hello to all. I need some help! after about 20 years in construction,always as an employee, I have recently found myself being let go from my foreman position caused by company downsizing. at this point in my life I need to go out on my own and start my own company. I am the only one I can trust for my own future. but during all my years of gaining knowledge from all avenues, I seemed to over look one aspect of construction. how to RUN a construction company. I have always been better with my bags on than with a clipboard. I have run jobs from start to finish, but only as a foreman, not from an office perspective. for now, I’m just letting logic take over and hope for the best, but that will have to change. I’m having a tough time with estimates because I’m unsure of the pricing in my area. if any one has helpful hints or advice I will GLADLY listen. I truly belive, we as the up and comers should hold a high respect for the veterans of the industry.thanx again……hamernnzls
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My first thought is, can you team up with someone with the opposite set of talents? Otherwise, I'd see about making an appointment at the local SCORE chapter (Service Corp of Retired Executives, not the strip joint) and see if there's a retiree from construction that can give you a crash course. Trying to learn the business end on the fly, if you are really as inexperienced as you say you are, may be biting off an awful lot while you're trying to do the work simulteously. Otherwise, doing a search here for topics like yours will produce a lot of threads with many suggestions on books, etc of value. While I'm not nearly as experienced as many others here at the trade, I do have 30 years of business experience and be happy to answer any specific questions I can.
Good Luck!
PaulB
You have a lot of reading ahead of you just from this forum. I would suggest searches in business plans, estimating, accounting, sales, markups and that will just get you started.
I would suggest that you start with a business plan. Very simply this will outline what you want your business to do, who is going to do it, how you will market your business, how much capital you need to run your business and any other questions that you can think of. In formulating this business plan you should talk to an accountant, an attorney, suppliers, subcontractors, customers and your banker. These people will give you good advice that will help you get started and which will guide you to your long range goals.
If you have already started your business, I would advise that you don't overcommit yourself until your business is firmly established (or really ever) because then you won't take the time to establish the necessary business practices which will allow you to grow profitably. Instead you will spend all your time putting out fires, exasperating customers and losing money.
Keep coming here with your problems as they arise. No matter what happens, it is something that plenty of us here have experienced. If nothing else, we will commiserate together.
hamerennzls,
A couple of points here.
First should you reconsider? think about getting hired as a foreman with someone willing to help you learn other aspects of the business.. It's normal for a startup company to lose money the first year or two, even if it makes money it may be less than what you are currently earning..
Second, you really don't understand business at all if you think that getting the estimates right is the key to success.. especially when you use such phrases "pricing in my area"
Third advice is worth only what you have to pay for it.. on this board and manny others you will get all sorts of advice if you select that which you feel will work then you really aren't getting any advice, rather it's like reaching into a grab bag and taking something out.. Advice is something that if you get good advice often you won't want to follow it. Remember whem you were a teenager? your parents gave you advice and most often if you followed it you were better off.
Hamer,
I've been on my own twice. Once I failed and once I was called away to do other things.
Here is the first bit of advice, and I think Frenchy already hit this one, Forget about "pricing in my area". Thats what did me in the first time. Figure out what you need to make and then you'll know what your price needs to be.
For example: lets say you want to take home $1000 a week? Well I'm optimistic and figure 48 weeks a year of work and 40 billable hours per week. Now lets say you have X as overhead, plus your $1k per week plus the taxes. Now lets say it all adds up to you needing to make $48.50 per hour. Well, if it takes you an hour to hang and case a door and everyone in "Your area" is charging $32 per door, Your already down $16.50 per hour each time you hang a door.
Now if you need to keep some cash rolling in and nothing else is out there you might need to hang and case some doors for $32. But don't make it a habit because before too long all you do is hang doors for $32 and you don't do anything else.
Sell your work, not the price, but make sure you get your price.
Today was a beautiful day to be in the saddle of the Electra Glide so I took a ride to see a friend. He's the most expensive, and most succesful trimmer I know. He's got work thru summer 2006 and is turning work away. He gives a price once and once only. If it's too high? " Hey, thanks for your time. If you reconsider here's my card, give me a call".
It will be difficult to go from working in the field to running a company. That is what the majority of contractors do to get started, and the majority fail, usually with significant damage to their personal finances.
I recommend you hire on at a company that needs a project manager. Your time should be about 80% office and 20% site visits. You learn to work up budgets, change orders, schedules, subcontracts, etc. You hire subs and employees. You deal with design and engineering people. You deal with owners all day long. You learn a lot about what others are doing in the office--marketing, sales, accounting, payroll, etc. I did about 4 years in that role and it gave me enough in those areas to run my own business, after about 15 years doing the trade end. Without that experience I would be making even more mistakes than I already do, and paying for each one with my rent money.
I can build everything I take on with my eyes closed. That part's easy. Sometimes I think this business is all about knowing how to avoid mistakes and problems.
My background is similar to yours. Tried on my own a few times, and lasted 4 yrs. the longest. Third time on my own is by necessity, not by choice. I'm getting a lot smarter this go around, working less and making more. Read the threads here about branding, bidding, and pricing. I advertise small remodels, repairs, and renovation.
