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Accidental Painter
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2,292 Posts
Discussion Starter · #1 ·
Been seeing this alot & it needs to stop. You are fooling yourself. That's no different than thinking "my wife has a good job..."

Value your time. If you don't value your time, no one else will.

Excuses:

1) My truck is paid for, so I don't have to factor that in overhead. No its not paid for. You may not owe the bank, but you still have to pay your mechanic. Transmissions randomly go out, vehicles die mysteriously.

So what are you gonna do when that day arrives? Sharply raise your prices? If you factored in a vehicle payment, you have no worries. Otherwise, your sunk.

2) I already have more than enough tools.

Liar. No tool lasts forever, & no contractor has enough. Tools break. You should always be "renting" your tools to each job. If your not renting your tablesaw for that project, what happens when it dies? You don't eat that week?

3) I don't have employees.

Yes you do. You have an accountant who does your taxes. If you need to be licensed in your trade, you have an insurance agent, you have a lawyer lined up to collect, & so on. These are the "hidden" employees. If your wife/cousin/3rd uncles sisters boyfriends half brother is taking calls or doing books they need paid.

No one works 100% solo, they just fail to recognize their support staff.

4) I don't have a big marketing budget.

Business cards run out. Your door magnet falls off. Your truck lettering wears out. Or worse yet, you hit slow times & want to do direct mailings/flyers. But you failed to budget, your broke, too late now.

5) my wife has a good job...

Why is your wife financing your company? You know, eventually shes gonna get tired of being your sugar momma & leave your azz. Suck it up, buttercup. Factor your half the bills into your salary AND CHARGE FOR IT!!!


You cannot & you will not be succesful if you you do not factor in the TRUE cost of doing business.

It's nice to not have to worry about replacing tools/vehicles. Join the ranks.
 

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I own stock in FotoMat!
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12,985 Posts
Many a start-ups have failed due to their employee mentality: Working = making money. Just 'cuz you're working doesn't mean you're making money.

I always use my story about Joe Sixpack.

Years ago, Joe Sixpack got a job as a helper for Fly-By-Night Electric. He started out working with a journeyman wiring houses for Cut Corners Construction. Joe turned out to be a pretty good electrician, learning fast and working hard. As the years went by, Joe got pretty good at wiring houses. Soon, he was running the jobs himself, and had his own helper.

Then recently, Joe got to thinking. "Fly-By-Night charges Cut Corners ten grand to wire a house. I know I get paid about $1500, and my helper gets $1000. I know the material costs around $2500.......... so that means the boss is making five grand just sitting at the office endorsing checks!"

So Joe decides to strike out on his own. "Man, this'll be great! I'll charge just $7000 to wire the houses, and with only $2500 in material, I'll pocket $4500 for each house I do....... Jeez, that's more than three times what I was making for 'the man'!"

So Joe hangs out his shingle. . He doesn't have any health insurance, thinking he'll get that later when things really get started. Suddenly, he realizes he needs to be licensed. So he takes the test, and spends more money for the test and license. He also doesn't understand that driving his own truck costs money, both in gas, repairs, insurance, etc.

All fired up, he gets his first job for Cut Corners. Right from the start, Cut Corners wants a current liability insurance certificate. So Joe forks out $3000 for insurance. A few weeks later, he gets a letter from the state saying he's not a registered contractor. So another $600 is spent. Oh, yea, the city says they need $1250 for a permit.

A few days into the first job, Cut Corners says they need temporary power. Joe didn't figure the cost of a temp pole into the job, but he builds one and gets it hooked up. Joe finds out he needs more than a 3/8" drill and 4-foot stepladder. So he goes out and buys more cords and a couple ladders. Every time Joe needs material or another tool, he'd drive down to Home Depot and whip out the plastic. Pretty soon, he realizes he's a couple days behind schedule. Why? He's working alone, and doesn't have his old helper with him.

So Joe starts working 12-hours days, and a couple Saturdays as well. He skips his daughter's dance recital, and misses his son's Little league game. He comes home dirty, tired and grouchy, which cause his family to stay away from him.

By the time the house is roughed in, his credit card is maxed out and Joe needs to borrow money from his parents. "Just until I get this job done, then I'll be rolling in dough" he tells them. He borrows even more money just to buy the material he needs to trim the house. By this time, he has alienated his family and taken his credit rating down below 400.

