# What you need to know when starting a Construction Company



## Builder/Lawyer (Mar 22, 2013)

Hi All, 
I am an attorney and residential builder for over 15 years. Over my tenure I have encountered numerous contractors and subcontractors of all sorts. Many of these business owners have been in business for decades yet have failed to properly form their businesses, manage their affairs (contracts, employment agreements, subcontracting) and abide by local regulations. Being a self-employed contractor myself, I understand all the hats that small -business owners must wear. Who has the time to swing a hammer all day, meet with clients, develop project proposals, manage crews, market your business and all the other required responsibilities of a new organization. I attended business classes in college but none were specific to the trades. If I only had an opportunity to learn all of the business “stuff”, specific to a construction practice, in a easy to learn and condensed format I would have had much more time to develop my business early on and learn how to do things _the right way from the beginning_. The school of hard knocks has a very costly tuition rate. 

Recently, I have considered putting together a workshop/seminar for those interested in starting a small business in the construction trades industry. I am interested in hearing your thoughts on this and whether you think it would be beneficial for not only newbies, but seasoned individuals such as yourselves or for the industry as a whole. Feel free to provide feedback and what you think a seminar of this nature would be worth to you as an attendee. 

*Brief Summary of Program*:

1)	(4) 2 hour classes or (2) 4 hour sessions w/ breaks or (1) 8 hour session w/ breaks 
2)	Powerpoint presentation
3)	All info provided would be state/locale specific and include detailed procedures, processes, 
4)	Provide all attendees with a three ring binder outlining lectures in detail , state/locale specific forms, etc
5)	Focusing on the following main topic


*Business Formation*
-	Difference between different types of entities and benefits/disadvantages of each
-	Process and procedure required to complete business filing within state
-	Requirements of maintaining proper standing within state according to business formed
-	Premature commencement of business activities 
-	Corporate veil and what factors states consider in piercing it 
*Employees/Subcontractors*
-	Statutory difference between subcontractor/employee
-	Proper classification of workers and prevention of worker misclassification
-	Applicable law on agency relationships and what it means for salespeople, foremen, 
-	Insurance issues, workers compensation
-	Liability in various construction relationships and situations 
*Contracts*
-	State contract law 
-	Consumer/Contractor, Designer/Contractor, Designer/Consumer agreements
-	What is needed in contracts according to local regulations, 
-	How do oral discussions play into project situations
-	How should subcontractor/employee agreements be structured
*Conflict Resolution*
- How to prevent contract conflicts
-	How to handle conflicts when they inevitably arise 
-	Available mediation, arbitration and conflict resolution

Feel free to provide additional topics that should be included. Would you pay for this seminar and how much would it be worth it to?


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## Smithanator (Feb 18, 2013)

I think personally. The only part of this I would be interested in contract info. We all have learned over they years how to run a business. But if you were able to make contracts tailored to individual contractors for there clients. That's something I would be interested in as opposed to the generic contracts we all use


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## skyhook (Mar 17, 2007)

Smithanator said:


> I think personally. The only part of this I would be interested in contract info. We all have learned over they years how to run a business. But if you were able to make contracts tailored to individual contractors for there clients. That's something I would be interested in as opposed to the generic contracts we all use


I remember when I was young and knew everything.


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## Builder/Lawyer (Mar 22, 2013)

Thanks for the response. Tailored made contracts for specific projects/clients would require more focused attention. I do that as well. However, my intention is to inform those who may not be able to afford an attorney to perform these business formation and related issues. At the micro level, I hope to help contractors in their business affairs (at an extremely economical and efficient manner) so they can spend more time focusing on what they do best...market, sell, and build. At the macro level I hope to play a part in educating the future workforces in this growing industry so that it grows in a sophisticated and educated manner. Not to mention, an educated work force will hopefully help stabilize pricing once all understand the requirements, overhead, liability, and regulations associated with the built environment.


