I’m 27 years old and have completed my carpentry apprenticeship and successfully completed my license. Over the course of my apprenticeship I was lucky to be exposed to a wide variety of work from renos to new residential and commercial from footings to finishing.
Now I am thinking of going out on my own and would like to know if there is books I should read for setting up a company or if anyone has any advice for me. I am thinking renos and then moving to building homes when money allows me too.
Also, I am going to work towards my LEED certification, as I hope that the green building market will continue to grow.
Thanks for any advice.
Replies
You must develop skills in scheduling and managing other people, and managing cash. Neither is completely intuitive, especially the first. Often it is harder to manage others than to do the job yourself, but if you want to grow and not just be limited by what you personally accomplish, that is what you must do.
I'm also 27, and studying up for starting a business in a couple years. Here's a couple reccomendations:
Running a Successful Construction Company, by David Gerstel. Great book about business and organization aspects of construction.
Click on the Business folder of this forum, and read as much as you can stomach. Recently there was a great thread called "what you wish you knew then" or something like that.
Same thing on the JLC forum, there's a peer to peer folder on business and finance that is very good.
If you haven't made a point of it yet, I would reccomend spending some time learning about business, management, and accounting before you start that company. It's harder than the other carpentry skills you've learned, and just as important. You'll have time to write a business plan and set up filing and accounting systems before you're swamped with work.
That's my $.02, worth what you paid for it, especially as I've not got a company yet.
zak
"When we build, let us think that we build forever. Let it not be for present delight nor for present use alone." --John Ruskin
"so it goes"
I have been building my own business for about 10 years. I can say for certain that my biggest mistake was taking a partner. DO NOT DO IT EVER!! You can always find a sub or another business owner to help you with the things you do not know or need help doing, i.e: accounting, banking, financing, estimating, roofing, etc. If you have any people skills, build your relationship with your building official. I really helps to have that person in your corner.
Good Luck.
taking a partner. DO NOT DO IT EVER
That's horrible advice when applied indiscriminantly. I currently have four different partners in four different projects. All is fine.
blue
Partner or no partner is a decision based on your personality and that of the partner, as well as other circumstances. It can be a big mistake, or a real blessing. It can change from one to the other over time. IF you take on a partner, have a way to break up worked out in advance, including a valuation method. Do not do this home brew or from a book. Use a lawyer who consults a valuation expert -- NOT necessarily a CPA, although a minority of them are qualified in valuation (it is a different discipline from accounting).
There are a lot of important things to learn about how your contracts should be worded, how to manage unhappy customers, how to estimate and bid, how to manage accounts recievable, what to do about taxes, insurance, bonding, licenses, etc.
However, as I said before, by far the most important new skills are in the scheduling and managing of other people and in the planning and managing of cash. Just remember, profit is merely an accounting phenominon. You can go broke making a profit. Your perfectly set up monthly P&L can be way in the black, and your CPA can tell you that you are doing well, and yet--AND YET-- you might not have the cash to pay your bills when due.
You should consider setting up an Excel spreadsheet that you look at more than once a week that carries the latest and best information about when you expect to recieve cash and when you will have to pay it out. Do it on a running basis. Alter your plans accordingly. Green dollars are how you pay your bills, and they are what is most important to survival.
Accountants, including CPAs often do not understand the process I am describing.
Hear me on this. I am a business advisor and what is called a turnaround guy. I help start-up or spin-off companies and companies in trouble, and have been doing it for a long time. You guys on this site have been very generous with your time and expertise in helping me with construction issues. This is one place where I can give back.
Joe,You are giving good advice. I also think any one startng out should have a sound business plan and 4-6 months living expenses. In Georgia we can access SBDC (Small Bussiness Development Centers). They offer many free services Many states have something similar.Chuck Slive, work, build, ...better with wood
Chuck:Agree. The business planning process can be very valuable, if it is a real plan. Lots of times people get business plan guides or software that leads them into phantasy land -- lots of concepts and big ideas, little that is practical and helpful. The reason this is so is because the term "business plan" has come in some people's minds to mean a sales document used to raise money from lenders or backers -- long on glitz, short on practicalities. In fact a business plan for a start up that wants to succeed should be an organized way of thinking through what will be needed, when it will be needed, and how enough business can be generated to pay for it. It should include goals, objectives, and marketing approach, but it should also tie everything back to the actual capacity of the business to perform the work and to pay bills on time.IN fact, the kind of cash spreadsheet I mentioned before can be the heart of a genuine business plan.
