Getting Started - Business - Contractor Talk

Getting Started

 
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Old 06-22-2019, 10:55 AM   #1
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Getting Started


Hey guys, just passed my license exams and am waiting for my plastic in the mail. I am class B general contractor in CA and will be doing kitchen and bath remodeling type work.

My question is how to get started and build up my business? Ive never owned a business before but have always worked for small companies and seen the benefits and pitfalls that can be had for a small operation. I am registered as sole proprietor for now so i will be doing all the work myself with workmans comp exemption.

I have some old bosses and contacts with extra work they are ready to pass on to me but i dont wanna rely on them exclusively, just as a stepping stone to build up my rep and referrals. I would like to take smaller jobs to start as i dont have the capital, shop, labor force, ect to take on big stuff yet.

Also thinking of maybe doing some insurance/restoration jobs or subbing for HD or Lowes. Anyone done that and can give pointers? I know they arent glamourous, big bucks jobs but they dont involve alot of wasted time on bids and customers that never book any work. Scopes and prices are already set and most can be completed in short time without a million variables/change orders.

How did you guys all start out and grow your businesses? What mistakes did you make at first that you could have avoided with more experience? How much did you set aside on bids and job profit just for reinvestment toward the company? How did you prep for switching from a 1 man operation to building a crew? Ect.

So many ?s and things to do. I just dont wanna make any rookie mistakes and shoot myself in the foot swimging for the fences early.

Thanks

Tom. A to Z Contracting

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Old 06-22-2019, 05:58 PM   #2
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Re: Getting Started


save money

establish a line of credit w/your bank

only take on what you can comfortably handle

ALWAYS deliver what you promise

slowly build your tool collection

get rid of debt whenever you can

KNOW YOUR OVERHEAD and what it costs to be in business

be above board/honest in your dealings

learn to network

basic business/accounting classes are helpful

read the books by David Gerstel

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Old 06-23-2019, 02:20 PM   #3
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Re: Getting Started


Quote:
Originally Posted by griz View Post
save money



establish a line of credit w/your bank



only take on what you can comfortably handle



ALWAYS deliver what you promise



slowly build your tool collection



get rid of debt whenever you can



KNOW YOUR OVERHEAD and what it costs to be in business



be above board/honest in your dealings



learn to network



basic business/accounting classes are helpful



read the books by David Gerstel
Thanks griz.

I have a little bit of $ saved up and set up seperate accounts and a new line of credit with my bank. Ive never been one to rack up debt so my credit is good and the only thing i have is a mortgage as far as liabilities. I have been slowly building my tool arsenal for years but i dont think thats something any of us ever really finish.

As far as establishing my accounting practices and pricing for bids and such, thats where i know im gonna need to do a lot of work. I have never been the most organized or diligent when it comes to accounting and paperwork in general so im gonna either have to develope a system to track everything, hire an accountant, or probably both. As a sole proprietor i know this will have major implications for my tax burden and individual income.

As far as overhead is concerned im kinda not sure what to do yet as i dont have any data and am trying to anticipate what expenses i need to be prepared for in the future. Right now my overhead is very low compared to my competition since i am running things from my home without any employees but i want to set aside a good chunk of change to be available cover expenses that i know will be necessary to grow my business (new tools, advertising, proper insurance, storage space, ect). I also want to be prepared for any down time or time between progress payments where I may need to have a little extra capital to cover my life expenses. The last thing I wanna do is come outta the gate charging too low and getting stuck in a rut with a ton of work that doesnt pay me enough to properly grow. I figure I can probably charge a little under what my competition does and still make a healthy margin considering my lower expenses but I still dont know exactly where I want those #s to be as far as %s of markup and such. Thats where im really just guessing right now and trying to be as cautious as possible.

I will have to look into the books you mentioned. Ive got alot of research to do still and practices to establish. Thanks to you and everyone else here for all the tips and advice.

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Old 06-23-2019, 03:09 PM   #4
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Re: Getting Started


here is a very comprehensive overhead list.

Courtesy of 480Sparky...

Business Cost List

Building
Building
Warehouse Space
Trash Removal
Lawn Care
Snow removal
Upkeep & Repairs

Office Expenses
Computers
Stationary
Copy machine
Fax machine
Forms
Printing
Software
Office Equipment
Computer maintenance
Files
Postage
Office Supplies

IT
Internet service
Email accounts
Web site
-Initial creation
-Updating
-Maintenance
GPS services

Benefits
Vacation Pay
Holiday Pay
Uniforms
Uniform Maintenance
Unemployment
Bonuses
Incentives
Retirement Plan
Christmas Party

Taxes
Property Taxes
Tangible Taxes
Pay Roll Taxes
Income Taxes
Sales Tax

Training
Management Training
Office Training
In-House Training
Tech Training
Mfg. Training
Training Equipment
Safety Training
Update classes
License testing
OSHA compliance
RRP compliance

Insurance
Building Insurance
Liability Insurance
Employee Insurance
Life Insurance
Business Insurance
Workers Comp.