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## Builder/Lawyer (Mar 22, 2013)

skyhook said:


> I remember when I was young and knew everything.


Do you see value in a seminar like this?


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## skyhook (Mar 17, 2007)

Builder/Lawyer said:


> Do you see value in a seminar like this?


Absolutely. Continued education is a must in the building business.


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## Builder/Lawyer (Mar 22, 2013)

skyhook said:


> Absolutely. Continued education is a must in the building business.


Can you put a dollar value on it? How much would you pay to attend? 

I believe it would only be successful if it is priced appropriately. Many new contractors or soon to be contractors are more interested in getting jobs and making money then incurring more upfront expenses. So the price cannot be cost prohibitive. On the other hand there is a lot of work required to put together a practical, useful, and current program. Not to mention the cost of renting a conference room at a hotel or other space for the seminar.


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## Bone Saw (Feb 13, 2006)

Builder/Lawyer said:


> Do you see value in a seminar like this?


I see it as invaluable, something this industry seriously needs


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## RobertCDF (Aug 18, 2005)

I might sponsor some of the local idiots who keep undercutting cause they don't have a clue how to run a business...


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## Builder/Lawyer (Mar 22, 2013)

RobertCDF said:


> I might sponsor some of the local idiots who keep undercutting cause they don't have a clue how to run a business...


Your point is well taken. In addition to the "undercutting" you mention, uninformed contractors give a bad name to the informed, taint the public's perspective of contractors in a negative light and even encourage addition regulation in an already highly regulated industry. 

*I initially thought about providing this seminar for the fixed price of $400.00 (including materials). Any thoughts on this price point?*


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## Chris G (May 17, 2006)

Builder/Lawyer said:


> I initially thought about providing this seminar for the fixed price of $400.00 (including materials). Any thoughts on this price point?


Can you breakdown the material costs for me?




Just kidding! I think that's a fair price. I would expect a heavy Q and A period at a seminar like this. I'm sure you will be overwhelmed at first, but then you'll figure out what the common concerns are and streamline from there. Wish you were in Canada.


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## Builder/Lawyer (Mar 22, 2013)

Chris G said:


> Can you breakdown the material costs for me?
> 
> Just kidding! I think that's a fair price. I would expect a heavy Q and A period at a seminar like this. I'm sure you will be overwhelmed at first, but then you'll figure out what the common concerns are and streamline from there. Wish you were in Canada.


You're right about the question and answer session. That would be an important part. However, I intend to fill people's minds with so much information that they may be running for the door as soon the seminar winds down.


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## greg24k (May 19, 2007)

Try it out and see what happens, you really have nothing to lose other then your time, etc. 
The idea is good, and if you get newbies to come in and listen to you...then you will make some money. In most cases who needs to learn most likely will not spring for the cost of that and the guys who been at it for a while, pretty much they got it down when it comes to contracts,the business, etc. 

Good luck


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## Builder/Lawyer (Mar 22, 2013)

greg24k said:


> Try it out and see what happens, you really have nothing to lose other then your time, etc.
> The idea is good, and if you get newbies to come in and listen to you...then you will make some money. In most cases who needs to learn most likely will not spring for the cost of that and the guys who been at it for a while, pretty much they got it down when it comes to contracts,the business, etc.
> 
> Good luck


Thanks Greg. I think you're right about those who need it most may not be interested. We have a few good tradesman programs at the local community colleges that I thought would be a good place to start visiting classrooms and promoting. I figure those that are interested in taking classes to learn their craft may be most interested in doing things right from a business standpoint. Eventually, I would seek sponsorship or encouragement from the state licensing department as a recommended class for licensee applicants.


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## ASInsulation (Aug 25, 2010)

i think its a good idea. I started my business at 23 and ALOT more then 8 hours of research to get answers on the stated topics. Most of which, I found out later, weren't correct anyway. Live and learn, here I am 6 years later and I think I have it down...lol


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## Builder/Lawyer (Mar 22, 2013)

ASInsulation said:


> i think its a good idea. I started my business at 23 and ALOT more then 8 hours of research to get answers on the stated topics. Most of which, I found out later, weren't correct anyway. Live and learn, here I am 6 years later and I think I have it down...lol


ASInsulation, 

If you were presented with the opportunity, would you have attended at 23 for the cost of $400?


