it saves money.. it saves hats   & it saves penalties

   i now spend about 2 minutes a week on payrollMike Smith Rhode Island : Design / Build / Repair / Restore

1. 
   Gunner | Jan 10, 2005 03:52am | #11

   If you don't mind my asking. What do they charge for that?Who Dares Wins.

1. 
   jonblakemore | Jan 10, 2005 05:49am | #24

   Gunner,We use Paychex and it costs about $65 every pay period (bi-weekly).That's for 2 officers and 1 employee. 

   Jon Blakemore

1. 
   Gunner | Jan 10, 2005 05:55am | #25

   You can't beat that.Who Dares Wins.

2. 
   jonblakemore | Jan 10, 2005 06:08am | #26

   Yeah, I would tend to agree.I decided to go with the service based on Mike Smith's recommendation. I have never done payroll so I don't know how long it would take me. I can tell you that the checks look professional which is nice for a small company. Nice tear-off stubs that have all your info with each check look good if you're trying to get a loan. Add that to the fact that I never have to worry about those taxes and the time is neglible, I'm happy. 

   Jon Blakemore

2. 
   MikeSmith | Jan 10, 2005 06:10am | #27

   gunner.. i think it's about $13/ week..... they file all state & fed. quarterlys.. pay all of the taxes.. my guys & me  are all signed up for direct deposit.. so no time lost going to the bank

   i get W-2's .. hell, they even  used to take care of child support payments

   all i gotta do is fax in the gross hours.. and make sure the money is in the bank

   blue.. more than the time and the reporting.. thye keep me out of trouble... i was always falling behind on  state & fed. tax deposits....penalty this.. that..

   the first 10 years was hell... since payroll service not one single late report,  no penalties..no errors... no sweat

   edit:  jon  .. we use Advantage Payroll .. they have a lot of offices in other places.. but not as many as PayChex....

    i'll double check the charges tomorrow..  that $13 / week is off the top of my head

   Mike Smith Rhode Island : Design / Build / Repair / Restore

   Edited 1/9/2005 10:15 pm ET by Mike Smith

1. 
   jonblakemore | Jan 10, 2005 06:13am | #29

   Mike,What service are you with?How many checks are cut each week? 

   Jon Blakemore

2. 
   MikeSmith | Jan 10, 2005 06:16am | #30

   see my edit above... we cut any from 3 to 6 checks / week.. weekly payrollMike Smith Rhode Island : Design / Build / Repair / Restore

3. 
   jonblakemore | Jan 10, 2005 06:19am | #31

   That sounds tempting. I called a few places and I went with Paychex because I got a site visit by a guy from Richmond and they really seemed to have their stuff together. I will probably shop around again in 6 months or so but I wanted a good company that would be there to smooth out any bumps we might hit, you know?I'm putting that on my long term to do list. 

   Jon Blakemore

4. 
   MikeSmith | Jan 10, 2005 06:37am | #32

   my bank recommended that i use the service..

   you might ask your banker which  companies work thru themMike Smith Rhode Island : Design / Build / Repair / Restore

2. 
   blue_eyed_devil | Jan 10, 2005 04:01am | #12

   Mike, using Paychex was a great idea many years ago for me. I've since switched over to Quickbooks and we do the payroll in house, but I wouldn't hesitate to go back to a payroll service. All small contractors that are struggling with their day to day bookkeeping are well served to use a payroll service.

   blueJust because you can, doesn't mean you should!

   Warning! 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. According to him 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!

1. 
   SamT | Jan 10, 2005 05:10am | #22

   All Youse Guys,

   Thanks muches, dog bones are in the mail.

   Keep 'em coming, I'm just trying top get a feel for what's realistic so I can keep my head outa my arse. (For a change.)

   Mike gave me something like 29 hours a week nonbillable and office and Les 10 for all office.

   Anybody else?

   TIA,

   SamT

   Edited 1/9/2005 9:12 pm ET by SamT

1. 
   jonblakemore | Jan 10, 2005 05:48am | #23

   Don't forget BT time. At least 21 hrs/week (3 a day). 

