I’m the right hand man for a small G.C. doing custom remodels, additions, and a few whole homes. I’ve been wanting to go out on my own for quite a while so I was pretty excited when I got a call from a client(heart surgeon) who I did a basement remodel for last year. He bought some land in the country and really wants me to be the general to build a weekend house, he even offered to be my investor if I needed help getting started.
So after some deliberation (with my wife of course) I have decided to go for it. But I would appreciate some advice. Would it be unethical for me to contact past clients to inform them that I am starting a business? I always get to know homeowners pretty well during a job and the feeling I get from most of these people is that they would probably refer their friends to me instead of my current boss(he does’nt have the best P.R. skills.) If I were to do this it would be in a very low key manner, I would just tell them my plans, give them a card and say I would appreciate any referrals. At the same time I would tell them my current boss is still in business and they should feel free to refer him as well.
Other than that I would also welcome any advise you have on starting a business, taking the contractors exam, buying a new business work truck etc;.
Thanks for your advise.
Edited 10/26/2004 8:39 pm ET by sunny
Replies
best advice i can give is:
if you don't spend it... you don't have to make it...
81 was my last NEW truck... current is 92 f350xlt diesel 160,000 miles paid 6k for it 3yrs ago and my guess it's still worth 7-9k.... oh yeah i still have the 81... and the 87 and the 88 and the 89 and a 95... plus a few others
I do spend $$ on tools & equipment but if i was a true contractor & not a builder i'm not sure i'd own more than a hammer (you need something to bang that sign in the ground)
pony
Here's the way not to do it:
http://forums.taunton.com/tp-breaktime/messages?msg=49159.17
I invented bad advise.
As long as the former clients are on completely closed out projects, and you don't bad mouth your current-former employer, it shouldn't be a problem. If a current client gets wind of what you're doing, you have to be careful to say that the current company will finish the project etc, and don't try to steal projects that the company has bid on.
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
Hi Sunny, I'm not in the business but I'll throw my two cents in if you don't mind. First, if you really feel you must have an investor make sure everything is in writing (down to how you'll part ways...because it just might happen), use a good local small business attorney to help you do this. Preferably not someone the doctor golfs with on weekends.
Second, ensure that you have at least 51% control of the "voting" stock of the organization. Or if it's an LLC then ensure that he's the "silent" partner and you're the "managing" partner. I speak from experience, I had a business partner that was a great friend first. After six months in the business we parted ways (semi-amicably) and never spoke again. I'm now in a capacity where I work with entrepreneurs and I'd say that, based on my personal experience, 80% of all partnerships (that aren't husband/wife) fail in the first 18 months. But hey, I've been where you are...you're thinking yours will be different. Maybe. But get everything in writing anyway and be 100% sure that when the day comes and there's a disagreement between you and doc, he doesn't have the right to tell you what to do. And don't ever believe that a 50/50 deal is a good thing...someone needs to be the alpha dog in the relationship when push comes to shove.
Third, personally I wouldn't mind if you sent me - your past client - a letter or something along those lines letting me know that you're on your own. Maybe you follow that up with a phone call 3-4 weeks after the letter just "letting them know you've hung your shingle out" and maybe politely asking for referrals. Anything more blatant than that and I'd think you were crossing that grey line. What is the grey line? I don't know but you want to be able to pay the mortgage and sleep well at night knowing you have a good reputation in town.
Fourth, remember that any wise entrepreneur will be prepared to go one year without taking any money out of the business for personal reasons. Yes, one year. If you're prepared for that you can conquer the world.
Again, just my two cents. Good luck! - Rob
I agree with "stokeoluck"
I know , never say never, but , that said, I will never go into business with anohter person. For me they have not worked out.
If I did , thta is where stokeoluck is right
If you do , be that alph dog adn keep at least 51% of voting rights and control
I would not be happy to have a former employee contact past clients
like biting the hand that fed you
being a gc is tougher then it looks
over the past 9 years I have had three guys go out on thier own, two went under
and I believe the three reasons,
1)they had no real idea how much time I spent on bids, contracts billing and overhead
2) they were not in shape to go a few months, let alone a year without a pay check.
3) tried to be real low cost, ( as an introduction, get their names out) which ment paying people low, which ment quality was poor , which lead to no referaals and insurance problems
the one that made it, was the guy with me in the beginging and we were friends, he saw how hard I worked so that was no surprise to him, he had a good nest egg and a wife that worked full time and had the bennies
he almost failed as he tried to make a ton of money, he kept his prices high but paid people low ( like #3 above)
and he did go out and contact all past clients, and current ones ( while I was out of town for 2 weeks due to the death of my father), decided to go on his own, and when I got back gave me 1 weeks notice.
