Starting your own construction buisness

[GoldeneyeHunter]

I know i need to set up a LLC and get insurance. I'm wondering how the bidding process works on new construction. I have a builder lined up who will give me work. Do I bid the job and then when the bid is accepted do i then have him sign a contract, and then when the job is done I give him a invoice? Is this the correct process and where can i get professional looking bid forms and contracts? I do not have the money at the moment to hire a lawyer.

[bigred1974]

I would have to say sorry, but I dont think your ready to start your own business based on your post. maybe look into some classes at your local community college or tech and then think about starting up.

[GoldeneyeHunter]

What part of that post makes you think that!

I may not be a knowlegable on the buisness side of things yet, but i have been working in my field for ten years and do high quality work.

And i didn't ask for opinions on if I was ready in the first place!!

[bradyd]

From personal experience the best bid forms you can find are the ones you make yourself since your the one that's bidding the project.

And you may be better off finding a partner if you don't know how to run the "business" side of things.

[JeffB]

No one wants to knock you down, but if you have a job now continue learning about the buisiness side of things and start saving up a cash reserve before striking out on your own. It won't take you long to learn enough to get you started if you really apply yourself. Start talking to people who run a buisiness and asking questions. Good luck I hope your new buisiness is a success.

[bigred1974]

I wasnt slamming you by any means, it just sounds like you have no experience in the business side of what you do. You will end up in serious financial trouble if you dont know what you are doing business wise and I wouldnt wish that upon you. Look at St Paul Tech, you should be able to find business classes there relating to your field.

[jwmiller33]

what is your time frame of setting up this business? i am graduating in may from st thomas with a double major in finance and accounting. i'm hopefully looking to team up with entrepreneurs for starting businesses. with accounting and finance backgrounds, i have a strong background in a lot of areas and am looking for business ideas/avenues to get involved in

[GoldeneyeHunter]

I wasnt slamming you by any means, it just sounds like you have no experience in the business side of what you do. You will end up in serious financial trouble if you dont know what you are doing business wise and I wouldnt wish that upon you. Look at St Paul Tech, you should be able to find business classes there relating to your field. 

I,m sorry, i should have responded differently. You are probably correct but I will have to attend the school of hard knocks. I highly doubt that the very many people in the construction field have gone to school for buisness.

[GoldeneyeHunter]

what is your time frame of setting up this business? i am graduating in may from st thomas with a double major in finance and accounting. i'm hopefully looking to team up with entrepreneurs for starting businesses. with accounting and finance backgrounds, i have a strong background in a lot of areas and am looking for business ideas/avenues to get involved in

Beginning of January 2010

[CJH]

I will give you this little bit of advice, take it for what its worth, if you don't know the business side of it, hire people that do - a good accountant, etc.......

Good Luck! Entrepreneurs drive America's economy. More power to you!

[gregg52]

you said you dont have enuff money to hire a lawyer

sounds like you might be a little short of money

the above info is good

call the small business [PoorWordUsage] in your area

you can go to a college close to you

they wil help you with a business plan

cash flow ...taxes..incorpating or not etc..etc..

cash flow is important

if you dont have money for a lawyer i'd say you are little short on cash flow

what will you do for money between bidding work and finishing

thats part of the bidding process you do so much then get a draw or a payment for materials...gas.etc etc

theres alittle more to it than just biding work

office max or just bout any big box store will have bid sheets

bills reciepts tax forms..etc

its a good idea but take your time and do it right

i recently ran a business for a guy and we did over million dollars of work a yr but he didnt have 2 nickels to rub together

lots reason's for that but one was poor money mangagment

remember 3 out of 4 small business fail

best bet is talk to SBA lots of free help there

[merkman]

From someone who has been though all this "fun" before, I agree with the previous posts.

Just as the homeowners could do the projects, they instead trust people like you to provide them with a quality product, and that is why they are paying you for your services.

Now you could run the “paperwork” yourself and more than likely it would end up like many homeowners DIY projects. Some so bad the professionals won’t even touch, (this is not a dig on you… cause darn it Jim you are a carpenter not an accountant) Or you can get the professionals to come in and do it right. Just as you understand the importance of quality carpentry work and what doing it right the first time can save a person in the long run, the lawyers, accountants, and auditors also understand the importance of quality “paperwork”

Get it set up right by people who know and most of all who you trust. Make sure you check and double check those people you trust with independent auditors that you can trust. It seems like a big investment now but the costs of not doing it right are much more than the small investment up front.

Good luck on your new endeavors, It is allot of hard work, nail biting, and stress that you have to look forward too, followed by the great feeling that you can make it on your own.