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## greg24k (May 19, 2007)

Builder/Lawyer said:


> Thanks Greg. I think you're right about those who need it most may not be interested. We have a few good tradesman programs at the local community colleges that I thought would be a good place to start visiting classrooms and promoting. I figure those that are interested in taking classes to learn their craft may be most interested in doing things right from a business standpoint. Eventually, I would seek sponsorship or encouragement from the state licensing department as a recommended class for licensee applicants.


I think that would be a good place to start, I get similar courses from local colleges all the time in the mail, how to run business, how to do accounting, AutoCad lessons, etc. I'm sure people sign up for the lessons if they continue doing them every year.

Good luck on your venture!:thumbsup:


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## elementbldrs (Sep 26, 2010)

Well my perspective is both as a general contractor and as a former director of a trade school the offered classes along these lines on a once yearly basis. I know the starting per hour number for training in the early 2000's was $20 hr. So starters would be nearing the $200 mark. 

Now we were part of a trade association of 800+ businesses, so we had a good market to solicit. I encourage you to make a similar connection. Two four hour sessions would be my recommendation. Within the same week. Relevant handouts organized properly and inexpensively is a must. Three ring scenarios gobble up a lot of your time. You will dread it. Try a website the can get electronic copies of forms or handlers so they can modify on their own.

Your topics seem right on. I would attend, even if some info was just a refresher.


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## Texas Wax (Jan 16, 2012)

I agree, $400 is not a bad price and 'should' be a great value to anyone who understands.... Training the idiots, low ballers ect it's not in their psychology to accept these thoughts.

It's hard to get many "tradesman" / contractor to buy into the legal- business end at any cost-value. Those starting out, generally don't want to be scared into "NOT" following their dream. LOL Be afraid, very afraid LOL You might do some a service by scaring them out of starting a construction business....but that won't get y'all many repeat customers

A strategic alliance with someone who can give real marketing/sales direction would benefit your your cause. How you can pay for and grow a legit and proper business. 

All I hear in my mind are all those I've run across that 'know better' and blah blah blah about all this who-haaa. At least 5 of them to one of those who even sort of get it.


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## greg24k (May 19, 2007)

Builder/Lawyer said:


> ASInsulation,
> 
> If you were presented with the opportunity, would you have attended at 23 for the cost of $400?


400? Are you out of your mind? 

If you get one guy in there who will spring $400, consider yourself lucky. 
30 years ago you could find someone being 23 who got $400 in their pocket, because it was different times, and at that time at 23 I had an apartment and was supporting a GF with a baby ... Today at 23 if you have $400 in your pocket you probably selling crack, if not they play video games, or have an 80k student loan to pay back... so I doubt they or anyone will spring 400 to get more schooling.


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## Builder/Lawyer (Mar 22, 2013)

BamBamm5144 said:


> The problem is that it will take a lot more than 8 hours to learn all that.


That's a good point. I could spend dozens of hours teaching any one of the topics (I spent several years studying just contracts in undergrad and law school and have plenty to say). Since I haven't developed the actual program yet, I don't know how long I will need to convey the material in a comprehensible and concise manner. But one of my intentions is to provide the material in a manner that will not be so time consuming that individuals will have to attend classes several times a week or over a long periods of time.

The attendee will need to put some time in learning the material. However, through a practical format I hope to expedite the learning curve. Keep in mind, I'm not planning on teaching theory but practical knowledge.


