# Where did you get your funds to start?



## Flimmer (Dec 1, 2005)

When you started how and where did you get the money to start for things such as Trucks, Trailers signage, Advertising, first 3 months of operating capital, office equipment, Etc. Etc.?

I have a small rental Business and have some money coming in from that so I have been purchasing some of the office equipment for that, so I am covering that area part way so far. I also have decent credit so I could go get a truck and probably a trailer on loan, but I know that when I decide to get in an office and warehouse space that I will need at least 3 months operating expenses for staff(sales, bookkeeper, production, warehouse).

Did you get this through downpayments on jobs? Or some invester, or elsewhere?

Just curious how it all started for you guys? 

I appreciate any help you can offer.

Flimmer


----------



## Grumpy (Oct 8, 2003)

My savings account.


----------



## Flimmer (Dec 1, 2005)

Wow Grumpy thanks for the quick reply. 

I have money in savings but anything I have ever done has almost always been with OPM.. I know that I will have to have some money for the banks to look at me, If I decide to go this route.

Do you have a office/warehouse, trucks, trailers? Just curious 

Did you finance these trucks and trailers?


----------



## MinConst (Oct 16, 2004)

Flimmer,
Using a deposit from a customer will surley get you in trouble. If you want to be hurdled with loans from the get go is up to you. Buying truck, trailers etc is best done through banks but personally I use as much of my money as I can. I am small and don't have alot of loans to worry about when the first of the month comes. Times get slow and the bills still come in if you know what I meen. Three months capitol seems a bit short unless you are already slammed with orders.


----------



## copusbuilder (Nov 8, 2005)

Flimmer said:


> When you started how and where did you get the money to start for things such as Trucks, Trailers signage, Advertising, first 3 months of operating capital, office equipment, Etc. Etc.?
> 
> I have a small rental Business and have some money coming in from that so I have been purchasing some of the office equipment for that, so I am covering that area part way so far. I also have decent credit so I could go get a truck and probably a trailer on loan, but I know that when I decide to get in an office and warehouse space that I will need at least 3 months operating expenses for staff(sales, bookkeeper, production, warehouse).
> 
> ...


Are you staying in the rental business or are you contracting.

I would suggest keeping your expenses as low as possible as well. Do you have to have a truck, warehouse??? Advertising??
I built as I grew...worked many hours and then started hiring when the $$ allowed..

Maybe a good used truck???:innocent:


----------



## kenvest (Sep 27, 2005)

The first thing you need to do is form some realistic goals and devise a business plan.

Do you want to specialize in one trade? New construction, remodel or handyman?

How much money do you need to sustain your current lifestyle?
How skilled are you? Are you licensed??

IMHO, the staff needed to grow the business will be harder to come by than the equipment. the papers are full of trucks, trailers and office space.......
Starting big with staff your unfamiliar with in a business you may or may not know much about sounds risky. Developing personnel is at least as important as funding. 

good luck!


----------



## paroofer (Sep 30, 2005)

Grumpy said:


> My savings account.


Same here!

Takes a while to get off the ground, but it's nice to keep the overhead down.
We didn't buy a new truck (found a very nice used).
We had to buy a new trailer, it's hard to find a used one, but we paid cash.
We are conservative when it comes to spending (will that REALLY make us more money/pay for itself if we buy it?)
Office supplies, I shop around on the net.....there is a huge difference in prices on things such as paper and envelopes. If you use a lot say for mailings, the savings add up. As far as good advertising....test small before committing to spend a lot of $$. Our BIGGEST mistake...we did find out the hard way that yellow pages was a huge waste of money!


----------



## Cole (Aug 27, 2004)

I agree, my savings account.


----------



## Flimmer (Dec 1, 2005)

Yes, I plan on staying in the rental business, as well as grow it. But I also work in the contracting business full time, I have experience working with Subs, Advertising, contract writing, customer service, sales, collecting payments and marketing. The reason I am moving into my own business is because it makes sense for me to. Not to mention that my passion is to control my own destiny and run my own business. 