I've built custom homes and commercial buildings from the ground up, and overseen some pretty major commercial and residential remodels - for others. At one time I had a framing crew doing big semi-custom homes, but didn't make any money. Now for myself I work alone, so I go for the smaller jobs - not ashamed to advertise under the "handyman" heading in the local bargain hunter paper. I'm also in the yellow pages, but I don't get many calls from that ad. You can make it if you're determined to learn from others, and from your own mistakes. Best wishes!
Hi,I have been "in business" for about 20 years and have mostly just gotten by during that time. Only in the past year have I really been trying to look at what I am doing and how I am succeeding or failing.I have not ever fully committed myself to contracting up to this point as I have also worked on furniture making, sculpture, exhibit building etc. But now at the age of 48 I'm starting to feel I need to actually focus on making a real living! Bout time.Luckily for me I have a lot of referral work now and I seem to hit it off well with my potential clients on a personal level so they often choose me to do the work. But for years I have refused to really look dispassionately at the numbers and the cost of doing business.
As a result I often just get by or sometimes "eat it" on jobs.
Not a good way to live.I would recommend some reading. Try David Gerstels book "Running a Successful Construction Company". Read books about markup and profit, get good contracts and other forms for change orders etc. and use them!Avoid underbidding a job because you need the work. Go deliver Pizza for a while until something better comes along. There is nothing worse than going to a job that you are paying for.Join your local building association, talk to other contractors.Decide whether you are going to wear a tool belt while you run the company. If you are going to hammer nails while you run the business then sub out more of the work so you have time to put into the business. Sub out the foundation, do the framing yourself maybe, sub out the drywall work and the roofing and the flooring. That might allow you enough time to actually run the job properly.Good luck!TomYou Don't Know.
You Don't Want to Know.
You Aren't Going to Know.
nothing wrong with all the other advice.
it's all solid ... but ...
have a buddy that was in your exact same shoes beginning of this year. He was a working carp for 16 yrs and a lead carp on huge/high end additions for the last 8 years ... then ... his company went bankrupt.
A business plan and reading all the books would have been great ... but he was outta work on a Fri and had bills to pay the following Monday.
He decided he wanted to end the stress of relying on someone else for a paycheck .. and end the stress of the million dollar remodels ... and end the stress of keeping track of his crew while he was still responsible for actually getting something built ...
so he started right off the bat working small jobs. 9 or so months later ... he's still working pretty much every day ... and has no plans to take any jobs that last longer than 2 or 3 weeks. In and Out. Get the money and run.
He does great work. Has tons of friends in the trades ... and just bounces from friend to friend helping out who ever needs a hand .... and has fit in some fairly profitable small basic bath and basement remodels in the mean time.
He's making as much if not more money than before ... working harder and usually longer days ... till Fri ... which is uaually a half day. Golfs after each "big project" ... and is very happy with his new lifestyle.
Went thru a coupla helpers ... then decided he could get more work ... working with friends ... if he dumped the helper and worked solo.
I've used him a ton of times ... coupla times with the helper ... but I can fit him into a tight spot schedule wise if I just have to pay him ... and not both him and the helper.
That way ... even though I didn't budget for extra help ... to keep things moving along ... I can take a bit of money out of my pocket and feed it to him.
My advise ... start small. Let all your contacts know U are available and looking for work. My buddy didn't have the first bit of knowledge on swimming pools ... but a buddy of ours landed a huge pool project ... and needed even more help in addition to his crew ... so he hired our friend for a coupla weeks and had him plumbing the pool.
Find the work first ... then ... focus on running a business.
just my 2 cents. I take a real world/ bills need paid and kids need fed approach to life. Make some money ... then find a good accountant.
U can always grow. But ya gotta start first.
smaller jobs ... less overhead ... less liability ... less headaches as you're learning how to run a business.
best words of wisdom ...
"Don't be afraid of the money" ...
and as my Dad would say ...
"U never lose money on the job U walked away from" ...
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Your two best pieces of advice have so far come from two opposite ends. Buck, who said to start small and right away to keep the bills paid , made some very good points. You can only take so much time assembling your business before the real-world bills start piling up.
And the guy who told you to contact SCORE hit it on the nose. You my friend need a mentor, and that is what they do. Someone who will assist you in putting together a business plan, and help you along the way. Someone who has all of the knowledge that you don't have and will impart it to you.
Service Core Of Retired Proffessionals.
When I am done licking my wounds from the most recent failed business, and ready to get back on that bucking horse, that is exactly what I am going to do. I only wish I had been smart enough to do it in the first place.
Getting started is half the problem. Attitude is the other. Go out there and learn everything you can and don't look back. You can do it!
Hey Hammer, you are in the right place... some of the best minds in the business around here--and they are confident enough to impart their wisdom.
I started in 87 with no capital and a little debt, an old pickup and basic tools. It's been quite a ride. Jeff is right... Frenchy is right... everyone has offered sage advice here. Make sure that what you are wishing for is actually what you want then study, read, learn and build your company.
It will be long hours, more stress than you may be able to handle today but you will learn to cope with it.
The most important thing I will say has to do with time management. Take the time to organize and analyse what you do and why.
Never let stress cloud your judgement. If you cant see or don't realize your errors you may as well be speeding with no headlights on.
Second thing I will say: Profit is not wrong or immoral--it is a necessity for the survival and health of your business. Make it a goal to maintain a 20% profit margin beyond all other expenses and your own pay.
Good Luck to you Hammer
L
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