# Small Contractor with large job



## hawktoy85 (Apr 19, 2012)

So a little back ground on me. I have been in the trades fro 15 years. Started as cabinet installer and have made my way to remodeler. Doing just about all aspects of construction. Light framing, appliance install, electrical device install. I still have to sub real electrical and plumbing. I have been basically a sub-contractor to several interior designers for many years and do all there work. But they are usually considered the GC on the job. So most of the Money goes though them first. I have done $100,00 remodels but for them, not my self. I just got my first remodel for myself. And I'm about 1/2 way done now, going great, but only about $ 10,000. I am bidding on one now that is getting up to wards $90,000. Mainly because Carpet, Paint and re-staining all the wood work in entire house, accounting for about $50,000 of the total price. This is not alot of work for me, and I do it all the time, but alot of money. My normal contracts for my interior designers is $10 - 15k. Would it be acceptable to work out a deal to have HO have contract with painter and carpet store? maybe cost plus 10% on those 2 items? since they are the biggies. Already having sleepless night thinking about it. I have all the insurances and licenses that I need. all help is greatly appreciated. and Thank you in advance.


----------



## PARENOS (Nov 24, 2008)

Do you have a draw schedule set up for this job? If you are stressed on the money going out, try to set up smaller payments more frequently throughout the job. You have to remember the reason the HO is working with you is they want a one stop shop. Work with your client and subs to make it work. just remember if your clients wanted to deal with a whole bunch of different trades, they could have shopped everything out themselves.


----------



## go dart (Dec 6, 2005)

Designer work is awesome but I've always run the contracts thru my company and paid comissions to them. You should be ready for this step. For the carpeting you could arrange for the carpet store to work direct with the homeowner including payment. You're still managing them so have them build in 10-15% comission for you. Carpet usually doesn't burden alot of your time but make this arrangment up front with the carpet store and include " Carpet allowence is -----per yd as selected from XYZ carpet store. For the painting you must know a good painting crew so have them price it for you and include it in your contract but add a good markup as this will take alot of your time to manage. Don't overthink this job because its just another one. Now get crackin!


----------



## hawktoy85 (Apr 19, 2012)

I normally do 50% down, 40% , than 10% final. Could I ask for 50% down than x number of dollars when cabinets are delivered, than x when paint is finished, and carpet ect... That schedule would keep subs paid and a little money coming in though out the job. I want to be paying trades as they finish there work. I hate waiting 30 days to get paid, so I don't want to do that to them if I can help it.


----------



## WarnerConstInc. (Jan 30, 2008)

I have one coming up that they will have to cough up about 25k just to get started. I am not fronting 15k in lumber and another 8k in accessories.


----------



## carolinahandyma (Jan 6, 2006)

Managing cash flow (the flow of money in and out of your business) is where many contractors get into trouble.

Try looking at it another way with Progress Payments vs Draws.

At contract signing get a 10% downpayment. If there are items that need to be ordered and downpayments required, collect 100% of those amounts before you place the order.

Each Friday collect a payment from your customer based upon Progress made (you calculate this) on the project. The customer pays as they go and you are better able to manage cash flow.

Good luck!


----------



## hawktoy85 (Apr 19, 2012)

carolinahandyma said:


> Managing cash flow (the flow of money in and out of your business) is where many contractors get into trouble.
> 
> Try looking at it another way with Progress Payments vs Draws.
> 
> ...


I like this approach. My only dilemma is this is a second home for the HO. They are not going to be there weekly and would have to mail checks to me. I think I might get larger deposit than do progress payments from there on. Might be good balance.


----------



## DavidC (Feb 16, 2008)

If you are overseeing the subs then it should be on your contract, client pays you pay sub. Every time a separate deal is made directly with your client it generates another opportunity for them to become someone else's client instead.