[upnorthvoice]

One thing you didn't mention, a license. If you do business in Minnesota biding and subbing out contract work you will need a "builders license". There are courses at tech colleges and private schools that will get you started on education for the basics of the business end, and you will be required to supply proof of insurance and pass a exam before you are issued the license. It takes a little to get the license and become a general contractor, just take the right direction.

Will you use a computer to do your competitive bidding or use a set of forms?

[GoldeneyeHunter]

I will only be subbing work from a General. He is supplying all the material I am only supplying labor. As far a bidding I will taking measurements of the print the old fashioned way. I will take the contractors class and test after i get a couple jobs done in order to expand my buisness to remodeling and storm repair. Right know I currently work for a company full time and do not have time to take the classes.

[gregg52]

do you work for this contractor now ???

[elkrivermn]

Do not attempt dto do this in the current economy. there are so many very experienced contractors out of work right now that you will have a very hard time getting any work.

[furnace man]

HI,

I started my own heating and air company with 1,000.00 to my name. You need a bond, ins and get yourself a quickbook program to use for your books and it does all your bidding and your invoice and they look professional.

Don't listen to all these people that say don't do it. I did it in a bad economy and I am doing fine. You don't need a business degree to run a small company.

Bottom line is it is a lot of work and it takes alot of time after hours. If you don't like to work 14 hour days in the summer and if you have a wife you better make sure she is on board full time for support when you are not around to help with your house.

Last thing don't get a head of your self keep your overhead as low as possable. Don't buy it unless you have the money to buy it.

Have fun I love having my own business but sometimes you wonder why you do it but when you are out on the ice fishing in the sun one day because you wanted to then it is worth it.

[Farmboy1]

I will only be subbing work from a General. He is supplying all the material I am only supplying labor. As far a bidding I will taking measurements of the print the old fashioned way. I will take the contractors class and test after i get a couple jobs done in order to expand my buisness to remodeling and storm repair. Right know I currently work for a company full time and do not have time to take the classes.

First, I am a full time GC who does about 10 million in a office of 2 people. Small business all the way and we have been able to thrive in this down economy. All depends on the RELATIONSHIPS you build. There is a definite slowdown, but there is also opportunity. I will also be starting a offshoot residential contractors business next year, so am going through some of this as well.

Look very carefully into working for only one person, even if only at first. Your work is tied to his, good bad or ugly. Having a few contractors to work for as a sub would be benefitial.

Insurance (work related, health, etc. not covered by boss), bond, quickbooks (all said i think), WORKING CAPITAL, tools, vehicle, etc. Money to cover the time from your last paycheck until you can bill on a job and then add 30-60 days. That is a large pill to not have money for up to 6 months for work completed, but is a necessary evil.

Please, please, please, do a detailed analysis of you finances, with every dollar you will need to invest to include computer, software, receipts, postage, etc. Everything you will need. Any office supply house can get you most of this, but make sure you know the true implications of this before you start.

Also, remember that you will go from working 40 hours a week, to working in the field for 40 hours, and then order materials, schedule upcoming work, write checks, balance books, fix tools, send invoices, etc. 40 hours is a pipe dream, but it is a dream that many of us cannot pass up.

Ohh yeah, I am a construction manager with a Business Degree

Let me know if you have more specific questions, since I have done, and am doing it again and can hopefully help. Do not listen to anyone who says you cannot do it.

[krinkle]

Bid the job and then get him to sign a contract. Make sure you have your lien rights in order. Try to get him to sign a personal guarantee also. Hire an attorney if these are going to be larger jobs. Last thing you want is to not get paid and find out there is nothing you can do about it. The only thing worse than not getting a job is not getting paid for one you did. Dont worry this will happen. Good thing is there are many rights you have to fight this. Bad thing is it will only cost you lots of time and money to fight it. Bottom line is its better to have a poor contract with a good contractor than a great contract with a poor contractor.

I agree with you that very few in the construction trades went to school to learn how to run there business. It shows very much. The industry is plagued with sub par contractors that may be great at their trade but have no idea on how to price or conduct them selves in a business like manor. Calling around to check competitors prices is not the way to price your services. Neither is doubling what your current boss is paying you. These are sure fire ways to go out of business fast.

The only reasons I have made it 10 years with my own construction business it that I started with this in mind. " I am good at my trade but know nothing about running a business." From that I started reading books and trade magazines and eventually joined a trade group that provided full time business coaches. With out this I would of been gone years ago. Even with all of this it is still very hard rite now to run a construction business.

Okay. Back to answer a few of your questions. Yes you invoice the contractor at a time interval that you had better set up in your estimate. Yes this means agreeing on payment terms before starting the work. On small less than one day jobs it is COD at the end of the day. Larger jobs may go 50 down, 50 when complete. or 25 down, 50 at rough in, 25 complete. These are just examples on how we bill. 80% of our work we get paid before leaving the job site. Not doing it this way and you better plan on some expenses for chasing money and a line of credit to get you threw until you get paid.

