Grumpy

When you take a week vacation, would I be correct in assuming all work stops and all of your employees also take a week vacation at the same time? I want my business to be able to run with out me if I choose to take a 2 week vacation.

Well according to the IRS any company that employs less than 250 people is a small business. I think that's hogwash. I agree I am CURRENTLY a small but growing business. I won't be small for much much longer.

Congratulations on this investment.
It's good that you are diversifying. I too have alternative retirement plans, and the sale of my business is only ONE of those plans. Investment property is another, though I am slow to start on that one. I personally feel that investment property is the best and safest investment around.

No books. Most of the books I have read I find major flaws with. I do things my way, which is a large part of the reason I started my business.

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Grumpy

Copus. Last night I sat down after posting my reply questioning what my real goals are. Company size is just a symptom of my true goals which are monetary earnings and quality of life.

When I set these goals for myself, the next logical step was to devise a road map to attain my goals. I explored every idea I could think, including the small owner operator type, of and it kept falling back to one thing (for many many reasons)... The company must be able to run without me, and must do a certain volume of work at a certain margin.

Budgets have been put together. Marketing and business plans written, and everything run past two accountants which agree they are reasonable and realistic.

I've read various reports that the #1 hurdle a small business faces in terms of growth is the owner being able to deligate responsibility and basically just being able to let go and trust his employees to their responsibilies. From my point of view, I have no problem doing this, assuming the revenue is there to support it. My first hire was a repair man, to free up more of my time to sell. My second hire a sales man, to compliment my own sales and increase overall revenues, and my third hire a book keeper because I face the reality that I am not at all good at book keeping.

Right now I am looking for another good estimator/salesman who can bring in some numbers. However I admit that hiring isn't one of my strong points, and is something I need to work on. After I find this estimator who can "bring in the numbers" I plan to hire a part time office person to take a big burden off my back in terms of data entry and returning phoen calls and e-mails.

After I get to a point, which has already been pre-determined, I plan to stop the growth and farm profit. The profit will both be absorbed by me, but also my future long term growth plan which are partly the satelite offices I mentioned above.


I've got a plan and I am working it. The plan to attain my ultimate goals of financial independance and quality of life. However I admit that I am up and coming and overly agressive and very ambitious. I admit that I am speking of my perspective of what I am trying to do and you appear to be speaking of your perspective of been there done that.

Copus, all that I ask is that you understand that WE are not the same people... and just because a large business structure didn't work out for you does not mean it will not work out for me. Just because you couldn't or didn't have the desire to manage a large business structure does not mean that I won't have the ability when the time comes. Who knows? Maybe youa re right, maybe I won't have the tenacity or desire when the time comes, but only time will tell because that's where I am going!

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copusbuilder

Hey Grumpy, Thanks for moving this

I don't have an issue with you or anyone reaching their full potential and growing if thats what they choose to do.

Where I have an issue is with you saying a small shop is a self employed person and not a business person. We are all business men and women if you are self employed... just with different goals.
I did my share of the limelight and it wasn't worth it to me.

I downsized and increased my salary and have abundant time to do things. If I had not grown I probably wouldnt have the customer base that I have, so that was a positive.

To you growth might be a challenge you can't live without??

I will offer opposing views at times to threads that make growth sound like it is "heavenly".
Many of the newer people need to see both sides so they can formulate a business plan that works in harmony with their life.
Because a person chooses a smaller growth pattern does not make them less of a business person. Perhaps someone who likes more time with their family or hobbies?

I have said before that I understand and respect anyone wanting to build a business. I hope it works for you and anyone else who trys.

P.S.
When I take a vacation I have my workers set up for that period. Usually a bath or kitchen remodel that keeps them busy for long periods.

Keep smiling and thanks for sharing your point of view.

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Glasshousebltr

Sounds like your headed down the right road Grump. My hats off to you on that post. I'm glad I took the time to read it.

Bob

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realpurty2

Ditto Bob.. Grumpy sounds like he's accomplished what many of us still need to do and that is determine and finalize exactly what our goals are. Where everyone decides is their "end of the road" or "the holy grail" is as individualized as the opinions of how to get there.

Good job Grumpy, your farther down the road that I am at this point on the stability scale.