Map out a schedule based on your experience and set your draw schedule to fit that. Get paid at the start of a phase rather than the finish. Finance each portion with their money so you stay ahead of the cash and on schedule. We usually get a deposit (up to 10%) for scheduling the job at contract signing. A down payment when we start and progress payments tailored to suit the job and schedule. Last payment is 5% of the total.

Good Luck
Dave


----------



## DavidC (Feb 16, 2008)

hawktoy85 said:


> I like this approach. My only dilemma is this is a second home for the HO. They are not going to be there weekly and would have to mail checks to me. I think I might get larger deposit than do progress payments from there on. Might be good balance.


You could set up a Pay Pal account. You email them progress reports/pics/invoices and they use their cc via PayPal deposited directly into your account. There is a small fee for this that should be included in your overhead portion of the total.

You will find that you have fewer collection problems with smaller payments vs. the large ones.

Good Luck
Dave


----------



## F&M BUILDERS (Mar 6, 2012)

hawktoy85 said:


> I normally do 50% down, 40% , than 10% final. Could I ask for 50% down than x number of dollars when cabinets are delivered, than x when paint is finished, and carpet ect... That schedule would keep subs paid and a little money coming in though out the job. I want to be paying trades as they finish there work. I hate waiting 30 days to get paid, so I don't want to do that to them if I can help it.


This is the same method i use. I wish more people were like you and wanting to pay the trades as soon as they get done, when i was a sub i use to hate waiting 30 to 60 days to get my paycheck. When i went out on my own i swore i would never do that to anyone as long as i could help it.


----------



## J F (Dec 3, 2005)

On larger jobs (basement finishing projects for me), I set the up payments as attached (see sect. "F").

I was always using clients money, with a tiny final payment. Billing for services prior to the start of those services always allowed me to pay subs on the day they invoiced as well.


----------



## katoman (Apr 26, 2009)

DavidC said:


> If you are overseeing the subs then it should be on your contract, client pays you pay sub. Every time a separate deal is made directly with your client it generates another opportunity for them to become someone else's client instead.QUOTE]
> 
> And if the HO is hiring any subs direct, you loose control of them. I never allow the HO to do this.


----------



## J F (Dec 3, 2005)

I didn't mind...as long as it was before I started or after I finished, nothing in between. Contract stated this as well.


----------



## carolinahandyma (Jan 6, 2006)

hawktoy85 said:


> I like this approach. My only dilemma is this is a second home for the HO. They are not going to be there weekly and would have to mail checks to me. I think I might get larger deposit than do progress payments from there on. Might be good balance.



They can also mail you checks or do the PayPal option also mentioned. Getting your customers in the habit of sending a regular or weekly payment is the idea here however you implement it. 

My point is that you use the customers money and not your money to finance the project.


----------



## wellbuilt home (Oct 22, 2007)

Grow a set of b---s and set up a payment plan that works for you. 
On a 100,000 job i get 5000 on singing contract .
30,000 at start 30,000 foundation 30,000 mechanical rough , 5,000 
substantial completion . 
Work orders are payed on singing . 
don't work with your money .


----------



## HUI (Jan 21, 2011)

Shoot you guys have it easy. I am a municipal utility contractor and I have 100,000 in material out a month before. Try floating that. It sucks!!


----------



## ranteso (Nov 11, 2010)

There's no middle ground, you're either the GC with total control or you're not, and if not you're just a sub to the owner. 

10k or 100k not much difference, just set up a fair payment plan for both parties and do it.


----------



## ohiohomedoctor (Dec 26, 2010)

J F said:


> On larger jobs (basement finishing projects for me), I set the up payments as attached (see sect. "F").
> 
> I was always using clients money, with a tiny final payment. Billing for services prior to the start of those services always allowed me to pay subs on the day they invoiced as well.


That must be a nice basement! I would love to see the rest of that contract..


