Need Advice For New Residential Contractor In Florida

DoubleJ

I'm just starting up a new residential contractor business. I contacted SBA and SCORE to get advice from folks who have been doing this for awhile. Neither were any help. I'm looking for general or residential contractors in Florida that can advise me on insurance and costing. I'm a one person operation and plan to sub out all work. I plan on building one to five homes per year.

Insurance: Reading the policies is clear as mud. Any help would be appreciated.

Florida only requires $300K liability and $50K property. Should I get more, or stick with these limits? If I go higher, I understand my subs will have to match the higher amount to keep me covered. If I get higher coverage, aren't I limiting myself with subs who have less who would bid on the job because of the higher insurance requirement?

Since liability insurance is based on labor payroll, what estimate percentage do you use for labor on a single home?

Should I get Occurance with Contractor's Special (5 yrs), Occurance with a Sunset Clause (2 yrs), or Claims Made (coverage only as long as you have it)? Since Florida only requires you to cover any warranties for one year, is there an advantage to having longer than a year coverage?

Reading the policy, it appears I'm only covered if someone other than a worker gets injured, or if construction related property is damaged. Does the liability cover defects that occur later? Since the property owner will have builder's risk, what really am I covering with my liability policy? I don't have construction equipment, so should I keep the property coverage as low as possible?

If I have a partner who's working the business side, do I need Worker's Comp?

Profits:

I'm reading on this website that markups of 20-30% are common. Then you add in overhead costs for things like your insurance costs, office, etc. Then you typically add 10 -25 % for profit. What do you typically use in each of these areas?

What would be an average percentage figure to use for a finders fee for someone who brings me a customer that actually builds a house with me?

Sorry for the long list of questions, but I'd appreciate any answers I can find to my questions. Thanks.

TNGHomes

Thats alot of questions that....well......Im just going to mind my own business.....

DoubleJ

Yeah, I've asked several of these questions before and didn't get any answers. I figure either the folks on this forum don't know, and don't want to share the answers.

I'll muddle through it and eventually find my own answers, if no one cares to answer. I was hoping to shorten the learning curve. We'll see.

TNGHomes

Call your insurance provider

dirt diggler

don't we all

MattCoops

You should have at a minimum, a million dollar general liability insurance policy. I've never heard of a $300K one EVER.
Then you need workman's compensation.
Talk to an insurance agent and let them know what you're doing, and they'll find the plan for you.

It seems like you understand how to make a profit. It's all accounting really. Knowing your time and materials (or square foot labor rate) adding overhead, and then adding your bank change.

You may want to take the time to learn how to construct a business plan. And use this as a tool to run your business.

Good luck in your endevours.

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DoubleJ

Umm, let's see. Talk to my insurance agent. Which one would that be? The one that quoted me $1948 for a $1M liability policy, or the one that quoted me $45,000 for a $1M policy? As you know there are a lot of variables in insurance policies. The biggest ones appear to be payroll and years of coverage after the policy ends. I'm trying to find out what most contractors use, so I'll have a little more info when I speak to the insurance agent. Sooo, what do you guys use (other than a $1M policy dollar limits). Do you just get a policy with the $1M policy limit, trust your insurance agent, and not know what coverage you really have, or can someone answer my question?

I have a business plan. I'm trying to improve it with insight from other contractors who have been doing this all their life. That's what I asked the profit questions. Since the home building industry is so competitive, I'm thinking the 20-30% markup on material and labor, 10-15% overhead allocation, and 10-25% profit is going to result in zero customers. Again, that's why I was asking the folks who have been doing this forever. I've mentored a lot of folks in my previous career. I was looking for a little help in this new career. Anyone willing to help? I'd like to keep my startup mistakes to a minimum by being informed, and yes, I understand we all want to do this. So is someone willing to help or not?