What I mean by this is I want to continue to grow the rental business in which I work with contractors, tenant issues, collecting rents, etc. What I want to change is to not work for someone else in the contracting business which takes up alot of my time(scheduled office times, in-home visits, advertising meetings, customer complaints,project planning, etc., etc..) Especially when I know I have all the contacts and knowledge to get it done myself. 

By working for myself in the contracting business this will give me some time to put towards the rental business as well, not to mention the capital to buy future properties. This way I can kill 2 birds with 1 stone. I can have the rental business and my contracting business under one roof and utilize my employees in both..

Answers to Questions: 

I plan on new construction, additions.(New homes(turn key), garages, cabins)

Yes I would need a truck(no not new), trailer, staff (bookeeper,warehouse worker,production manager, I would handle sales the 1st year) these things in my opinion are essential in order to have a solid infrastructure in place to handle the contracts that come in. Unless you guys can tell me differently, you could probably add some things that I did not mention.

Minconst, How will using the deposits get me in trouble, after all isn't that revenue to run my business. Each job has material costs with overhead and profit, wheather I use the deposit or the final payment for paying the bills does it really matter? Just curious. 

Sorry I rambled on a little, alot of questions to answer.

Thanks for the replys, keep-em coming. Flimmer


----------



## Jeremy England (Jan 17, 2005)

I guess my question would be what type of contracts are you looking for. 

Trucks, staff etc... all that is pretty expensive. I am a gc/homebuilder in the gulf coast area, 90% of the work that I've had since I've been in business is residential. Yes we do ok on a whole house project but I absolutely could not afford to pay an auxillary staff. Mainly because on custom homes the bank rarely lets me get ahead of them. On spec homes I don't know yet because the only work thus far has been custom but I can't imagine having any more cashflow from that since it would be borrowed money. We don't have an "office" everything is run out of a pickup truck and my house basically. The only employees are tradesmen. 

We did invest about 2000 in advertising, and spent about another 1500 on tools that we did not already have. 

All this money came from my savings. 

Hope this helps


----------



## Mike Finley (Apr 28, 2004)

I would want more than 3 months of operating expenses if I was taking on a staff and warehouse space right off the bat.

There are basically 2 ways to do it, grow your business from a small boot strapping operation, or jump right in with a loan (bank, credit cards, friends, home equity, etc...)

Which way to do it I would consider the business plan you have. If you can generate strong steady income very quickly then I would do the jump start with a loan.

If you can't guarantee generating strong steady income in just a couple of months then it would seem more prudent to grow the biz by boot strapping.


----------



## Glasshousebltr (Feb 9, 2004)

I found it.......on the ground......that crap grows on trees around here.:jester: 

Bob


----------



## mdshunk (Mar 13, 2005)

Flimmer said:


> ...How will using the deposits get me in trouble, after all isn't that revenue to run my business. Each job has material costs with overhead and profit, wheather I use the deposit or the final payment for paying the bills does it really matter? Just curious.


Doing as you suggest is the construction equivalent of a Ponzi scheme. Yes, you have profit and overhead built in. Just don't count your chickens before they hatch. It is only after you complete the job and do your final cost analysis (you should always do that), will you know what your actual profit and overhead were. You're new in the biz, and you will screw up a fair number of bids and estimates. Some, you'll make out like a robber, and others you'll end up doing for free.


----------



## ruskent (Jun 20, 2005)

Why in the world do you think you need a book keeper, warehouse worker, and a production manager if you are just starting a business? Please explain, maybe i am missing something?


----------



## nadonailer (Nov 15, 2005)

I always just fly by the seat of my pants (and pray a lot  )


----------



## MinConst (Oct 16, 2004)

md kind of explained what I was getting at. If you start out thinking that a deposit is your money to do with as you wish you will be headed for trouble. A deposit is for materials and possibly pay your help while the job is going. You will find that sometimes a deposit is not enough to do this with and if you spend it on non related expenses to the project it is for you will fall behind and end up in a bad place. I have seen this happen to both myself in years past and others who ended up one step in front of the sheriff. As MD said don't count your chickens before they hatch. Cash flow is tuff sometimes especially when starting out.