----------



## J F (Dec 3, 2005)

Thanks Matt, and yeah it turned out pretty nice. I won't post a full contract (too many things to blank out for customer privacy), but I started with one from here: http://www.amazon.com/The-Contracto...=sr_1_1?s=books&ie=UTF8&qid=1335115636&sr=1-1

I've been an advocate for this book since I purchased it in 2002/3, great stuff. Money very well spent for anyone in the business. I've bastardized laughing the contract I use from it many times, changing things as I go along, adding/subtracting, etc. (Have your attorney check out any contract you use).

Best $60-$70 you can spend.


----------



## AnonymousGC (Apr 24, 2012)

There's a lot of good micro-level management tips here. I want to give you my 2 cents on a more macro-level. You need to realize that you are a skilled contractor and tradesman and people trust their most prized property to you, property they spend their whole lives to acquire. It's completely natural to move to bigger and bigger work. You are now responsible for literally making people's dreams come true and for being there to fix anything that goes wrong. This is a big deal and with high risks and high rewards. The more you outsource the risk to others (having the H.O. deal directly with your subs/suppliers) the less reward you can demand for the risk. You might sleep better now but you will sleep better when you get paid for organizing everything. You need to find your own comfort level but it's essential to see this connection between risk and reward, figure out how to calculate it, and then how to monetize it. If you're insured and have enough to cover your basics ask yourself "what is the worst that could "realistically" happen here while I'm in the driver's seat?" Usually the downside is nothing compared to the upside. This might not be anything new to most people here including the O.P. but I think it's important to emphasize nonetheless.


----------



## fast fred (Sep 26, 2008)

*bro-brah way to go*

Best of luck, I think most of the comments above should help. Do what feels best for you, taking a 25k check may feel weird to an honest guy. I knew how uncomfortable it was to get a big check for the first time. Where you live your just in the minor league

I say your only in the minors because I just checked out two "remodels" (leave a couple walls intact and rebuild from there) up on beaver trail in vail. Makes me feel like a handyman looking at a remodel with a tower crane. I was down at the building dept going over a basement remodel requirements and we got off track a few times, he looks at me and says the 25 pg set of plans over there are for a 1 million basement remodel I've got a way to go.

The bottom line is your one lucky guy to live where you do and have access to the type of work your looking at. Hopefully you got here young and worked your way up like I did. Gone are the 100 day seasons dropping everything at 4:30 to ride bikes and screw off. I was just sub for some time and started getting my own projects right before the blow out of oct 2008. After that mess I was determined to be a contractor instead of waiting for others to get work for me.

The customers you'll deal with are mind blowing to say the least, bend over backwards for them. Set up a payment plan, figure out who is going to buy what and go from there. I did a 20k face lift (no kitchens no baths) over in avon this winter. The ho provided 12k in flooring, tile, and stone. I accounted for that in my bid and it was no big deal. 

The customers I'm dealing with now, I have to pick things for them (they don't have time to shop) or I provide them with 3 choices and they pick. I purchase everthing that goes into the job. 

Two summers ago I gutted a house and she provided the kitchen cab, tile, and carpet, no big deal. Went through the contract and scope of work in early may, she wrote NO CHANGE ORDERS on a piece of paper. I didn't see the customer again unil september. Since the house wasn't 15 yrs old and in good shape I didn't have one change order.

Your dealing with the 1% it's a nice club to be in. Get to know these people, go out to dinner with them, have drinks, talk about their project like you've been old friends for some time, see how they want to do things and what they expect, send them to people you know and trust that deal in carpet, tile, cabinets..... 

Then get it all in writing. 

When your done, keep in touch, send them an email, remind them that your there for them. 

I take photos every day of everthing that is going on, guys setting scaffolding up and scraping pop corn, take a photo. Sounds dumb but it isn't. Download your photos to a website and let them check them out. Do this every day or two. They love to send the link to their friends and family, look what they are doing to my third home. the customers rave about this and it's effortless. 

one customer tripped me up because they wanted to know what was going on with the cabinets that I told her I installed in an email. Well they were installed I just forgot to take photos and download them. She was so used to seeing every bit of progress and I was slacking. 

then again I've done jobs where I've had video cameras all set up so they can watch from their house 1800 miles away. My only disclaimer was any conversations they may hear are total nonsense and trash talk and shouldn't be taken seriously. What do I care. You wanna watch me from a thousand miles away I don't care.

