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Old 11-01-2019, 09:14 AM   #1
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Expanding


Hi,

New to the forum. We have been in the GC business for two and a half years, and we have been actively seeking employees for a year and half. I know this is not an unusual situation in the industry at the moment.

We are still a two-man operation. This year we have $350,000 in sales and we don't need to advertise to bring in business. Theoretically we could be booking a significantly larger number of jobs, but we just don't have the man-power to complete the work.

We are faced with the decision to turn down work as we can't find employees, or book work and pray/hope that we can hire someone in order to complete the work in a timely fashion.

Suggestions as to how you proceed? We've tried Zip-Recruiter, Facebook, Craislist. Haven't tired Indeed or Linkedin yet, those are our next stops.

Second question - Has anyone used short term debt (line of credit) to fund payroll in the transition to more crews? Looking at numbers and wondering how to bid jobs assuming a lead will come along, but also prepare for the potential that if we do eventually find someone, we might have a short term cash flow issue as we transition.

Thanks for you help.
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Old 11-01-2019, 09:24 AM   #2
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Re: Expanding


Forget the online deals imo, maybe unpopular opinion but I have run through a number of hands in 11 years and never put an ad out. Tell all your subs, suppliers etc... what you are looking for, ask their hands if they know anyone who may want to step into a better job/pay/career?

Pay more than the average for the position and tell everyone you start at xx.xx dollars an hour for the position. Other than 2016 - 17 which was nuts here I have always been able to staff up when needed, as many as 16 full time.

Try and hire in advance of need, well in advance. Sucks to train on the fly

Cash is king in this business. I've always used lumber accounts and still keep a like of credit on 5 of our work trucks I can (never have) tap when needed. I've used Amex to cover lumber and supplier Bill's to push to 60 days when doing commercial work especially. It is wise to try and keep way more cash than you think you need, I've had 13-15% of my annual sales inopersting capital and been down to 5 digits payingBill's, subs, payroll, etc... when we had a 100 days of rain and couldn't close out 4 houses to get our next or last draw.

Subs and hands want their check every week, and using credit can be done for that but your running on a knife's edge imo. If you find your self tapping that credit you need to be eating beans and rice imo and putting it all back into the account. I paid myself less than a lead carpenter for 7 years

Good luck and fortune, sounds like your making stuff happen.

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Last edited by Jaws; 11-01-2019 at 09:30 AM.
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Old 11-01-2019, 10:26 AM   #3
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Re: Expanding


If you don't have the cash to fund expansion, you aren't ready to expand. It's that simple.

Plenty of people have gone broke trying to expand. New guy doesn't work out, project gets messed up, client doesn't pay and you're in the toilet

Rule if thumb, you can't expand faster than your free cash flow will support. Free cash flow 25%, you can grow at 25% per year.

If you don't know what free cash flow is, learn some business to run a business.

Expansion always has downside risks, and you have to be able to cover them.
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Old 11-01-2019, 01:07 PM   #4
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Re: Expanding


Quote:
Suggestions as to how you proceed? We've tried Zip-Recruiter, Facebook, Craislist. Haven't tired Indeed or Linkedin yet, those are our next stops.
I've had success with Indeed and my current lead came from there. You should also do as Jaws recommended above. You could also explore using more subs to perform work on a project by project basis.

Quote:
Has anyone used short term debt (line of credit) to fund payroll in the transition to more crews? Looking at numbers and wondering how to bid jobs assuming a lead will come along, but also prepare for the potential that if we do eventually find someone, we might have a short term cash flow issue as we transition.
I personally would not take on more work than my current crews can handle. You will need some time to see how a new hire really performs before you let them run a project. This will require an investment on your part but I would not take on debt for that. Let the business finance the growth.
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Old 11-02-2019, 09:17 AM   #5
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Re: Expanding


Thank you all
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Old 11-02-2019, 10:29 PM   #6
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Re: Expanding


Raise your price 1-2 % a MONTH till you aren't working 40 hours a week, Don't spend the "Pay raise" Then hire with cash.

Remember EVERYONE is competing with the same payroll staffing issue(s)....

When figuring Payroll costs vs profits, don't forget every added employee is ADDED risk = need to CHARGE more for the bigger crew over and above tangible payroll expenses, and usually production per worker drops.....

In the USA, make sure you transition to some type of corporation where you can accumulate cash with out paying self employment taxes, The 15.2% ding adds up fast....

Of course you'll ARE lowering your likely SSI retirement monthly pension check...

CPA, Tax lawyer are suggested with use of multi decade spreadsheets.
Remember much advice given IS TO RAISE the Guru's Income flow, NOT yours..... Banks, sellers, insurance agents, Websites etc... Software peddlers....

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