start up construction business

[arcticcat400]

hello, i have worked for a contractor for a while now and have a co worker looking to get his contractors license and have us two do some work on the side for a while until (hopefully) we cant keep up with the side work and would then turn it into a full time job. this would be doing residential building and remodeling. just looking for any advice or comments on the best way to go about this or what to expect. best equipment set ups people have found for doing this kind of work? just any comments or tips anyone might have would be greatly appreciated. thanks

[tonkapat]

What kind of construction? You should both start by getting work comp, liability insurance and establishing an llc. After that finding work that you can actually make a living on is going to be the hard part. You couldn't have picked a worse time to get started, but if you can make it now you should be able make it anytime.

[MattL]

I am assuming both of you work in the field right now as craftsmen? Depending on your age and experience, I would suggest going back to school to get a degree in contruction management. After that, work a while for a general contractor to gain business experience. Perhaps you guys are very experienced and have a plan, but just want to give you a heads up that is pretty cuthroat out there.

I work as a PM/Estimator for a commercial GC and have seen the margins that are being made (and sometimes lost) to appreciate the lower risk and less stress of working for a contractor versus going out on your own.

In the end it all boils down to what you want to do and feel comfortable with. High rewards sometimes come with high risks...

[Gillfisher]

Make sure you have a written contract between you and your partner as well as an independent non related person to take care of your books. A buddy of mine when we were in apprentice school wanted me to start a business with him, I had two infants at the time and couldn't risk it. The guy he got as a partner put nothing into it and after they got a good business going took the money and ran so to speak the other guys wife was the book keeper. Be very careful how it all gets set up.

[LightningBG]

What kind of construction? You should both start by getting work comp, liability insurance and establishing an llc. After that finding work that you can actually make a living on is going to be the hard part. You couldn't have picked a worse time to get started, but if you can make it now you should be able make it anytime.

Just as an FYI, you can't put workers comp on owners, but liability insurance will be important.

[Jmeyers]

Also I would recommend not to overestimate you're start-up capital. Over and over again I hear of start-up failures becasue they realize they have enough money to start up a compnay, but forget about the finances of their life (Mortgage, Car payments, insurance, children, ect..) You need to support yourself and the business at the same time.

Sounds like you are going to ease into the company by just working until you build a reputation, just thought I'd warn you to really make sure your finances are in order. Good Luck!!

[trolloni]

After 32 years as cocrete contractor i would recommend against it right now,as was stated consider start up cost and capital needed for that ,then equipment,theese are the lower end of the spectrum now for the serious stuff,payroll taxes,social security,medicare,unemployment insurance,workmans comp,thats just the federal stuff then comes the state taxes all of this is based on youre payroll and fluctuates with how much you work,and yes if you dont have the money to pay on the due date get ready for a penaly or fines or prison time,then comes the insurance man every quater, hope you dont do roofs thats the highest rate.then you have material bills to keep up with and vehicle maintence dont forget insurance on it either.Or you could just cheat and take cash for everything you do and not report it and take youre chances some do on purpose and some just cant make enough to cover it .it is ruff and will make you wake up at 2 in the morning and wonder [PoorWordUsage] and not be able to sleep until a half hour before ya gotta get up and get rollin!And they wonder why companies go overseas!!

[gregg52]

as said above times ar tough

if you are getting word of mouth work to start thats a good way to get going

last year i marketed myself into the broke house and didnt get the work i was hoping for..eventually found the right marketing and it saved money plus got good returns on it

do pay workmans comp i got caught with out it but it wasnt a big deal cost be about 280$ which was actually alot cheaper than the comp..lol

got lucky on that deal

also if you are going need employees..i started using a temp agency last

year..i call it rent a bum...lol but i got 2 really good guys that stayed with me all seasson...you pay more per hour but i dont have to pay all those quarterlys he was taling about which usally add up to 1000-1500$$$$ pretty fast if not more and really eats into the cash flow

you do understand cash flow right???/ you might want to just try a business plan and do the #"s they dont lie its reality plan and simple

you can find some templates free on line

if gas keeps going up i believe we will see a slow down in improvements businesses that extra 4-500 a month is going to go for bigger prices at the grocery store and fuel to get there...another thing is kinda figure out who your customers are the first year i did one job for somebody under 55 last year was alittle better younger people were spending some iwas hoping for a big things this year being its my 3rd year but

i'm as the guy said above waking up at 2 thinkin about the gas prices

i think you 2 probably are going about it ina good way dont invest a pile of money just ease into see were it goes you will get an idea what where it can go or not lots of up's down's

[gixxer01]

I'm on year number 5 with my side Irrigation business and have yet to take an owner draw. Bills are being paid and the business is growing, but it has yet to "Make" me any money. I've got alot of tools, though!