If you've been in the valley for a long time, own a home, and are committed to sticking around use that as a selling point. I do big time. It builds trust with these people. So many guys show up and set up contractor shop and then bail after 2-4 years because they can't deal with high end clients, the cost of living, the long winters, the isolation of a mountain town, or they take that first check for 25k and blow it on a new truck, a downpayment for a house or some other junk.

Good luck kick some butt.


----------



## TNTRenovate (Aug 19, 2010)

Don't do PAYPAL!!! Their policies favor the customer and not the vendor. They can file for a credit and it takes forever to get it resolved, up to 6 weeks. No way am I going to risk tying up my money because of a contract dispute. Have them pay you through their bank. Most will issue checks and mail them the same day. It will only take a day or so to get to you.


----------



## skcolo (May 16, 2009)

J F said:


> On larger jobs (basement finishing projects for me), I set the up payments as attached (see sect. "F").
> 
> I was always using clients money, with a tiny final payment. Billing for services prior to the start of those services always allowed me to pay subs on the day they invoiced as well.


Nice form, but 21% per month could be considered usury in most places. I think you mean per anum.


----------



## skcolo (May 16, 2009)

TNTSERVICES said:


> Don't do PAYPAL!!! Their policies favor the customer and not the vendor. They can file for a credit and it takes forever to get it resolved, up to 6 weeks. No way am I going to risk tying up my money because of a contract dispute. Have them pay you through their bank. Most will issue checks and mail them the same day. It will only take a day or so to get to you.


I bought some cabinet doors from a guy and used Paypal (ironically, he was in Illinois also) and the guy never produced the doors. I never got back the money as Paypal wouldn't refund it. In the end, the door builder went broke and I got bupkiss. If I would have used a credit card, I used have been able to dispute the charge and get a refund. I am not a fan of Paypal either.


----------



## hdavis (Feb 14, 2012)

skcolo said:


> I bought some cabinet doors from a guy and used Paypal (ironically, he was in Illinois also) and the guy never produced the doors. I never got back the money as Paypal wouldn't refund it. In the end, the door builder went broke and I got bupkiss. If I would have used a credit card, I used have been able to dispute the charge and get a refund. I am not a fan of Paypal either.


Here's a whole bunch of non-fans:

http://www.paypalsucks.com

I used paypal for a couple weeks, and lost a few hundred. Then I found the above site - I should have looked before I leaped.


----------



## J F (Dec 3, 2005)

skcolo said:


> Nice form, but 21% per month could be considered usury in most places. I think you mean per anum.


:laughing: I know, I have it on 2-3 years worth of signed contracts after coping and pasting, no using changing it to post here. Luckily, I've never had to deal with a payment issue....I could make some _real_ money then. Might have to have a pawn shop license, though. :whistling


----------



## Tiger (Nov 21, 2007)

hdavis said:


> Here's a whole bunch of non-fans:
> 
> http://www.paypalsucks.com
> 
> I used paypal for a couple weeks, and lost a few hundred. Then I found the above site - I should have looked before I leaped.


83,000 people like paypalsucks....WOW!


----------



## cwatbay (Mar 16, 2010)

Like others have said, use progress payments based on meeting goals that you set yourself. The idea is don't lose control of the project and the finances involved. 

We do this all the time for any project over $1000 and all the way up to $500,000. First a deposit, then a payment upon delivery of product, then additional payment upon completion of each construction goal, plus additional payments for each delivery of product. 

I always keep ahead of the game, making sure my goals are realistic, and, that I am not out any significant monies for products and sub-contractors. Yes, it does take some planning and work, but it's a win-win for you and the client.


----------