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maj

OK, to keep it fair on this thread, I'll throw in my two cents.....

I gotta go on the side of Copus here. I started out thinking I was going to have 2 or 3 crews going on multiple jobs. Made no money the first couple of years. Plenty of work, just nothing was getting done. I spent more time showing people what & how to do things, I could have gotten everything done faster myself. I cut way back.... I now have only one full time helper, and a part time grunt. I get more done now & have more money in my pocket at the end of the year. Probably because I am not a good people manager.... More of a "hands-on" type of guy.

I don't feel compelled nor have the desire to be big business. If I can make a good living and provide for my family, that's all I need. Really.... What good is all that money you hope to make Grumpy, when in reality it's not worth the paper it's printed on? My wife & I have been through many tough times (I do not care to expound). We have come to the conclusion that as long as we are in good health, love our careers, and have a good family life, that's all we really need.

I do hope it all works out for you and anyone else with the same desire & ambitions as you Grumpy. Myself, I do not have those qualities in me.

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Tom R

I couldn't agree more with everything you say, maj, - - especially that statement . . .

I'm thinking the main difference here, though, - - is that your line of work (like mine) is so multi-faceted, - - whereas Grumpy's line is much more 'niche'-focused . . .

Much easier to be able to depend on guys doing 'one trade' . . .

maj

No doubt...... I agree.

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George Z

Two differing opinions here, none of them are wrong.
As far as a smaller owner operator having more time for family or friends,it is not necessarilly true.
In fact, after twenty years of being one, I think the oposite was true (for me).
As soon as I changed to "out of the bucket", the free time generated was eye opening.
And I now have a bigger salary monthly than I ever had. I don't ever have to touch a paint brush.
The more time I have to concentrate on selling and hiring, the bigger my salary gets.
At the same time I have time off to have a life.
As far as this being possible with specialty contractors only, I know couple of multimillion dollar contractors,
doing exactly that and working 5-6 hours a day.
Again, I see nothing wrong with the other point of view,
I just like Grumpy's approach better as it is changing my life for the better.

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Tom R

Not saying 'impossible', George, - - just tougher . . .

Like you say, - - all different points of view, - - none wrong . . .

George Z

Tom, also think:
we are all growing older too.
Myself, I wouldn't have the energy or desire to be an old painter.
What about injury, back trouble etc, a lot of us would suffer that.
In that case as soon as we are out of work the business is no more.
One of the painters here is going through that(there is a thread to that effect).
On the other hand you could be in great physical shape and health and
be hammering away until you retire.

Me...I had too many donuts and smokes...

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ruger9

I just started my own business, so I have alot to learn, BUT...

I just quit a job of 16 years working for a "small company"... about 10 employees. Only about 1M in sales annually...like I said, small company. But CHOKED with debt. Way WAY too much overhead- if I owned that company, I could do the same job with 5 fewer people, a smaller (& cheaper) site, and all the employees could double their salaries. It seems like when a company starts growing, you have to be careful not to grow too fast. Then you end up in a cycle of:

-I need to hire more people to get more work done
-darn, I'm cutting profit hiring more people & all the overhead that goes with that
-now profits are back up. Cool! Now I need to hire more people to make MORE money... & on & on...

It seems to me, and as I said I'm a rookie at this starting-your-own-business stuff, but one of the keys is to KEEP overhead low. Which is easy if you don't mind working. Seriously- I've got 2 friends who have been doing this awhile, & their businesses have grown quite a bit. But employ only around 10 people, but they do a steady business & apparently make good money. They want to make MORE, which maybe they could if they didn't have to buy another truck, for another crew, with a hike in worker's comp, and cellphones for all the crew leaders, etc etc etc.

Right now, I'm solo. I know I'll have to hire at least ONE guy, because I can't do everything solo I need/want to do. And I want to hire someone I can trust to do it if I'm not there. But to do the work I want to do (interior remodeling- especially high-end/creative stuff, and eventually historic restoration), I think a high quality of work, and a close relationship with the homeowner is a neccesity, and also what is lacking in this area's contractors (or so I've been told). On my last job my client told me "you showed up on time, finished when you said you would, and cleaned up when you were done. That puts you ahead of 90% of the contractors out there." I couldn't imagine doing what I want to do, with crews out there doing all the work- it's a bit scary, actually. Sorry to carry on....back to the topic at hand... MINIMIZE overhead to maximize profit, flexibility, and free time. That's my plan. At least for now...

