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  Going Into business for yourself  
     
 

New Going into business
Kris 12/13/02 1:14 p.m.
I need some advice and thought I would find it here. I started my own remodeling company a year and a half a go as a sideline business. I want to try and make the leap to doing it full time, but to leave the steady pay check... you know how it is. Working full time for a large construction company during the week makes it difficult to make contacts so I've been doing everything word of mouth. Has anyone else started out this way? How did you drum up business so that you were "steady"? Any advice would be apppreciated. Thanks

New Re: Going into business
T Moore 12/13/02 2:12 p.m.
Kris:
A note of encouragement: the Trades are chuck-full of Owners who started out from their garage and kitchen table wondering what the heck they'd use for food money next week.
12 years ago, my wife used to ask me on Friday what I'd be doing the next week. I said I had no idea, but from Friday night to Sunday night with alot of phone calls, I had another week of work.
Six years ago, she asked what I'd be doing next month to pay the bills, I said I had no idea, but I'd work on it and wound up with a month's worth'a customers.
Nowadays, with employees and big customers, my wife and I talk about what I might be doing a year from now.
As far as specifics of how to grow a business, the best advice I have is to remember the Five Rules of being an Owner. Break any one of 'em, and you're sunk.
1 = Get Jobs from Customer who will pay.
Advertise yourself and your Co to get prospects and get jobs. For the specifics of advertising yourself: what do you do best? Who needs it and how might they find out you can do what they need done?
2 = Be ready for the Customer.
Get a few Suppliers or SubTrades on your side for the materials you need to perform your work; i.e. short lines of credit and the "tools" required to do the work. Make sure your "papers" are together (licensed, bonded, insured, have professional business cards, have a business checking account, ectectect).
3. Do the job right the first time.
Perform your work in a trustworthy and professional manner. That way, even if your Bid is higher than others, the Customer will know that they're getting a reliable and honest worker for their money.
4. Get paid.
Finish your work so that is done. 100% done. Nothing left for the Customer to say "but you're not done, why should I pay you?".
File your Liens if necessary, make sure your Suppliers are covered so they don't get burned, get money up front if possible, make your bids money-makers (not money-wasters) ectect.
5. Be a good steward of the money you receive for the work you do.
Get help with Billings and Receivables so that your money doesn't run out with you broke and starving while being owed thousands of dollars from Customers who haven't paid you yet. Be accountable to someone who knows how to handle money.
I'm a professional in my trade, but that doesn't mean I can do everything required to make the business run. I do the first three items, and my wife takes care of the fourth and fifth items.
Of course, it helps that I married a Mary Poppins Accountant too!
No "luck" wishes: if 'ya want it, be a tiger and go get it.
T Moore
Active Door

New Re: Going into business
Matt 12/13/02 3:37 p.m.
Very good advice from Moore. Make sure that "all your ducks are in a row" before you make the jump. Have you let your employer know that you might become a competitor? Might not want to until your ready to hit the road.
Also, you need a mix of many things to attract customers. Start a simple web page. I started one for around $150 and do the html pages with Microsoft FrontPage. Try to do all of the work yourself when it comes to advertising. Designers charge much more per hour than carpenters do!! I use Print Shop Deluxe 15 to design business cards, thank you cards, and advertising postcards. Postcards are cheaper to make and send than folding brochures, and if people have to open something up that they might consider junk mail, your efforts are wasted.
Find EXACTLY WHO your customers are! market your services to them and them only. Don't over extend yourself and try to sell to too many different groups of people. If you want customers who are more likey to pay, then target the ones with higher incomes and more expensive homes. This information can be found from census information, and home values listed on tax assessor's databases. If the databases are not available online, then you can look at the assessor's commitment books at the city hall in the town you'd like more information from. It's all free public information that you've helped pay to put together, so feel free to use it.
Make sure you you keep in touch with your prior customers. I find that 70-80% of all my business comes from repeat customers. Send them thank you cards after the job is done and paid in full. Send them brochures every few months to remind them that you are still available to do work for them. Send them year-end thank you cards around the first of december. Do whatever you can to make your name STICK in their heads.
As for money, Moore made many great points. Keep track of your cash, it's the fuel your business runs on. Keep good records so that if you need a line of credit, you'll be ready to show some numbers to the bank. You can get hundreds of templates for financial spreadsheets and business plans, etc. free from Microsoft Office web site. Find the link on the right of the "Office" page that says "Templates".
Tell your customers in writing on the estimates that full payment for materials on site, as well as a third of your estimated labor, is due as soon as you land on the job site. This is typically in the industry, at least in New England. Two thirds of the way through the job, you should get paid for materials and labor up to that point, and the rest when your done. Put it on the estimates, so there's no confusion.
Make sure you know if you need contracts. I know in Maine, a contract is required for any work over $1500. Although carpenters don't need a license in Maine, they do in many other states, so check that out too.
Not meant to offend, but what's your education? I ask because it is a REALLY good idea to have some accounting, finance, marketing, etc. classes behind you. If for nothing else, the basic knowledge of knowing when your being shafted or you're about to go bust and can do something to fix it before it's too late.
Stay small to start. Don't take on jobs that will leave you without operating capital. You should work your way up to a fund that will let you work for a few months while waiting for receivable to come in.
Best wishes on the adventure! And keep track of those $$$$$$$ !! Let me know if you'd like to find out where to find advertising materials, software, web hosting, etc.
M Smith
STIX Builders
STIX Builders - Superior Touch Interior/Exterior