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## greg24k (May 19, 2007)

Builder/Lawyer said:


> That's a good point. I could spend dozens of hours teaching any one of the topics (I spent several years studying just contracts in undergrad and law school and have plenty to say). Since I haven't developed the actual program yet, I don't know how long I will need to convey the material in a comprehensible and concise manner. But one of my intentions is to provide the material in a manner that will not be so time consuming that individuals will have to attend classes several times a week or over a long periods of time.
> 
> The attendee will need to put some time in learning the material. However, through a practical format I hope to expedite the learning curve. Keep in mind, I'm not planning on teaching theory but practical knowledge.


Now we getting someplace my friend, and you starting to get the drift where we coming from... and as you said yourself that learning theory can only be taught in school, and that takes years... and practical knowledge cannot be taught at some seminar, it must come from experience which can only come in the field and to learn that it takes years and years and years... :thumbsup:


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## AllanE (Apr 25, 2010)

Assuming the information you are teaching is accurate per state laws, I think $400 is too high. I might suggest webinars for each of the 4 topics, @ $25-$50 each. I think your biggest challenge is marketing your program so that it reaches enough contractors. 

Allan


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## Builder/Lawyer (Mar 22, 2013)

greg24k said:


> Now we getting someplace my friend, and you starting to get the drift where we coming from... and as you said yourself that learning theory can only be taught in school, and that takes years... and practical knowledge cannot be taught at some seminar, it must come from experience which can only come in the field and to learn that it takes years and years and years... :thumbsup:


For some reason I get the impression you are doing your best to debunk my idea. I'll play along. Without getting into a long philosophical debate, learning contract theory and practical knowledge about contracts and how they apply in the construction context are polar opposites. One deals in the theoretical while the other deals with useful knowledge that can be put to use immediately. The latter does not require years of studying. 

You've made clear your stance on formal education so I am cutting against the grain trying to convince you of the value in formal education. This program may not be for you. However, others may benefit from the idea. That's what I'm researching. 

For someone who is starting out or researching what is required to start a construction business and does not have the wherewithal or desire to figure it out may benefit from learning from someone who has put it together for them. That point has been expressed already on this thread by others. Some experienced contractors have also expressed an interest. This tells me the idea may not be completely crazy as you are suggesting. There is no doubt that more research and market analysis needs to be performed to see if this is a worthwhile investment. 

Your position is your position and I respect that. However, others may not feel the same way.


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## Builder Butch (Jan 30, 2012)

Man rough crowd! I like the idea. I've been in business 25 years and would welcome the information. The market is changing and I'm finding I can't do business with a hand shake anymore. I can promise you will spend a lot more than $400 on lawyer and CPA,s advice easy. And I have spent enough on hard knocks to learn this business and still get blind sided by people and the way the laws read. I don't understand the attitude we experienced guys don't need this? Even slapping leins requires a contractor to jump through hoops to abide by the prescriptive laws. A contractor walks a liabilty tight rope daily, and the older I get and the more close calls I have causes me to worry more than ever over the risk and how to better deal with business practices.

However, I do agree it would be more profitable for you and less costly to us if you took advantage of technology. Do a write up or blog or a you tube video for each state once and sell it over and over. I see me as a buyer at any reasonable cost because I see it paying me back quickly in this sue happy world. Good Luck!


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## Builder/Lawyer (Mar 22, 2013)

Builder Butch said:


> Man rough crowd! I like the idea. I've been in business 25 years and would welcome the information. The market is changing and I'm finding I can't do business with a hand shake anymore. I can promise you will spend a lot more than $400 on lawyer and CPA,s advice easy. And I have spent enough on hard knocks to learn this business and still get blind sided by people and the way the laws read. I don't understand the attitude we experienced guys don't need this? Even slapping leins requires a contractor to jump through hoops to abide by the prescriptive laws. A contractor walks a liabilty tight rope daily, and the older I get and the more close calls I have causes me to worry more than ever over the risk and how to better deal with business practices.
> 
> However, I do agree it would be more profitable for you and less costly to us if you took advantage of technology. Do a write up or blog or a you tube video for each state once and sell it over and over. I see me as a buyer at any reasonable cost because I see it paying me back quickly in this sue happy world. Good Luck!