   Jon Blakemore

3. 
   SamT | Jan 10, 2005 05:04am | #21

   Mike,

   I will definately look into that.

   But, I do want to DIY for the first few employees/months, just so I thouroughly understand the process.

   Thanks,

   SamT

2. 
   SamT | Jan 10, 2005 05:01am | #20

   Les,

   Thanks for your thoughts and that 10hr/week number for all office tasks.

   My specialty, Footings and Basements, will need 2 craftsmen full time, 3 sometimes, and 4 for pouring the walls. I'll hire a grunt from Labor ready when I pour.

   I have to disagree with you about the accountant. I think they can pay for themselves just in tax savings. I have already lined up one who is familiar with Excel and construction to set up a bookeeping spreadsheet for me.

   SamT

    

1. 
   MikeSmith | Jan 10, 2005 06:13am | #28

   foundation guys i used for the first   years always filled out their crew with work release inmates...

    interesting job sites...Mike Smith Rhode Island : Design / Build / Repair / Restore

7. 
   IMERC | Jan 10, 2005 08:46pm | #33

   lotsa clones...

   but keep the loot to yerself..

   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!

1. 
   SamT | Jan 12, 2005 05:14am | #34

   bump

   Flagrant self promotion.

   Or maybe that's fragrant self propulsion.

   SamT

8. 
   Bowz | Jan 12, 2005 07:17pm | #35

   Sam,

   Bookeeping/accounting takes 1 1/2 hrs per week on average for me.  ( I work by myself).   Another specialty contractor,  with three employees told me he has a bookeeper come to his office for 4 hours every other week. It also takes 2 hrs of his time going over stuff with her and signing checks.

   I wrap Superintendent, Purchasing, Foreman, Craftsman, and Gofer into  my goal of 28 billable hrs per week.  I don't divide them up. I am the most expensive gofer, and the cheapest superintendent.

   Bowz

1. 
   SamT | Jan 13, 2005 04:33am | #39

   Bowz,

   Thanks, that helps a lot, it is what I am looking for to make sure my wild guesses are in the ballpark.

   SamT

9. 
   maverick | Jan 12, 2005 10:04pm | #36

   Accounting for me takes about 5 minutes a day. I set up an excel spreadsheet and copy it as a template for each job.

   All of my lumber yard tickets, packing slips and reciepts for the day are entered on the spreadsheet then they go into an accordian type folder. Then I enter every ones hours. some other things that get entered are credit returns and recievables.

   If a job is T&M markup is calculated automatically

   At the end of a job I take a few numbers off that spreadsheet and plug them into another spreadsheet that is a year-to-date running total. On this spreadsheet I also enter things like tool purchases, insurance premiums, office expenses and quarterly tax payments. All reciepts and cancelled checks also go into the same accordian folder

   I buy a new accordian folder at the beginning of every year. Larger jobs get their own folder

   That all gives me my tax liability, profit margin and expense tracking up to date every day of the year. I know where EVERY penny is every minute of any day. It could'nt get any simpler

1. 
   MikeSmith | Jan 12, 2005 10:51pm | #37

   damn, maverick.. you're good... i'm so ADD i procrastinate half the stuff ...

   i can find twenty reasons to not do it  until i absolutely have to do itMike Smith Rhode Island : Design / Build / Repair / Restore

2. 
   woodguy99 | Jan 13, 2005 02:24am | #38

   Maverick, that sounds like a good system.  Is there any chance you would be willing to post a copy of your spreadsheet here?

3. 
   SamT | Jan 13, 2005 04:36am | #40

   Maverick,

   Thanks for sharing you system.

   That's what I'm trying to do with my forced at home time right now, set up Excel to do the hard parts.

   I would be interested in seeing your spreadsheets too, if you don't mind sharing them with a bunch of illiterate yahoos like me.

   Samt

1. 
   maverick | Jan 13, 2005 03:05pm | #41

   let me see if I can figure out how