...now WHERE did I put that "free time"?????????

Gordo

This thread has been very interesting to see as it unfolds. Today I had lunch with a wood flooring conttractor friend of mine who is trying to make the jump from a four man operation to eight man operation. He is very stressed. I asked him if he is making more money or if he was just "churning" money. The answer was "churning". Even in what is considered a niche he is having a hard time, being more profitable, mainly due to competion. He said he is almost ready to go back to 1 employee. Two cabinet makers I recently talked to have made the cut back from 10 man operations to just 1 man ops and say they are making more now than before.

In my mind, I am thinking how hard is it in a niche specialty for the employee to just do the work? Painters.......Pick up paint, go to house, prep,paint,be clean and courteous. Wood floor finishing......the same to a certain degree.

Bath and kitchen remodeling, and additions are much more faceted and requires forward and reverse logic and reasoning which keeps the job interesting to say the least. Like any job, one begins with a plan and follows through until completion. Niche jobs just seem easier to train and manage employees through this process.

With all the talk about growing your business to a point where you can sell it........I just do not see where it can happen in a residential remodeling format. You may be able to sell your assets (trucks,tools,trailors), but what else is there to sell once the key employee of the company (You) is gone? Are you going to sell your phone list?
How much is that worth?

Please, do not mis-understand me. I understand the concept of growing a business to sell....but not a residential remodeling company. I hope I am wrong. Anybody with success stories?

I would like to hear some of the veterans chime in on their thoughts and experiences with their muti-crew, million dollar residential remodeling companies that they operated during a younger phase in life.
Namely, off the top of my head, I would ask Sonny Lykos and Shell Additions. If anybody else that had a big residential remodeling company and sold it.......was it profitable selling?

Was the profit just in the physical assets or in the whole company brand and physical assets?

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Looks like some pros were here.

George Z

If the profit margins stay the same, job after job, after job, after job,
growth is very predictable. It has been extremely predictable here recently.
You budget, you execute, you grow. What is interesting is, it only hapened after I stopped beeing on the field.

My choices were:

A) on the field - hardly any money, lots of back breaking work, frustration
B) off the field - better money and growth, lots of fun

I chose B!

Of course my personal experience relates to Painting Contracting

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Gordo

Just out of curiosity, George can you sell your business right now if you put it on the market? Without going into specific dollar amounts is there a tangible dollar figure?

Glad to hear you are doing better with B.

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George Z

"I would like to hear some of the veterans chime in on their thoughts and experiences with their muti-crew, million dollar residential remodeling companies that they operated during a younger phase in life"

No personal stories, but I know a few of these local companies
are doing the impossible

http://www.renomark.ca/members.asp?offset=0

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George Z

Gordo, No. I don't think so.
Our turn around is very recent (less than a year).
The plan is that everything will be turn key and systemised within a year.
I would love to remember to answer that question then.

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Melissa

Great post! Very interesting to hear both sides, especially for us, since we've come to a fork in the road where this is concerned.

I think one of the determining factors is that a small business will eventually have to turn down work, since they are not at capacity to do it all and don't want to be. Whereas a larger scale business owner could take it all on and then some and would in turn make more money down the road this way??? That is, as long as they can handle it and are etremely organized and efficient. If not, they would make the same or less then the small guy.

ruger9

See, from what I hear around these parts (New Jersey), that is exactly where you WANT to be, and where all the "really good" contractors ARE. I have been told by many, many people "if you listen to the client, and do good work, and get it done on time, they will get on your WAITING list for you to do their home. And by the time you get to this point, you won't need to advertise anymore. Most guys operating this way don't advertise, and don't even have their name on their truck."

I realize it could take several years to get to this point, but it still sounds like heaven to me.

George Z

Unless you want to be on the field working hard daily, you need to advertise. Referals keep you on the field (most of the time).
You need the constant flow of leads so you can only take the profitable ones only.

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