It backfired on him, people ( other contractors and developers) that knew what he did and how would have nothing to do with him
but he stuck with it, he struggled big time at first, set himself up into a niche and now , 4 years later , has 3 employees.
now all that said, there is room for good , honest competition
I started working for other contractors as an employee
becoming a right hand man. When I flet it was time to go, I talked to the boss about it, he encouraged me to chase my dream, he even helped by giving me info on wher the cheapest insurance was etc. He continued to help by sending me work, refering new clients to me , that he did not have time for. we are still very good friends, even though we are competition
so keep it clean, dont burn any bridges, cover your asp in contracts, adn if you wnat it to be your business , keep control even if it is just 51%
( and make sure you have a buy out clause in the contract and at what rate,etc)
There's a new thread here every 2 weeks or so with someone like you thinking about going out on their own.
Using the advanced search on the words "Starting" or "on my own" ought to net you plenty of threads like this one.
And hang around here - Especially the business folder. It's amazing what you can learn on this board.
Madness takes its toll. Please have exact change.
Would it be unethical for me to contact past clients to inform them that I am starting a business?
as an old sales boss used to say ...
"I'm here to make money, not to make friends" ...
lotsa people take that the wrong way .... but I see it as words to live by.
simply put ... is the old boss more use to you as a potential enemy or potential friend?
potential enemies aren't such a bad thing ... just gotta weigh the situation.
Me ... I'd contact the old clients. If the old boss complained ... I'd tell him I'm just another competitor ... deal with it.
Unless ... U see the chance to use that connection to your favor.
Then ... I'd let him know first ...
I got a kid to feed ... and he doesn't get much food if I'm trying to be everyone best friend.
Be good to your customers ... dealing with old bosses is just business.
I got "laid off" in a group firing a coupla years back ....
the conpany had plans to invite about half of us back as subs.
I was the only one smart enough to not tell the owners to F off ...
trurs out ... by being "friendly" ... I had more than enough work from them to last about 2 years ...
other guys talked of "principle" and "pride" ...
I talked about how I was making about 30% more pretty much overnight.
I hated the owners ... bastards just laid me off ... took food outta my kids mouth ... but ... hey ... it business, right.
Like I told my one buddy at the time ... I'll work with the devil if I write the contract.
Money's money.
Jeff
Forget about him bankrolling you. Start up costs are not that much. Why would you want to pay him dividends year after year when you could get going on your own? Buy what you need, rent what you dont have to own.
I have no problem with you letting past business aquaintances know you are striking out on your own as long as the jobs that were contracted by your current employer have all been closed out. You may actually be doing them a favor.
You may want to have announcements printed up that say "Sonny So&So, previously employed by the Yadda-Yadda company... has taken the advice of his friends and is entering into a business arrangement that will be known as Sonnys Blah Blah Blah... and consideration for your future projects will be appreciated and shown the personal attention they deserve.
Has your present boss been fair to you? Has he been a friend to you? If you explain to him that it is time for you to move on you may be surprised how much support you may get from him. I doubt if he will send you much if he is hungry but if he has more than he can do he may send it your way. I would not try to steal his base, although I would guess you have made some friends/clients while working for him. I would try discussing it with him unless you know he will just lay you off. I have always tried to sleep well and make a living and it has worked for me (not carpentry but another business). I would not have a partner other than my spouse. The first day of business school my instructor told me to make plans on how to split up and decide who will take the loss in a partnership before you even think about the profits. A partnership is a lot like a marriage but with out the sex so you better like that partner a lot. It is harder than it looks when you are the boss but in my case it is worth it.
As far as taking the contractor's exam - Here in Minnesota there is a company called Pro Source that gives exam prep courses - very helpfull - you might contact the people that give the exam in your area and see if there is such a source local
Other advice would be to incorporate as soon as possible, find a lawyer to help you with this - costs a little more, but, it frees you up to do other things that you have more expertice at. On that same line of thought - I would hire an accountant to take care of all the tax stuff involved with being incorporated.
Charge what you are worth - figure all the overhead you have - time doing bids, fuel, tools, vehicles, paperwork, insurance, license fees, you know - everything be sure to include all that into your costs - not just labor and materials
Best of luck,
Shoe
Sunny, you already have a lot of conflicting advice. I'm going to give you some more to think about.
First, I want to know about that client of "yours". Is it really yours, or were you the lead man on your bosses job? If it's truly yours, ignore the next few paragraphs. If this client is really your bosses client, then please read.
In the contracting busines, especially in smaller cutthoat remodeling firms, the customers have a field day getting rock bottom prices by using the "divide and conquer" technique. Instead of contracting again with your boss, he cuts out the "middle man" and just hires the skilled labor direct. This is what is happening to you. This guy is trying to get you to cut your own throat.