----------



## Flimmer (Dec 1, 2005)

Md,
It's not the estimating and bids that I am concerned with, I don't care how many jobs a person has bid in their careers they have all screwed up on bids and lost their arses on jobs, it happens, we move on and learn from our mistakes..

In the last 6 years I have bid on approximately 1200 jobs and sold over 400 projects and have never lost money on one of them. Did I make what we would like on all of them? NO. But, like I tell my boss, wait till the year ends, I have never been under what I needed on profit margins at years end! 

Factors sometimes beyond our control helps us to make a better profit than we were expecting, like excavation comes in less than normal, or we get a product for less than we were getting it before, and the job gets done for less labor than we determined would be in the job.. Or it goes the other way and the excavation comes in a little more than we would have anticipated.. 
I can also say that this past year probably killed alot of companies who didn't have a little extra profit for the never ending price increases this year. The company I work for is normally more expensive than the competition, there is a reason for that, we don't ever give our products and services away, or go with the cheap products just to get work.
I also should let you know that I am 100% comm. and I have made the mistake of counting my chics before they hatch when I first started, so that won't be a problem. But you can bet that I will have an idea of how many chics I want at the end of the year(goals).. I never go into the year without a clear set of goals, with the mindset that I want to not only reach my goals, but surpass them. That has always been my attitude.. I truly started this thread to get an idea of how you all started out financially, but appreciate all the advise.

By the way I don't know what a ponzi scheme is, so I probably wouldn't do that, whatever THAT is. 

Question?
So, do you not get a deposit for your projects? If you do, do you not use that money to buy materials,permits,etc. I would think that everyone would rather use the customers money to get started on project. Then have a payment schedule that allows you to use the customers money throughout the project.. 

I believe that you need to take on some risk in order to be successful in any business. Some hear seem nervous to do this. Is that the case? If so, Why?

I may be wrong, JMO
Thanks for the info, Flimmer


----------



## Flimmer (Dec 1, 2005)

Sorry Minconstr, I did not see you post before I put mine up. I agree with what you are saying to a point. Let me give you an example: I start my business say January 1st, where I live you cannot build until at least April(road restrictions) I am starting my business so I can keep my overhead down quite a bit by not getting into my office/warehouse space right away when the money is not flowing yet anyway. My initial investment(my money) is spent on sales materials, advertising, contracts, phone service, etc., etc. I run estimates and sell lets say 15 framing jobs at $14,000avg.=$210,000x aprox. a third down for deposits=70,000 and 1 turn key home at 180,000 x a 3rd down=60,000 both together I have 130,000 in deposits I order big ticket materials such as trusses, studs, garage doors, than I get permits. after that I have x amount of money left over. would you not pay out bills with this money. In my opinion I sell a product and it includes overhead which is part of the product, and it needs to be payed.

These of course are not real #s, just an example to get more out of this discussion.

I appreciate your comments, Flimmer


----------



## Teetorbilt (Feb 12, 2004)

I was an out-of-work engineer with offers in Seattle and Holland, both too cold for me. Dad was a GC and I grew up in the trades, I just gravitated back into it. There never was any 'funding'. I just helped a single mother move once.


----------



## RobertCDF (Aug 18, 2005)

Lets see... started with a good amount of debt, little cash in the account, and I have been floating most of my tools intrest free for the past 2 years. They will be paid for soon. Not the best way to start out, but if I had stayed at my old job I would never pay off the tools, or the rest of my debt. Finally starting to bid things right I might make some decent money this next year.


