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New Business

 
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Old 08-21-2011, 03:23 AM   #1
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New Business


hi guys i was wondering if i could get some opinions from you. i curently am a project manager for a real estate developement company in phila that is doing rehabs . i do everything from picking up supplies to giving out jobs to the crews to supervising and doing the work myself. i am ready to start a general contracting company of my own specializing in residential renovation but am not sure of a few things and was looking for some answers/advice/opinions.

1. about how much does all the proper insurances cost?
2. do i need to pay workers comp if i plan to sub everything out?(to start)
3. when hiring sub contractors how much do i charge the customers on top of the cost of the subs?
4.is there such a thing as a contractors license that is accepted in multiple states and countys?

any other tips or advice would be greatly apreciated. thanks alot in advance for helping me with my new business.
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Old 08-21-2011, 03:34 AM   #2
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Re: New Business


No offense, but you're not starting off very well if you need to ask these kinds of questions on a message board. You should ask your attorney what you need to do and how much it costs to set up your business. You then speak with your insurance agent about insuring your business. In contracting, insurance costs are based on how much business you actually do, not set rates. As for workman's comp.... you only pay that on employees. But if you hire subs that don't have it.... you'll pay workman's comp on every single dollor of business they were involved in after your insurance audit at the end of the year. So, you had better be sure they are insured. And for licensing information, you should call your local licensing board that has juristiction over your area of operation. They will be able to guide you through local requirements.

You really need to do this leg work yourself to determine what it will cost in your particular area to go into business. There is no magic formula or number that works for everyone.

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Old 08-21-2011, 06:36 AM   #3
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Re: New Business


You have asked good questions and these are really easy to simple to get answers on, simply ask an insurance agent and contact your state contractor licensing board.

The biggest question you need to get answered is how you will get customers?
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Old 08-21-2011, 06:49 AM   #4
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Re: New Business


Quote:
Originally Posted by hgoldfein View Post
1. about how much does all the proper insurances cost?
2. do i need to pay workers comp if i plan to sub everything out?(to start)
3. when hiring sub contractors how much do i charge the customers on top of the cost of the subs?
4.is there such a thing as a contractors license that is accepted in multiple states and countys?
You'll need GL insurance, WC, and commercial auto insurance, for starters. Commercial auto is in the $1200 range here in GA - not sure in philly. Here, GL for a start up GC is in the $1000-$2000 range based on projected sales. Even if you are working with only subs with insurance, you still need workmans comp, even if you're not required by the state. That's because the GCs work comp fills in lots of the holes in a subs WC policy.

For how much to mark up the subs - see this thread https://www.contractortalk.com/f16/pr...success-27899/. Read it a few times, there's a ton of good advice there.

For a multiple state or county license - try checking with a local NARI or NAHB group. They can answer most of your questions and may even have good places to get insurance for reasonable prices.
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Old 08-21-2011, 08:59 AM   #5
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Re: New Business


I think you should stay where you are for awhile and try to find out how that office handles everything from bookkeeping to marketing, contracts, extra work orders, estimating, sales, design, HR , etc.
In other words you still have a lot to learn.
Most of us worked for 10,15 20+ years before we went out on our own.

1. about how much does all the proper insurances cost? Depends, $1,000 on up.
2. do i need to pay workers comp if i plan to sub everything out?(to start) No, 1099 the subs.
3. when hiring sub contractors how much do i charge the customers on top of the cost of the subs? Depends, 50% or more.
4.is there such a thing as a contractors license that is accepted in multiple states and countys? No.

Good Luck and never give up.
PM or call if you need to.
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Old 08-21-2011, 01:39 PM   #6
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Re: New Business


thanks guys your all giving me lots of helpful info. some questions on what was said so far. 1. do i need to have comercial auto insurance if im usng my personal vehicle?
2.does the fact that i am a new company suggest that i should charge lower rates?
by the way for those concerned im not just deciding to open a business with the no info on legal and practical info im getting advice from you guys who are experienced in the field and then i plan to speak with my lawyer and accountant and everyone else. im just trying to get basic info so i know what to expect.thanks again.
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Old 09-22-2011, 03:05 PM   #7
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Re: New Business


I agree with the previous posts there is a lot of research and planning to do before opening the doors to a new construction business.

Here is some "Bread For The Head"
--------------------------------------------------------------
Most construction firms use the "P.A.M" Method:

P = Production, they have a job of two from friends and relatives and they go to work...cheap

A = Accounting, wait until the tax forms pile up and they bounce a few checks and things start to get serious then buy QuickBooks and use it like a check register.

M = Marketing, when the low hanging fruit of friends and relatives "honey do projects" are complete they wait for referrals and the phone rarely rings.

--------------------------------------------------------------

Successful construction firms use the "M.A.P" Method:

M = Marketing, they really think hard about who is their target market? They document and describe in detail who is their "Prime Customer". They include demographic and psychographic profiles because it will set the direction of the firm. If everybody is your customer then nobody is your customer.

A = Accounting, they find someone who understands construction bookkeeping and accounting and outsources that chore to them in most cases for a lot less than an in-house bookkeeper.

Quality experienced Construction Bookkeeping Services have remote servers which means they offer clients 24/7 access to their QuickBooks desktop version and they guide clients on which reports to pay attention too and why certain reports can make them more money than other ones.

P = Production, is a process developing operation manuals for employees, and processes "This Is Who We Are And This Is How We Do Things Here". They gather tools, equipment, establish relationships with suppliers, vendors, employees and setup truck(s) and/or van(s)

This is a quick and dirty overview of the process we have used when we started our construction firms and in the end we were able to sell them at a nice profit.

I am interested to find out what you think. Agree or disagree please let me know

Last edited by Randal DeHart; 09-22-2011 at 09:44 PM. Reason: Remove extra signature
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Old 01-04-2012, 01:08 PM   #8
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Re: New Business


Quote:
Originally Posted by hgoldfein View Post
thanks guys your all giving me lots of helpful info. some questions on what was said so far. 1. do i need to have comercial auto insurance if im usng my personal vehicle?
2.does the fact that i am a new company suggest that i should charge lower rates?
by the way for those concerned im not just deciding to open a business with the no info on legal and practical info im getting advice from you guys who are experienced in the field and then i plan to speak with my lawyer and accountant and everyone else. im just trying to get basic info so i know what to expect.thanks again.
1. If you're using your vehicle for work, you should probably convert from a personal auto policy to a commercial auto policy. There won't be much difference in premium. 2. No way dude. Stand behind the quality of your work and charge a fair price.

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