Your "excited" because someone is willing to let you build something for them and your letting your short term goals obscure your long term goals. If you truly were commited to your present employer, and were dilligently seeking to stregthen your company, you wouldn't be entertaining the idea of stealing your bosses referral customer.
If you truly think you have what it takes to be in the contracting business, you wouldn't need to steal a customer...you'd just go out and get your own.
If I was to judge your ability to survive in the contracting business, I'd give you a about a one in ten chance of surviving. Why? Because of the timid marketing plan that you are thinking about....because you don't understand the importance of networking, with guys like your present employer. You think you are an island....willing to attempt to take his client list.
About 25 years ago, I was in your shoes. I completly ran my bosses jobs, start to finish, unspervised and I KNEW I could survive in the business. One day a builder of his asked me to do a two day job for him on my own. I told him I would do it, ONLY IF MY BOSS DIDN'T MIND!. I asked the boss (thus alerting him that there was trouble with one of our clients) and he told me no and so I didn't.
Why don't you just ask you boss if he would take offense? Why not keep him as a valuable resource. To understand why, let me tell you a little story: This spring, we cut loose 20 men, many who had ran their own businesses. The last crew that was cut loose was one that we considered using as subcontracters for our overflow. We told the guys that and they were very receptive to the idea....they formed their own little crew and started contracting on their own. Within two weeks, we got word from one of our builders that "your crew foreman is trying to contract with us behind your back at reduced rates"! Basically, the builders thought less of them and were warning us.... When you think of it, they were trying to steal our overflow before we got the business! They were going to make the same either way, but now we were peeved and the builders thought they were jerks.
Do you think for a minute that we would ever lead them to another of our contacts? Of course not and we also warned the builders that the reason we let them go was because they couldn't do a decent job that we were willing to stand behind. That just about seals it up with them!
I've got another story...but this is gone on too long.
FIND YOUR OWN CUSTOMERS AND DON'T BURN YOUR BRIDGE!
blue
Sunny
I'd be the last to give you advice on how to run a business but after reading all the posts I would have to say that the one that makes the most sense to me is Blues, he may not know much about politics but I think he is right on here!
JMO
Doug
err, thanks Doug.
I will agree...I don't really know that much about politics. It's true, I quit following them in my early twenties. I used to get so mad about taxation....When I was 21, I called in to a radio talkshow and chastised a tax cutting politician for not joining forces with another tax cutter. They both were running tax limit proposals. In the end, I was right....niether proposal floated!
I only stepped back into politics when Gore f'ed up the last election. I'm still hopping mad at him for not conceding and letting Bush get on with the job.
A few more months (I expect at least three months of bitter vote count fighting) and I'll be back to talk radio.....forever...let the kids worry about this world..I'm almost out of here anyways.
blueIf you want to read a fancy personal signature... go read someone else's post.
Blue
I dont want to get a political discussion going here,and I'm not going into the Tav until after the election.
A few more months (I expect at least three months of bitter vote count fighting) .
But, I'm afraid you are right, I think it will be a repeat of 4 years ago. All at the expense of the country!
Doug
I`ll only comment on the "past clients" note.
Business is business and all, but I believe lines need to be drawn.
I went out on my own several years back. When I left the company I had worked with for nine years, I had a better than cordial relationship with my boss, even though he was the direct cause of my leaving. Most of the clients we had done projects for were quite wealthy and made regular improvements to their homes. Very few of them were all too happy with the manner in which (read attention given to) their projects had been handled. My employer was a hell of a salesman, but a lousey business man. When I left, it would have been easy pickins. They already knew the quality of my work, and my overhead at the time would have made it easy to undercut him.
I chose not to and I`ve never regreted it. If you are as talented as you believe yourself to be, it won`t be necessary. Sooner than you realize you will build up your own client base.
Over the years, several of my former bosses previous clients have contacted me. Most of the projects I`ve rejected, but there were two or three which I entertained only after contacting my former boss and making him aware of the situation. Only one went as far as an estimate.....but apparently I had become too expensive by that time.
I don`t know that there isn`t a statute of limitations though.......after a certain point, I might very well be willing to agree to take on a project of a former client. It just wasn`t something I felt comfortable with out of the gate.
J. D. Reynolds
Home Improvements
"DO IT RIGHT, DO IT ONCE"
I agree Jay...after some time. I also agree that it is wise to call the old boss. Uusally the old boss is goiing to be too proud anyways and tell you to go for it.
I eventually framed for one of my old bosses builders....it was after a few years and my old boss wasn't framing for him anymore anyways. The real point is to make sure you can survive in business without that one or two clients that you think you need.
blueIf you want to read a fancy personal signature... go read someone else's post.