Quick books is a good business accounting software. There on line version is great for a small business and can handle estimating and invoicing. You can print from quick books or email directly. Other than that get the generic forms from office max or similar. A rubber ink stamp works easy to stamp the tops. Check out Nebs business form also.

A series of books that helped me out in the beginning was the "where did all the money go" series written by Ellen Rohr. Not sure if the last name is spelled correctly. These are simple 100 page work books that will take you threw basic accounting, pricing and more.

IF you are not willing to invest some time in learning how to run a true business do us all a favor and stay out of it.

[GoldeneyeHunter]

Thanks for all of the good advice everyone. I knew if I asked this question on here I would get some good answers. And I know its a tough economy but if i can get by i will be in a good position when it comes back. I think i will have to invest in quick books for sure.

[Surface Tension]

Thank God I stayed out of the business end.

I saw your post before there were any replies. At that time I had more questions then answers. As the thread developed those items you didn't include were later on.

All good replies btw.

Still there is a lot that I would ask.

What have you been doing up till now? Are you working for a sub contractor that specializes in one field or are you working for a General Contractor that does their own work instead of subbing everything out? Huge differences as to the GC there as one conducts the orchestra and the other does the work themselves. How that relates to you of coarse the more your exposed to all elements of the "building" the better off your are.

So we know that you'd like to become a sub contractor but doing what? Employees are another element on the business end and ultimately on the working end. When your not on the job your going to need a guy that knows whats going on and one that can run a crew. He is the guy that is going to make you your money. Those guys are very rare. When money ain't flowing how are you going to pay these guys?

IMO, if you can get on with a GC that only subs out the electrical, heating, and plumbing your going to be invaluable in the future. Not only will your be diversified sub contractor, you have all that to fall back on.

That might not seem important now but when you start getting into your 50s it will.

I see positions all the time where brand X is looking for a Sub contractor. Could be window, siding or whatever to skirt having to pay employee insurance and benefits or just to be the middle guy in the money flow. When there is a product failure guess who gets holding the bag? It will be the Sub. I'd rather work up for a GC that stands behind themselves and their employees, then move on to be a sub.

[GoldeneyeHunter]

  I've been working for the sub for about 6 years and the GC for the past year. The GC cares more about quality than anybody I ever work for. He was very mad when i got layed off wasn't able to work on his houses. When I got called back he asked me for my personal phone number and told me that if i was layed me off again he would deal with me direct.  I started to think why wait to be layed off and started buying all the equipment and tools that i would need. I'm just waiting until he has alot of work lined up. I also know a few other people that I can get little work from to fill in between jobs.  

[setterguy]

One of the best pieces of advice I ever got when starting my own business at 22..."Remember, you can go broke from home."

Meaning, don't bid jobs low just to get jobs. It may seem like you will make enough to make it worthwhile but most often it isn't. I know of plenty of contractors that are busy but still not making any money.

You will get burned a few times in the beginning, not figuring in warranty work, multiple trips to job site ect. Just remember that everyone in every line of work makes mistakes. Its how those mistakes are handled that will separate you from your competition.

Golden rules of a contractor.

1. Answer your phone.

2. Call people back (within 24 hours)

3. Don't make promises you can't keep.

4. Clean up your mess. Nothing makes a homeowner more angry than to be picking up your mess as you drive off with their check.

5. Be where you say you will be when you say you will be there. If there are going to be delays, inform the people that need to know.

6. Treat every customer as if they are your only one. No one likes to feel like their work was passed because of a bigger, more profitable job. You never know where those next referalls are going to come from.

I once stopped at a guys house who I didn't know, he just happened to be out messing around with his sprinkler system and looked frustrated. I asked him if I could help, as I had my truck full of tools with me. He ended up needing a 10 cent part. I gave it to him, along with a card. That one stop ended up turning into over 35 new customers.

Good luck. Its a tough road, but always remember the benefits when it gets tough.

[fishorgolf]

As a business owner myself (not construction) and knowing many people who have started business (some construction) I have one piece of advise. Get a good CPA and pay your taxes. If you are not paying taxes you are not making money. or If you are making money and not paying taxes you are in trouble.

[gregg52]

i ran business here in the Brainerd Lakes for guy for 5 yrs

we were up against a company that had been here 60 yrs

so it was tuff

but if you going to be in the service industry

what SETTERGUY SAID those rules 1 threw 6 are to die buy

all very important!!!!!!!!!!!!

i have a similar story i could tell you about the 10 cents part

that sold me lots of work and it was all WORD OF MOUTH

thats your best marketing !!!!!!!!!!!

take advantage of it