And the sad truth is, by the time job is done, he's been paid only $7000 and has spent $14000 just to 'be in business'. So he tells Cut Corners the next job will be $8500, thinking he can 'make it up' on the future work. But even that 'extra' $1500 'from the next job' won't cover his $7000 shortfall. Besides, Cut Corners won't hire him again because Joe caused them to get behind on their schedule. And to add insult to injury, they found someone else to do the job for less.

Dejected, Joe goes home, only to find a letter from the IRS saying they want $3250 for the income tax Joe owes from that job. The state also wants $675 for sales tax. All the 'profit' Joe thought he was going to make went to pay his bills, leaving nothing to pay his parents back with.






And who did Cut Corners hire to wire their next house? Joe's old helper from Fly-By-Night!
 

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im a small 1 man shop...I hear this a lot....I may not need an office building, but I also cant buy in large bulk....one cancels out the other

larger shops should be lower priced than me....I charge full price for all my office time vs paying a girl $10 an hour...I don't have 5 laborers/shop boys......

the reason most small shops are less is because the owners are stupid...doing bids for free...office time for free....I charge 1 hour in the office for every 4 in the field...its built into my price....its around $15 an hour added onto my wage......I add for tools, repairs, vehicles, office stuff.....most small time guys don't add anything up....they don't realize their working for nothing
 

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Have Trowel, Do travel
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909 Posts
im a small 1 man shop...I hear this a lot....I may not need an office building, but I also cant buy in large bulk....one cancels out the other "Your dead wrong there"

larger shops should be lower priced than me....I charge full price for all my office time vs paying a girl $10 an hour...I don't have 5 laborers/shop boys......"

the reason most small shops are less is because the owners are stupid...doing bids for free...office time for free....I charge 1 hour in the office for every 4 in the field...its built into my price....its around $15 an hour added onto my wage......I add for tools, repairs, vehicles, office stuff.....most small time guys don't add anything up....they don't realize their working for nothing
"Im sorry, but do you not understand anything?
that is total BS"
i think your wrong on how you look at overhead,
its not that a 1 to 2 man crew has no overhead, compared to larger Co. they have very little overhead.
I am a 1 man crew that works with another one man crew, and we bid against the bigger Co.s and are able to easily stay 10 -20% lower, My home is my office so I pay no rent, I have no secretary and Geometer (estimator) so i have no one to pay.

it seems that you have convinced yourselfs that you's have the same costs
as a large Co.
your lucky you aint bidding against me, you'll lose.
then if makes you's feel better I'll let you call me a hack
 

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Accidental Painter
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2,292 Posts
Discussion Starter · #8 ·
Bruno: you pay no mortgage, property taxes? Your home never requires maintenance of ANY kind?

That's a huge mistake to think that your home is your office and therefore you have no rents for your office.

Eff this! I'm moving where you are! Free housing!
 

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Have Trowel, Do travel
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909 Posts
Bruno: you pay no mortgage, property taxes? Your home never requires maintenance of ANY kind?

That's a huge mistake to think that your home is your office and therefore you have no rents for your office.

Eff this! I'm moving where you are! Free housing!
but everybodies home, be it a employee, be it an employer, needs these things,
Its like saying we gotta eat so thats overhead
 

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Have Trowel, Do travel
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909 Posts
its the insane thing I've ever heard, that a one man operation has the same overhead as a large Company,
you guys are crazy,
Are you sure that this isn't a Union sponsored forum?

your problems arise from having no REAL competition.
Competition keeps you on your feet And is good for your health, and the job,
Everybodies seems to have fallen in the trap of Saying that "My high price is because I only use the Highest quality of materials" like the others have priced materials from walmart,

those posts makes me laugh because in the REAL world, usually it the ones with the highest bid that uses crapola,
 
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A interesting thread. Everything I own is paid off. I thought I was doing ok, but now I need to re look at what I am doing and see if I am just charging wages or running a business.

This maybe a eye opening dilemma . I will think on this and come back with what I am doing.
 

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we bid against the bigger Co.s and are able to easily stay 10 -20% lower, My home is my office so I pay no rent, I have no secretary and Geometer (estimator) so i have no one to pay.

I'll let you call me a hack
Fool for leaving money on the table, is more accurate. But you're in a niche situation where most of your competition is larger. Now if everyone was like you... that 10-20% cheaper to get work would drive prices into the ground. You'd be singing the same tune most are here.