Utilities
Gas
Electricity
Telephone / Fax lines
Internet Service
Toll Calls
Telephones
Pagers/Cell Phones
Radio Maintenance

Vehicles
Vehicle Maintenance
Ladder Racks
Interior bins
Fuel
Truck Signs / lettering / vinyl
Tires

Financial
Accounting
Loans
Tax Preparation
Interest
30+ Day Receivables
Bank Charges

Travel
Hotel
Meals
Airline / vehicle

Unique to the electrical trade
Permits
Licenses
Bonds
Inspections
Trade Association
Subscriptions
Memberships
Dues
Retainers
Safety PPE
-Lock-out/Tag-out kits
-Fall prevention harness
-Arc-flash clothing
-Hard hats
-Safety glasses
-Hearing protection

Tools
Company Tools
Safety Equipment
Ladders
2-way Radios
Test Equipment
Replacement Parts
Parts Storage
Damages
Tool Replacement
Job site storage

Misc.
Trips to Supply House
Theft
Uncollected Money
Collection fees
Unbillable Hours
Commissions
Call Backs / Warranty work
Shortages
Bad Checks
Delivery
Credit Card Sales
Drug Testing

Legal
Legal advice
Law Suits
Incorporation / LLC fees

Advertising
Marketing
Business cards
Signs
Radio / TV
Newspaper
Flyers / brochures
Material Purchases
Inventory

Labor
Wages
Salaries
Dispatcher
Answering Service
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Old 06-23-2019, 03:27 PM   #5
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Re: Getting Started


For those of you that run your business out of your homes, do you consider a part of that as overhead? I mean obviously im gonna write off a portion of my mortgage, space rent (i own a manufactured home in a park), utilities, ect as a business expense, but should i also consider it as overhead?

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Old 06-23-2019, 03:29 PM   #6
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Re: Getting Started


be best for you to talk with your accountant to set things up right, for your situation, and avoid/alleviate problems down the road.
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Old 06-23-2019, 03:57 PM   #7
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Re: Getting Started


Quote:
Originally Posted by A2Zcontracting View Post
For those of you that run your business out of your homes, do you consider a part of that as overhead? I mean obviously im gonna write off a portion of my mortgage, space rent (i own a manufactured home in a park), utilities, ect as a business expense, but should i also consider it as overhead?

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I don't write off a home office. If I ever get audited and after they I owe them money and the audit is through I'll pull an "oops! Forgot to claim my home office".


Mike.
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Old 06-23-2019, 07:31 PM   #8
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Re: Getting Started


1. Visit CT regularly. There are a lot sharp people here. Donít be afraid to post questions either, you will get good sound advice.

2. Take accounting classes at your local community college, either in person or online. Get Quickbooks for your bookkeeping and a CPA who knows it, and can help you get things set up.

3. When you get draw(s) for a job, use it for materials for that job. The last check you get for a job, if you priced it right and didnít make too many mistakes, is for you overhead and profit. The worst feeling it to be busting butt to finish a job, knowing most or all of it is going to materials for the job.

4. Integrity and reputation will create your referrals. (The more referral work you do, the less bidding you have to do and compete with the low bidders). Focus on building up your referral network for steady work.

5. Consider joining your local Home Builders Association or NARI.
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Old 06-25-2019, 01:51 AM   #9
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Re: Getting Started


So im kinda curious how those of you that are sole proprietor/one man businesses price for your own labor vs profit?

Do you estimate your total hours for a given job at your desired hourly rate then do a markup for profit? Worst case scenario if you screw up a bid you dont make a profit and work longer for less? Or more of a lump sum deal and figure out what you made after direct costs and overhead are deducted from a job?

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Old 06-25-2019, 03:55 AM   #10
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Re: Getting Started


Quote:
Originally Posted by A2Zcontracting View Post
So im kinda curious how those of you that are sole proprietor/one man businesses price for your own labor vs profit?

Do you estimate your total hours for a given job at your desired hourly rate then do a markup for profit? Worst case scenario if you screw up a bid you dont make a profit and work longer for less? Or more of a lump sum deal and figure out what you made after direct costs and overhead are deducted from a job?

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One man show here.

Small jobs are my specialty.

Since I often do a variety of small jobs, I price everything line item style. I make sure each item is profitable. If HO decides not to do all the work, thatís fine. If one task takes longer than I thought, the other tasks still make money.

I think by the day rate. Day rate includes labor, profit, overhead, fudge factor, etc.




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Old 06-25-2019, 06:55 AM   #11
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Re: Getting Started


Get market research done.
Get a lawyer.
Get an accountant.
Get a banker.
Get one years' worth of wages saved up.
Get a business plan.
Get a balance sheet.
Get good credit.
Get advertising.
Get customers.
Get going.
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Old 06-29-2019, 04:30 PM   #12
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Re: Getting Started


Quote:
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Get market research done.
Get a lawyer.
Get an accountant.
Get a banker.
Get one years' worth of wages saved up.
Get a business plan.
Get a balance sheet.
Get good credit.
Get advertising.
Get customers.
Get going.
Ive got a few of those covered so far. The market is pretty hot where im at and plenty of work to be done. Ive some $ saved up and my credit is very good. Already set up seperate accounts for the business. Not sure if/how im going to advertise. Id like to get to the point where my work comes all from referals its just that right now half the contacts i have are not the type of people who want to pay for legit and licensed work so im gonna hafta shift towards a more legit network and client base that are willing and able to pay the extra money for bigger jobs done on the books.

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