Joe, your advice sounds well grounded.
What size business have you helped turnaround?
blue
The smallest I have personally run is my own consulting practice which involves 5 of us. The largest was a roughly $80mm revenue, 23 branch distributor of electrical supplies. I have been the senior turnaround guy but not formally the CEO of two companies with revenues between $120mm and $150mm, and I have worked in various capacities with many very small companies. I also do a lot of writing and speaking on business topics.
In addition to the SBA many schools condintuing ED/Adult Ed departments have classes on starting a business. They can be part of a College, Community Colledge and high schools. And different community organizations such as Chamber of Commerce and city/state programs. Although the later are often aim at target groups.But look at the course contents to see what they offer. I suspect that there will be wide differences..
.
Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Bill,
Some very good and often overlooked sources of information and business education.
Beer was created so carpenters wouldn't rule the world.
Thanks for that background and welcome to the show. Your input is a blessing.
blue
As I mentioned above, I am pleased to be able to give a little back on a forum that has been so friendly and helpful to me. You have your trade, I have mine; we each know a few things of value to the other.
Joe, I could have used your expertise every week for the last thirty years LOL!
blue
Learn MS Excel or any other spreadsheet program.
Learn at least the basics of accounting.
Copy my tagline and post it on your morning shave mirror.
SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo
Edited 12/11/2006 9:26 am by SamT
36 yrs old and recently left a job in the bicycle business to earn a living as a remodeler/small project builder.
I would never look back!
I've not made it thru a tax year yet, but from the advice I rec'd from these characters (blue responded several times to me, thank you) and books like Gerstel's and a basic understanding of finances, I think I'll be just fine.
Although not necessary by any means, I went the conservative route and set up my business, an LLC, with an accountant and a lawyer. The accountant coaches me and the lawyer makes sure I'm up with my annual reports and whatnot. I figure as long as I do what they say I should be fine, and the expense is minimal.
I have a license, bond, insurance and I save between 30-40% of any income I clear over materials on each job.
Unless I'm missing something and get nailed come tax time, I wish I'd have made this move years ago!
You sound mush more ambitious than I am--content to keep it small, I mostly work alone on projects less than 15grand.
Good luck,
pat
and the lawyer makes sure I'm up with my annual reports
Very smart. It's important to maintain that relationship with your lawyer. It costs you a little but will save you a lot when something goes wrong.
blue
See,
I told you that blue guy was smart.
Pat
Figure out the proper folder to post your inquiry.
Sorry!
Good luck.
Eric
[email protected]
It's Never Too Late To Become What You Might Have Been
Im pretty sure GENERAL means that I can post this in here???
Of course you can post here.
Sometimes you won't get as many or any responses if you post more specifically.
Pat
I was messin' wit ya!
Search the business folder for words similiar to the title of your post.
You should come up with at least a couple of days of reading material.
Eric[email protected]
It's Never Too Late To Become What You Might Have Been
Don't let starting a business intimidate you. Start slowly and as your skills increase transition more of your time into being self-employed.
Any carpenter who does a side job is self employed, so don't think it's all or nothing.
Doing side jobs gives you experience estimating, dealing directly with clients, problem solving, marketing, etc.
If you were to treat side jobs as if you were 100% self employed in a year you will learn a great deal about the business side. Treat side jobs as an extra buck and you'll learn very little.
Tomorrow get a business checking account. This is where you manage cash from your side jobs. Pay for materials and make deposits from here and only from here. Otherwise it's just too easy for side job income and expenses to not mean anything.
