My brother is the electrical contractor who i work for and we have been slow. I also realize that you never get rich working for other people. I don’t need to be rich, but I don’t plan on working for my brother for the rest of my life.
My wife and I have this plan…
Start out doing odd jobs, small projects, handyman stuff and maintainence for people by word of mouth only. When we feel that I have enough business to leave my current employ, do so as a general contractor/handyman. Build up the capital to expand from there. I also plan to get my Contractor’s license in electrical so that I can do the small jobs that I have time for. The other stuff I would sub to my brother.
So what am I missing?
Health ins. is through my wifes job.
There are no electrons! It is all made up. Don’t believe it.
Electricity is made by GREENIES.
Replies
A written business plan. Don't start with out one.
It's like trying to get somewhere without a map. I'm pretty sure I can figure out how to get there..............oh, wait, maybe I should gone left, oh shoot I just missed the turn.
Go to your local SCORE website and download their business plan fill ins.
And you should still have health insurance on your spreadsheet.
I'd stay with bro myself. Get your license and partner up.
Eric
[email protected]
It's Never Too Late To Become What You Might Have Been
I used to work for 2 brothers that partnered up in electrical contracting. Worked good for them, one's wife was the secretary, 2 sons and one daughter of one brother worked there, other brother had 9 daughters trying for one son. Kindof a dysfunctional family though. Anyway, you can get a lot more done with a crew, and they could take vacations without much worry.
bosn,
Along with Eric's advice of a business plan, know what you NEED to make.
I've started out on my own twice and I know one thing. It's too easy to be cheap in order to be busy. But, if you need to make $20 an hour and are making $18, your $2 an hour behind no matter how many hours you work.
Sit down and make a list of what it will cost you to be in business. You'll need some sort of truck. Now, you may own one now but what if it dies or gets stolen? Figure at least $300 a month for that. Figure on some sort of health insurance. You might have it thruogh the wife now but have you ever seen the COBRA payments for some of these plans in case of a layoff or other similar situation? Plan on a Disablity policy, business insurance and truck insurance. Make sure the amounts are adequate for the kind of work you plan on doing. Plan for tool upkeep and replacement. Plan on miles drivena nd truck wear and tear. Plan on accounting fees and legal fees.
A couple of guys here have awsome programs for figuring out what to charge.
Once you've made a pretty decent spread sheet of these things, do the math and figure out how much it turns out to be per hour or day or week or month, however works out for your pricing plan.
Add to those numbers what you need to make for yourself, and get to selling YOUR work at YOUR price. If you start out making what you need per hour or day it will be easier to find more work than if you start out being really busy at a cheaper price and need to raise your prices.
“So what am I missing?â€
I recently started a new business, and I can tell you what I was missing: THERE’S A WHOLE LOT MORE PAPERWORK THAN MEETS THE EYE. I’ve now been reading For Pros by Pros: Running a Successful Construction Company. In the very first chapter it recommends setting up for an entire year before opening up shop. Most of that is supposed to be set aside for the paperwork aspect of it. Is that unnecessary? Not if you want to avoid greatly increasing the stress you’ll already have from starting off on this new venture. This is something especially to consider if you’ll initially be working for your brother at the same time.
I’m guessing your greatest frustrations will come from estimating. You’ll probably want to learn as much as possible about the subject before you begin. Customers want those numbers, and they want them fast. Often you’ll be estimating over the phone. That’s simple right? Maybe if you only specialize in one thing, but “handy man,†you’ve got to be ready for a lot of variables. If you can’t supply the right number quick, you’ll either lose the job to someone who can, or end up working for peanuts because you pulled the price off the top of your head. Remember to, some customers will want prices with materials, some without. Some will just want installation, some installation after demolition. The Complete Construction Estimator can assist you in this task. If you don’t have a computer, you can look into the appropriate costbook.
You might think you don’t need to know about accounting because you’ll hire an accountant, but how are you going to estimate without knowing those numbers? Furthermore, with all you’re going to have to keep track of, you’re going to have to do plenty of accounting before you even visit your accountant. To simplify things, you’ll need to open a business account.
In addition to keeping track of these (and many other) things, there’s also the contract. You’ll need papers for all of these things. Here’s a link for Construction Forms and Contracts.
I’d recommend getting your electrical contractor’s license now. From what I read in your post, it looks like it will be your strong point. I don’t know your family, but my guess would be that if your brother does work for you at all, he’s going to demand top dollar. It’s just what I think would be typical family dynamics. I personally don’t recommend a partnership either–with anybody.
Even if you have health insurance covered, few people are going to hire you unless you have liability insurance as a contractor. Then there are the bonds. You’ll have to look into what’s required in your area. Usually there’s one for working in a major city, and another that covers the rest of the county. You might want to get this set up well in advance. My experience with insurance companies has been gross incompetence, and the building department can be like the BMV.