----------



## Flimmer (Dec 1, 2005)

Ruskent, sorry I missed your question. My Answer is simple, I don't plan on selling one job finishing it and then moving onto the next. I plan on selling many jobs ranging in simple shells(majority of sales) to total turnkey homes(a couple the first year). When I sell these, I believe it is of the utmost importance that I have a solid infrastucture in place, or as we all know, I will be gone as quick as I arrived. I know you are all thinking that I am a dreamer when I tell you this, but this is the type of business I basically help run for someone else. I know the 1st group of jobs may be total caos. Who ever said that this would be easy. I definately do not expect that it will be. But I sure as hell will not run from a challenge..

Flimmer


----------



## donb1959 (Dec 9, 2004)

I was laid off from a battery plant here after 6 years, I had been in the painting trade all my life. I took my entire 401K, all my savings, got a small bank loan, maxed out a card and started my business, this allowed me to buy a used 81 Ford Econoline that I had to replace the tranny in, all my ladders,brushes,rollers, etc... as I finished jobs I added to the list sprayer, pressure washer, etc

I am now paying off the debt I aquired to start the business. I spent 6 years in that plant giving blood, and I was sick of working for others, the motivation factor for me to succeed was I had EVERYTHING tied up in this startup, it was sink or swim. So far I am keeping my head above water, and at time even doing the backstroke with some success, I give credit to God and my hard work.


----------



## Flimmer (Dec 1, 2005)

Hey Don, That is great, sounds like it is moving along. I agree with putting in your own money, I have some rental homes and will either sell one or refinance it to get started. after all if I refinance it is tax-free. I believe that by me showing my banks, that I have my money invested it will open some credit lines in the future..

Flimmer


----------



## copusbuilder (Nov 8, 2005)

I believe that you need to take on some risk in order to be successful in any business. Some hear seem nervous to do this. Is that the case? If so, Why?

I may be wrong, JMO
Thanks for the info, Flimmer[/QUOTE][/ 
I think you are seeing people say "minimize the risk". Living on the edge is not a lot of fun for you or your family. Run your business don't let it run you!

Keep it in your control and you will be happier. Otherwise you may have to rob banks to supplement your lifestyle:biggrin:


----------



## Flimmer (Dec 1, 2005)

Hey Copus, I wasn't talking about major risk. Just purchasing a truck, trailer, leasing office and warehouse space. In my opinion, this is not risk, it is essential in running my business. In the my business I would need the truck and trailer to deliver materials to the job site. The office & warehouse space is needed to store materials, get jobs ready to go and loaded on the trailers, also to be able to purchase larger volume of studs, shingles, Doors, sheathing, etc.this way I can get a better price. Which in turn will give me higher profits. Of course I would not purchase a bunch of materials without the jobs on schedule. The way we do things in the midwest in the winter is to sell the jobs before building season, which in turn we order the materials in higher volumes and get a better prices and better payment plans(net 60,net 90). Another words if I sell 20 jobs(new construction)before April. That is a nice truss order, and alot of shingles and sheathing in one order.

minimize risk? Yes of course I would do this. But to not take Any risk, is to sit idle and be happy with what you have. That is not me, or else I would stay where I am at. Where I have steadily increased in pay every year, while filling the pockets of my boss. 

Flimmer


----------



## PipeGuy (Oct 8, 2004)

Flimmer said:


> When you started how and where did you get the money...


I had a combination of resources including a HELOC, unsecured loans from family members, cash from personal savings, credit cards and both a substantial SBA loan as well as an SBA insured LOC. Contrary to the experiences of others I've heard from, I found the The SBA resources easy to secure. I attribute that to: 

1. I worked 20 years 'in the business' before trying my own hand.
2. My partner did the same.
3. We wrote a well researched, detailed, business plan.
4. We secured the loan through a small local bank that has a long established reputation for serving community based small-businesses.

TAKE NOTE! Don't ever get the idea that there is some amount of money that is 'enough' to start-up with. Think big when you apply for loans. I secured roughly half the loan my busness plan called for. My experience thus far has been that my funding requirement projections were very accurate.
Make sure you're well informed of the challenges you'll face in the first five years and get all the funding you can.