New Re: Going into business
beezo 12/14/02 10:33 a.m.
Kris,
There is lots of good advice on this entire web site. Business Strategy and Markup and Profit are full of good ideas. I would take lots of time over the next couple of weeks or months and read lots of posts. I find that there are things here that I may think have nothing to do with my business or a current job and find out I am doing something that was talked about just a couple of weeks later.
I started out just like you said. Only the company I worked for forced me and some others out due to a union strike. I had been involved in different types of construction for 15 years on the side. And that is part of where I got in trouble. I did it on the side and not as the only source of income. When you have a full time job and I decided to paint someone's house for them in the evenings and on weekends and it takes me 6 weeks, I felt I ought to give them a good price. After all, I was doing them a "favor" by saving them some money and they were doing me a "favor" by letting me work for them at such a slow pace. All the money I was getting was extra money, often in cash or sometimes I would trade for something like a window air conditioner or tires for a truck. I found that when I went full time as a remodeler that I really had to fight this mental attitude of doing it as "a favor to them and to me. I mean I was wet behind the ears. They were taking a chance on me and what I could do. How could I charge very much for someone who really did not have very much experience?" The trouble with that is it is not a good way to make much money. And some of my customers had this same attitude. "Last time it did not cost this much" type of attitude. I may have been the only one who ever fought that battle but I doubt it.
Besides these forums check out your local library. I know that some are better than others but our library carries some of the books that are for sale on this site and you can check some of them out to see what they offer. I have gotten several after reading them from the library to have on hand at any time I want.
Good contracts are essential and the more details you include the less questions I have from customers about what they are paying for. I find it helps me to spell it out as a way of thinking thru the job, the order it gets done in, the materials you will need to do it. It also helps you look professional, I feel, to have details included instead of a simple one or two lines and the cost is .... Especially important is to include something as a down payment. I sometimes refer to it as a commitment payment. they give me some amount for a commitment to put them on the schedule to start work on a certian project. Then, unless it is a really small job, I ask for payments at the start of the next phase. I found if I ask for a payment when the drywall is complete I am wondering if it is when it is hung, is taped, is sanded or is painted. Some would look at drywall completed as when it is painted. Much too long to wait for a payment.
Keep reading and keep us posted. I will probably think of some other things to add but have to go to look at a job or two.
beezo

New Re: Going into business
Steve Christopher 12/14/02 9:08 p.m.
Pay your suppliers on time. Give your customers what they are paying for. Sell service not price. Word of mouth advertising is the best. Started doing this 18 years ago after leaving a weekly check as a body shop painter doing remodeling on the side. Make a decent living and sleep well at night. Good Luck

New Re: Going into business
AWSM1 12/15/02 7:25 p.m.
Very good advice from all. Only one thing lacking. At the absolute minimum, Take 10% of your gross receipts as they come in and place them in a reserve fund, saving fund, or guaranteed secure fund. Do not touch them for at least five years, longer if possible. Reduce personal expenditures or whatever you have to in order to establish this reserve. If you don't have the discipline or can't afford it, you don't belong in your own business!! This fund will give you a measure of accomplishment, security, self satisfaction and an indication of just how your business is really doing.
Many new businesses fail because they receive phantom profits and wonder why they have so little cash. Your confidence level will grow as the reserve grows. You're less likely to become desperate for jobs and make silly mistakes in choosing customers. Good Luck!

New Re: Going into business
Kris 12/16/02 1:19 p.m.
Thanks for the advice and the encouragment. Working for someone else, knowing the money you are making them with all the hours put in kills me. That's my number on reason for wanting to do it the other is the satisfaction of building something that you created. Much different from working as a super planning the work.

New Re: Going into business
beezo 12/16/02 11:55 p.m.
Kris,
Just remember that you will probably put in lots of hours on the jobs that you take on for yourself. At least at first or until you get some help or subs. And there will not be someone else to blame if things wrong, you mis figure a price, or schedule things worng. I know these things from experience. I know it does not have to be that way but I am still learning.
One other thing that I feel is important is to develop as many skills as you can. Learn to drywall, to paint, to frame, to do plumbing, some electrical etc. When I started out all these skills kept me working. Someone wanted just a new light in a bathroom and then decided it needed painting. At the first you would not find me turning down any type of job. Some of the little jobs that I did for people have lead to long term customers who I can almost yearly count on for a couple of jobs. Be
Besides the actual construction end of it learn some things about bookkeeping, business skills such as salesmanship, how to write contracts, how to answer the phone, key phrases to questions, how to sell yourself not as a way to pull the wool over the eyes of a customer but as a way to show them you know what you are doing and are professional about it.
Try it and you might like it. Let us know and everyone here will continue to give you good advice.
Beezo

 
     
     
   
     
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