Becoming A General Contractor, And Payroll. - Business - Contractor Talk

Becoming A General Contractor, And Payroll.

 
Thread Tools Search this Thread Display Modes
Old 08-16-2019, 07:44 PM   #1
Registered User
 
racinepainter's Avatar
 
Trade: Racine Painting Contractors
Join Date: Aug 2019
Location: Racine, WI
Posts: 1
Rewards Points: 2

Becoming A General Contractor, And Payroll.


So right now I am a painting contractor, we've been getting busier, I have about 6-8 people that work for me as subcontractors technically but will be making the move to regular employees soon.

I have some questions I was hoping some people could help me out with. So one is with paying my people. So right now I just moved to the point of paying them every Friday. The problem I have is that sometimes I don't get paid promptly and I don't have a big enough bankroll yet to promptly pay them. This actually isn't a huge problem with the people that I have now because they've been with me the whole way and understand what's going on. The problem that I have is the idea of hiring new workers, as that will require an even bigger bank roll and I'm just not sure how to pull it off.

The next thing is I'm obviously constantly networking and making new connections. I'd like to make the jump into becoming a GC.
The questions I have are:
-How do I bid? Is it unprofessional as a GC to have multiple subs come in and give me a price before I give the client a final estimate? Or do I need to be able to give my own price and deal with subs later?
-Similar to the issue above, how do I deal with paying subcontractors all while keeping them happy?
racinepainter is offline  

Warning: The topics covered on this site include activities in which there exists the potential for serious injury or death. ContractorTalk.com DOES NOT guarantee the accuracy or completeness of any information contained on this site. Always use proper safety precaution and reference reliable outside sources before attempting any construction or remodeling task!

   

Advertisement

 

Old 08-17-2019, 09:09 AM   #2
Pro
 
Fishindude's Avatar
 
Trade: Industrial
Join Date: Aug 2017
Location: Indiana
Posts: 437
Rewards Points: 934

Re: Becoming A General Contractor, And Payroll.


You either need to build up some significant cash reserves to operate on if you are going to get any bigger, or set up a line of bank credit to use to fund your operation. If it were me, I'd do both. Try to run off of your own cash at all times, but have a line of credit in case you get in a pinch or take on a large project.

You can't jack employees (or subs) around, delaying pay for a few days because a client didn't pay. That's between you and the client and your employees (or subs) should never hear about it. You will lose them if they begin to think you are financially shaky.

-How do I bid? Is it unprofessional as a GC to have multiple subs come in and give me a price before I give the client a final estimate? Or do I need to be able to give my own price and deal with subs later?

For work that you are not performing, it is always prudent to get your subcontractor numbers prior to submitting your quote to the client, as their price is a big part of your price. I might occasionally take a guess at a subs price for a small item if I'm in a hurry to get a quote out the door, but not very often, and never on anything big.

Advertisement

Fishindude is offline  
The Following 3 Users Say Thank You to Fishindude For This Useful Post:
Dirtywhiteboy (08-17-2019), Not That Guy (08-30-2019), TheConstruct (08-17-2019)
Old 08-30-2019, 06:19 PM   #3
Registered User
 
Not That Guy's Avatar
 
Trade: Coatings Specialist
Join Date: Aug 2019
Posts: 12
Rewards Points: 28

Re: Becoming A General Contractor, And Payroll.


Fishindude brings up an excellent point, both the cash reserve, as well as the line of credit. This way your bases are covered when everything goes wrong all at once!

Regarding subs, the last thing you want to do is bankroll someone elses remodel because a sub came in higher than expected, or you have to go back to the customer and ask for more money than anticipated. This is an ugly situation, best to be avoided. Plus, many home owners use their own equity lines, or construction loans, which are based upon YOUR numbers. If your numbers are off, that can quickly get ugly.
Not That Guy is offline  
Sponsored Links
Advertisement
 
Old Today, 05:33 PM   #4
Registered User
 
home_builder's Avatar
 
Trade: Home Builder
Join Date: Sep 2019
Posts: 3
Rewards Points: 8

Re: Becoming A General Contractor, And Payroll.


Look into adding a "paid when paid clause" in your contracts.
home_builder is online now  
Old Today, 06:46 PM   #5
Pro
 
AllanE's Avatar
 
Trade: Home Builder
Join Date: Apr 2010
Posts: 252
Rewards Points: 577

Re: Becoming A General Contractor, And Payroll.


Quote:
Originally Posted by home_builder View Post
Look into adding a "paid when paid clause" in your contracts.
Explain?
__________________
http://aedwards.com
AllanE is online now  
Old Today, 07:04 PM   #6
Registered User
 
home_builder's Avatar
 
Trade: Home Builder
Join Date: Sep 2019
Posts: 3
Rewards Points: 8

Re: Becoming A General Contractor, And Payroll.


Quote:
Originally Posted by AllanE View Post
Quote:
Originally Posted by home_builder View Post
Look into adding a "paid when paid clause" in your contracts.
Explain?

The general contractor only pays it subs when the general contractor gets paid by the owner.


Each state has their own legal requirements for what is considered a valid paid when paid clause, so please consult local counsel.
home_builder is online now  
Old Today, 07:10 PM   #7
Geometrist

 
Warren's Avatar
 
Trade: framing/remodeling
Join Date: Feb 2005
Location: NE Ohio
Posts: 10,093
Rewards Points: 381

Re: Becoming A General Contractor, And Payroll.


Quote:
Originally Posted by home_builder View Post
The general contractor only pays it subs when the general contractor gets paid by the owner.


Each state has their own legal requirements for what is considered a valid paid when paid clause, so please consult local counsel.
You gotta be kidding me.

Good luck keeping quality subs with that clause.
__________________
I'd love to replace all the dumbness in this room but the budget is tight and the stupidity is plentiful!

Easy Gibson
Warren is online now  
The Following User Says Thank You to Warren For This Useful Post:
ScipioAfricanus (Today)
Old Today, 07:11 PM   #8
Pro
 
AllanE's Avatar
 
Trade: Home Builder
Join Date: Apr 2010
Posts: 252
Rewards Points: 577

Re: Becoming A General Contractor, And Payroll.


Quote:
Originally Posted by home_builder View Post
The general contractor only pays it subs when the general contractor gets paid by the owner.
Won't work in residential construction, no subs (or very few) will work for you.
__________________
http://aedwards.com
AllanE is online now  
Old Today, 08:24 PM   #9
Member
 
dbbii2's Avatar
 
Trade: General
Join Date: Apr 2017
Posts: 45
Rewards Points: 98

Re: Becoming A General Contractor, And Payroll.


This is one of the major differences between commercial and residential construction. In commercial, the pay when paid (or now I'm seeing a pay IF paid) clause is pretty much standard. If you don't want to sign it, you won't get the job. That's a basic business decision you have to make.

Advertisement

dbbii2 is online now  



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Join Now... It's Fast and FREE!

I am a professional contractor
I am a DIY Homeowner
Drywall Talk is for
PROFESSIONAL CONTRACTORS ONLY!

At DrywallTalk.com we cater exlusivly to professional contractors who make their living as a contractor. Knowing that many homeowners and DIYers are looking for a community to call home, we've created www.DIYChatroom.com DIY Chatroom is full of helpful advices and perfect for DIY homeowners.

Redirecing in 10 seconds
No Thanks
terms of service

Already Have an Account?