----------



## copusbuilder (Nov 8, 2005)

minimize risk? Yes of course I would do this. But to not take Any risk, is to sit idle and be happy with what you have. That is not me, or else I would stay where I am at. Where I have steadily increased in pay every year, while filling the pockets of my boss. 

Flimmer[/QUOTE]


I hope my guys don't here that 

If thats what you need to start your business then that's what you need. But a warehouse for storing studs etc?? I don't think you will recoup the outlay?

Not trying to be negative just hate to see people get hurt.

If you are convinced that is the right path then go for it. I will wish you the best of luck!!:thumbup:


----------



## Flimmer (Dec 1, 2005)

Hi Copus, I'm not talking a huge warehouse, just big enough to hold 10-15 jobs worth of studs, sheathing, shingles, header material, etc. So that I can load trailers with materials and be able to tarp them. With my current employer we keep the trailers on site with tarps over them, where as my competitors throw their materials on the ground no tarps. This does two things, one it keeps the jobs organized, two, it is a great selling tool, to let the customers that we care about the materials that we use in their projects. If it rains during the projects we cover them and go home.

Flimmer


----------



## jmic (Dec 10, 2005)

Flim,
Good luck on your new venture, hope you do well. But I have to agree with Copus and I'm sure the others will agree when you're just starting out to think of pre buying materials the way you describe just don't make a whole lot of sense. I'm not going to speak for anyone else but I think you're heading for a big train wreck. Sorry :no: I'de advise against it!
Joe


----------



## Flimmer (Dec 1, 2005)

Hi Joe, 

Actually it's not pre-buying, in the sense that it is not stocking and then selling, it's selling then stocking. I will be starting out in the winter months securing contracts to build, houses/garages. after I start securing contracts I will then buy the material for these jobs and projected jobs that I know I will sell(based on current rate of sales). This is what we do where I am currently working, It works well with minimal risk. The more you buy the better the price. Especially overhead doors, trusses, studs, Shingles, sheathing. 

Maybe I wasn't being clear in what I said. Sorry if you guys misunderstood me.

Flimmer


----------



## Flimmer (Dec 1, 2005)

Nice website Joe, do you build them, or sell them and install?


----------



## jmic (Dec 10, 2005)

Hi Flimmer,
I actually run the excavation division, but to answer your question our company either does drop-ships or turn - keys. We do about 16 - 20 turn-keys a year and about the same in drop - ships. We cover all Fairfield County and in the spring will be doing a new model in New Haven County. Gee I hope this isn't considered advertising, wasn't ment to be. 
Joe


----------



## jmic (Dec 10, 2005)

Flimmer,
They are actually built at the factory in N.Y.state
Joe


----------



## Flimmer (Dec 1, 2005)

Hey Joe,
So in other words, your a franchise of this modular company.


----------



## Cole (Aug 27, 2004)

jmic said:


> Hi Flimmer,
> I actually run the excavation division, but to answer your question our company either does drop-ships or turn - keys. We do about 16 - 20 turn-keys a year and about the same in drop - ships. We cover all Fairfield County and in the spring will be doing a new model in New Haven County. Gee I hope this isn't considered advertising, wasn't ment to be.
> Joe


Joe, your fine.

That is not advertising.


----------



## jmic (Dec 10, 2005)

Well Flimmer its not a franchise, we buy exclusivly from that one factory and are their exclusive builders for the counties, but other than paying them for the product there are no ties. Does that make sense?

Thanks Cole.


Flimmer if you go through are whole website you'll see that we're just a small part of the Scazo Group which also does real estate, lending for mortgages, project management, property management, our sister co. Empire Developement does stick built res., multi-family, and commercial bldgs. The whole group probably has about 300 employees, thats between all the co.'s.

Cole, Please let me know if I cross the line. Thanks

Joe


----------



## Flimmer (Dec 1, 2005)

Joe, that is a very impressive company, I can see myself some day diversifying like this and possibly taking on some partnerships

Flimmer


----------