Go online and order professional-looking business cards. Networking is key and a card is essential. This is the start of your marketing plan. You'll want to keep them handy at all times so when you're networking and a lead on a side job comes up you'll look professional.
Get in the habit of talking to people about their houses and let them know if they need anything that you'd be glad to help them out (and hand over one of those business cards).
Start acting professional. Seriously. Think of what makes or breaks a professional contractor, and start doing it.
Clean up your act. Spend a little extra time cleaning up on your (side)job sites. Don't assume the owner will do the dusting and vacuuming. Don't ever leave trash for the owner to deal with. They can, but it makes you look sloppy. Leave the space at least as clean as when you first showed up. Buy at least one canvas runner to keep dirt off carpets, prevent scratches to hard floors, and generally make you look like you're serious about protecting the client's home.
Manage how your work appears to others. It might not matter one iota if a stray nail is poking out the side of a board, but clients don't know that. It's human nature to be inherently scared of nails on the floor or sticking out of a board. We've become desesitized and know full well that we can jump up and down on an entire box of nails and survive to work another day. Clients only know that their entire lives nails are to be feared.
Don't underestimate how important visual "artifacts" are. When a client doesn't understand construction, they evaluate you based on superficial things: appearance, organization, cleanliness, type of vehicle, tools, condition of your clothes, etc. Look professional at all times--professional in the eyes of the client, not the yeah-hoos you're used to working with.
Be confident. Act decisively. Clients want to be able to trust that a carpenter knows what he's doing. Eliminate speach that sounds like you may not know which end is up. If you don't know something say, "Let me check on some options and get back to you on that one." Don't think out loud it makes you sound like you can't make up your mind.
Contractors are experts in their field. You've learned the basics, now you need to keep up to speed on the industry and building in general. You can't wing it or pick up the knowledge only as you need it. Each month read FHB and at least one other building magazine. "This Old House" is a dumbed down mag that can be helpful in exposing you to a number of products, designs and some very basic building skills. Best of all it's cheap to subscribe to.
Start building your library. Organize mags, pick up product info sheets, buy refference books that help you at your level of skills and most of all learn how to learn on your own.
Be trustworthy. Show up on time and do what you say you'll do. Take care of the client's home. Construction is a flurry of changing schedules and deadlines. Just because we're used to subs and coworkers saying they'll be here today, when that really means tomorrow, doesn't mean the average person understands or likes it.
Treat your job as if it were a business. The #1 thing to know as a construction employee is that the more money you make the boss the more you're worth. Write that in soap on your mirror, carve it into the aspen tree in the back yard, ask your girlfriend to whisper it in your ear when she's horny, and write it on the inside of your windshield with a sharpie. It's really that important. Do what really helps the bottom line, not simply the minimum to get a check.
If you are really interested in a certain market, go looking for a job with the very best contractor in that market. There is no faster way into a niche than to start working in it. You'll see how the niche works and how successful contractors behave. You are at a huge disadvantage if you don't understand how a niche works before getting into it.
Just as importantly, you'll meet the subs that work for many different contractors in that same niche. Always get a card from them. Pick their brains for information on how the various contractors are different. You will eventually need them for your side jobs.
Don't be affraid to work for the competition--this can be a valuable education. Jump ship and learn a second point of view in your niche.
Get your tools together. A good contractor will have the tools needed to be effienct. If the homeowner has better tools than you, how do you think that impacts your impression on them? On other carpenters? Like it or not, gone are the days when an entire house is built with what's in a carps toolbelt, a small toolbox, skillsaw and level.
Look for the things that turn your crank. If you've convinced yourself that custom home building is the path to riches, but you love the thrill of banging out something more like a track home or commercial building, then maybe that's telling you something. We put up with so much bs in this career that it can be valuable to focus on those areas that are the most rewarding in terms other than simply $$$.
Focus 95% of all efforts toward moving in the direction you want. With a little extra money you may want a fancy new set of chisels, but if your focus is on framing perhaps a plate-to-plate Stabila level is where that money should go.
Keep it simple. Don't make things more complicated than they need to be.
Have fun.
Beer was created so carpenters wouldn't rule the world.