I could go on, but I think the book linked above could explain it better than I can.
-T
Thank you very much. The book link will be helpful. i'm the kind of guy that doesn't just rush into these things until I'm comfortable with my knowledge a preparation. I don't have to know everythin, I just need to know how to find the info that I need in a timely manner.There are no electrons! It is all made up. Don't believe it.
Electricity is made by GREENIES.
Two points I would like to make;1) You need to make twice the money you think you need.
2) You can only do half of what you plan to do in a day.Bear
Two points I would like to make;
1) You need to make twice the money you think you need.2) You can only do half of what you plan to do in a day.
Excellent points. So in essence you need to charge 4x whatever labor figure you initially come up with for the job.......lol.
Bob
Account for book keeping and an accountant.
Grunge on.
What I did was work with numerous different builders over the course of ten years before starting my own business. I did high end trim in California, built government subsidized housing and hung kitchens at a rate of one a day in Maine for a while, and worked as a draftsman for architects in Maine and North Carolina before apprenticing with a design-build group here in NC and then starting another design-build group, leaving it and working for a one man and a crew contractor here. All the time I soaked up as much as I could of every trade on the jobsite, got a plumbing license and learned a good deal about electrical work and went to the New School for Democratic Management in Boston for a seminar to get me thinking about business. Start working on the business skills. First read "The E-Myth Revisited" (not "the E-Myth Contractor") then "Don’t worry, make money" "How to win friends and influence people" and "Fish!!!" Apprentice yourself to a good design-build contractor and learn how the business works on all sides. Start to think about the game of business and learn about how to make QuickBooks Pro play well with Excel both so you can estimate in Excel and keep your books in QuickBooks and so that you can mine job cost data out of QuickBooks and manipulate it in Excel. Realize that running a small business and negotiating profitable contracts with your customers and suppliers is as much a craft as designing a really beautiful fireplace. Learn to feel the sparks that fly off your fingers as you lead your team like an orchestra conductor. Give each person just enough information to help them avoid mistakes and work swiftly while holding back enough that they don't feel like puppets and have to exercise their creativity to do good work. About ten years into this business I hit a client from hell situation and worked the worst year of my life for a net of $4,000 and a divorce. The thing I took home from that is to always do the promotion and publicity so that you can turn down most of the jobs and only work for the best clients on the projects that most suit your strengths. If a prospective client asks you to be his or her savior and "prove that all contractors aren't crooks because everyone they ever had work done by in the past took advantage of them" just turn and walk gracefully out the door. If you take a job you would rather not do because you need the work you may end up being known for doing that kind of work. And remember it is always better to stay in the office and work on the business and not get paid than to go out and work for a client and not get paid. (My motto is that "it's better to go fishing and not get paid than to work and not get paid" but my definition of fishing includes fishing for better clients) I hope this is helpful, I posted my my business plan on the web (http://www.ChandlerDesignBuild.com) after we were named to the "best 50 builders to work for in America" two years in a row. I try update it every year to include new lessons learned; it doesn't stay the same from one year to the next. I'm always learning new things about this business even after 32 years of swinging that hammer.
shelter: good post... let me embelish one of your points.....
<<<<If a prospective client asks you to be his or her savior and "prove that all contractors aren't crooks because everyone they ever had work done by in the past took advantage of them">>>
i have an Arbitration Clause in my contract
and the guy you described above is the only one i've ever invoked it on.. all the warning signs were there for me to read, but my ego said that the other contractors were bums and we could make this guy happy..
when we were ALL DONE.. he gave me a list of 20 things he wanted torn out and redone....
the arbitrator split the final payment.. and the bum signed off... btw, one of his expert witnesses was the roofing shingle mfr's rep..... three years later the bum came to my office to ask me if i would testify against the roofing mfr......
Mike Smith Rhode Island : Design / Build / Repair / Restore
That's rich, I trust you declined to testify. We not only have an arbitration clause but also have a clause in our design-only contract (when we design for other builders) that we have the right to decline to testify in the case of future litigation between the homeowner and their builder.I'm a member of a NAHB builder 20 club, we all post our contracts and other forms to a password protected website so we can borrow and steal from eachothers forms and ways of doing business (including estimating spreadsheets and MS project templates) it's a cool deal. If you are a member of NAHB (cheap insurance) then I'd recommend you look into joining a 20 club.
...have a clause in our design-only contract (when we design for other builders) that we have the right to decline to testify in the case of future litigation between the homeowner and their builder.
A court subpoena is not subject to provisions of any contract. Or so my lawyer tells me.
DG/Builder
capital, capital, capital. you have a good rough plan, but make sure you have the capital before starting out on your own. having a good client base, and consistent work is great, but don't leave your current job until you have a fairly sizeable downtime allowance in the bank, because markets can dry up real quick.
is it better for a new business to be liquid or to be profitable? if you aint liquid, you aint going to be around long enough to be profitable.