...So you don't pay yourself for being secretary and estimator? Or don't think you may deserve a few extra beans for wearing those hats?
 

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Accidental Painter
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2,292 Posts
Discussion Starter · #13 ·
I will say I have planned for hiring & having an office building and a fleet of vehicles. These costs are handed to my customers. Now, when that happens, it can & my prices will barely budge.

Bruno, your not a hack because of quality of work or your pricing. It's because of your tremendous ignorance of business.

Stop with the pricing. Lets remove that argument. Who pays for your vehicle insurance? Who pays for a new roof?

Your business check account or your personal?

I'll give ya a hint: it shouldn't be personal.
 

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Have Trowel, Do travel
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909 Posts
Fool for leaving money on the table, is more accurate. But you're in a niche situation where most of your competition is larger. Now if everyone was like you... that 10-20% cheaper to get work would drive prices into the ground. You'd be singing the same tune most are here.

...So you don't pay yourself for being secretary and estimator? Or don't think you may deserve a few extra beans for wearing those hats?
Sure, Yeah, whatever,
Now in the real life,
If my prices were on par with larger Companies with 15-20 employees,
why the hell would anyone want to hire me?
a client would risk building his house, or doing an addition with an artisan,
afraid not.

With quality on the even, you would be a fool to go with the smaller company, if not for the reason every my problem becomes the clients problem, and nobody wants problems.

I know a artisan cabinet maker that is one with the wood, the cats meow.
Their is also a bigger outfit (15 in the shop, with 2 secretaries, an estimator, and a shop manager) that is the best in the country and does exclusively custom wood for the very rich,

the artisan does small jobs and has great prices, he raised his prices 4yrs ago in par with the big boys, and nearly went under,
because clients for the same price started going to the others.

if you cant follow that reasoning, then :whistling
 
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Have Trowel, Do travel
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I will say I have planned for hiring & having an office building and a fleet of vehicles. These costs are handed to my customers. Now, when that happens, it can & my prices will barely budge

Stop with the pricing. Lets remove that argument. Who pays for your vehicle insurance? Who pays for a new roof?

Your business check account or your personal?

I'll give ya a hint: it shouldn't be personal.
I assure you I am not the ignorant, yes, but for a small Co, here the insurance costs next to nothing, Having employees is when the rates skyrocket,
for one
 

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Sure, Yeah, whatever,
Now in the real life,
If my prices were on par with larger Companies with 15-20 employees,
why the hell would anyone want to hire me?
a client would risk building his house, or doing an addition with an artisan,
afraid not.

With quality on the even, you would be a fool to go with the smaller company, if not for the reason every my problem becomes the clients problem, and nobody wants problems.

I know a artisan cabinet maker that is one with the wood, the cats meow.
Their is also a bigger outfit (15 in the shop, with 2 secretaries, an estimator, and a shop manager) that is the best in the country and does exclusively custom wood for the very rich,

the artisan does small jobs and has great prices, he raised his prices 4yrs ago in par with the big boys, and nearly went under,
because clients for the same price started going to the others.

if you cant follow that reasoning, then :whistling
You always make the mistake that your expirences = everyone else's.
 

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diplomat
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5,292 Posts
Great post and very accurate for almost everyone, but not me for the most part.

I do have an insurance agent, plus licensing and continuing education credits. New tools, money in the bank for the next truck, etc.

But I do my own taxes, my clients market for me (plus outdated $500 website that costs $15 a year), and at the moment I'm the sole bread winner.

7 successful years in business and I can say OH before taxes is 20% when I don't have employees.

It can be done.
 

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Have Trowel, Do travel
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909 Posts
You always make the mistake that your expirences = everyone else's.
depends all on how you read into it, and what you get out of it.
the " half empty, half full" thing.
Im am still waiting for the reasoning a small contractor/sub, has the right to charge based on a bigger Co.s rates.
thats absurd.
Please explain to me this,

Insurance, so, If i pay 400 a year by myself, then a Co. of 10 pay 4000. then maybe you have a leg to stand on.

IME, We ran a 40 man crew back in the day, and in my experience, overhead cost almost double for every worker, until you get to the point that it starts to level.
That is
My overhead for me is 1, i hire, now its 3, i hire another, and its goes to about 5.
So, Now i have 2 employees and my overhead is 5 times the original.
now my price has to be modified to suit me.

now explain to me the reasoning that you that you work by yourself , has the same overhead as me, with 2 workers?
 
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