It would all depend on your goals, though. If you plan on making this a full time profit maker, then plan on reinvesting close to all your profit for the next few years in equipment, advertising, licensing, insurance and whatever overhead you have.

Or, use the bare minimum in equip., don't reinvest, and pocket whatever profit comes in. My thoughts are, companies like this usually don't last long.

My business structure was to keep overhead low, while passing the savings to consumers and reinvest any profit made in order to better serve clients in the future. The down side, is that I, personally, haven't made a profit.

I can tell you, it sucks working Sat. and Sun. for free! It's awesome knowing you're investing in yourself!

[Stizo]

I've been in the business for over 30 years and after the economic difficulties of the past 4 can honestly say that if you're still young enough, you should definitely do yourself a favor and find a different and less stressful way to make a living.

Stizo

[gregg52]

not sure but if you have been in business 30yrs and still stuggling

something aint right

cuz you either should have bailed a long time ago

or you just are not a very good businessman..sorry dont mean to sound like s a$$ but thats a long time and granted the last few yrs have been tough but the yrs before were all pretty good I built a business for a guy the grew very fast and we should still be in business but he was a very poor business man in lots of ways

i'm now in the 3rd yr of my own and will make a decision this year if its worth it to keep going or just go get a job and be happy iwould never struggle 30 yrs good economy or bad

[Lip_Ripper Guy]

not sure but if you have been in business 30yrs and still stuggling

something aint right

cuz you either should have bailed a long time ago

or you just are not a very good businessman..sorry dont mean to sound like s a$$ but thats a long time and granted the last few yrs have been tough but the yrs before were all pretty good I built a business for a guy the grew very fast and we should still be in business but he was a very poor business man in lots of ways

i'm now in the 3rd yr of my own and will make a decision this year if its worth it to keep going or just go get a job and be happy iwould never struggle 30 yrs good economy or bad

Hands down, dumbest post I have ever read on this (or any other) forum. And THAT is saying something...congratulations. You, sir, don't have a clue.

I can't tell you the number of highly successful, very intelligent business people who I personally know, who quite nearly were living out of a cardboard box when the real estate/construction (and the entire economy/world) industries took a dump. It is one thing to survive when times are good, it is an entirely different story when we are talking about a global economic collapse.

[ncesi]

Gentelmen, good luck. I also have been in The electrical contracting buisnes for over 30 years, at first with my father whom worked a second job and I also worked a second job for the first 5-6 years we were partners. I have been on my own for 15 years now and can attest to the be careful what you wish for thing. It is a great way to make a living but remenber as others have stated there are many many hidden things to consider like payrolll ,taxes, insurance, and doing things the corect way as far a the buisness end is considered. Being a highly skilled craftsman is the first step but being a savvy buisness leader and owner is aonother, one only learns in time and experience. You never get paid as fast as it needs to go out to pay your bills. If one has the desire to own their own buisness no one can take that out of them and no ammount of money paid by your presant employer will compensate or lessen that desire. If you have he B**s and desire go for it, but be sure your family, (wife and children) can deal with it also. It can cut into family time a great deal.It is a great way to make a living and one can be proud of what he accomplishes but it definatly has it's akes and pains.

[PurpleFloyd]

A lot of it depends on what you want to do and what your local economy is like. Personally around here the construction business is actually very strong but in remodeling and not new residential construction.

What I would suggest is to look at where there are opportunities to make money that are not yet being tapped and try to exploit that. I am in cabinetry and developed a few unique things and to be honest I have never been busier,more profitable or had a longer lead time than I do now and there are a few markets I can't even get to where there is money to be made.

One market in construction that will be very strong in the near future is in roofing and siding, especially roofing. The boom started in the early 90's and those roofs are now pushing 20 years old and as they start to cycle through there is going to be lots of work. Also, look into finishing basements as many houses were built unfinished and if you are good at it that can be a source of revenue.

[PurpleFloyd]

To add onto the last post you need to know if you are going to start your own business the first thing you need to understand is that you are not selling construction, widgets or gadgets.You are selling yourself and you need to understand that your job is to get the clients to buy you and not what you are offering. They can get what you sell anywhere but they can only get you at your company. If you can make them understand the value of buying you then you will have a customer and a source of references for life. If you cannot sell yourself then you need to stay working for someone who can sell themselves.

[traveler]

To add onto the last post you need to know if you are going to start your own business the first thing you need to understand is that you are not selling construction, widgets or gadgets.You are selling yourself and you need to understand that your job is to get the clients to buy you and not what you are offering. They can get what you sell anywhere but they can only get you at your company. If you can make them understand the value of buying you then you will have a customer and a source of references for life. If you cannot sell yourself then you need to stay working for someone who can sell themselves.

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