Great insight. I guess I haven't pursued the online based format initially because I believe face to face formats are more beneficial for the learner. I don't have any good reason for this other than my own personal experiences. Something to look into. 

I also don't know that I would want to produce this type of seminar for all states or even multiple states. For one reason, it violates Rules of Professional Conduct for attorneys to provide legal advice in jurisdictions that the attorney is not licensed in. Secondly, there is a lot of work in putting together these programs and I'm not sure I'd want to pursue it in states I'm not currently familiar with.


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## Eaglei (Aug 1, 2012)

I think any usefull knowledge about the business end of a contractors company is always a good thing . There certainly is a need for this , and hopefully many will find a way to your knowledge . I would look into maybe talking to someone at the many building seminars such as JLC .


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## Builder/Lawyer (Mar 22, 2013)

Eaglei said:


> I think any usefull knowledge about the business end of a contractors company is always a good thing . There certainly is a need for this , and hopefully many will find a way to your knowledge . I would look into maybe talking to someone at the many building seminars such as JLC .


Excellent idea. JLC reaches many people and they're seminars are very beneficial. I've attended some myself.


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## pibe (Jan 21, 2013)

Smithanator said:


> We all have learned over they years how to run a business.


I think he said it would be for new people looking to start a small business? Wouldnt that imply that they dont have years of knowledge running a business.

I think its a good idea.

edit: i think things like that could benefit the entire industry greatly. Probably wouldnt have as many people working themselves out of a job by working for nothing because they dont know how to run the business.


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## Builder Butch (Jan 30, 2012)

Builder/Lawyer said:


> Great insight. I guess I haven't pursued the online based format initially because I believe face to face formats are more beneficial for the learner. I don't have any good reason for this other than my own personal experiences. Something to look into.
> 
> I also don't know that I would want to produce this type of seminar for all states or even multiple states. For one reason, it violates Rules of Professional Conduct for attorneys to provide legal advice in jurisdictions that the attorney is not licensed in. Secondly, there is a lot of work in putting together these programs and I'm not sure I'd want to pursue it in states I'm not currently familiar with.


Don't get me wrong I think face to face is great but I'm thinking for you to brush up on my state laws (Tennessee) travel down here, rent a conference room, take the risk of getting 15 to 20 people minimum so you could cover your time and be profitable would be tough. I love the idea and encourage you to press on. Hit me upif you get anything
together in my area.


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## Windwash (Dec 23, 2007)

Does the State of Maryland have licensing with required continuing education? This may be an avenue for you to pursue.

In MN we are required to take 7 hrs of continuing education a year and they must be state approved courses or seminars. There are quite a few different people who are putting on these classes and the prices and content vary but are generally between $100.00-$150.00 for the day but some are free. 

I have taken 2 different courses for my continuing education which are similar to what you describe. One was put on by an accountant and a lawyer specializing in contractors and the other a larger law firm. The first was in the $125 range and the second was free. Class size 40-60 people. Both were very interesting and I used one for my Inc. paperwork a month later. That's where those classes were geared to make their money.

Some of the lumberyards or builder associations that put on these courses may spring for a big ticket speaker for several hours of the one day classes that they offer. They usually have a couple large corporate sponsors.


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## BamBamm5144 (Jul 12, 2008)

My supplier has courses like these for free that they have every few months. For example, the last one was about our specific lien laws. I was one of 10 people there. Did I mention it was free and that class alone was 1.5 hours. Other ones have been subcontractor management, accounting help, etc. the lien law was presented by a top lawyer in the area.

Besides them being free, lunch buffets are provided.


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## TxElectrician (May 21, 2008)

BamBamm5144 said:


> The problem is that it will take a lot more than 8 hours to learn all that.


But in 8 hours you can learn what you need to get more training in.

Did you learn all you needed to know in your RRP certification class or everything you need to know about safety in the OSHA 10 training? No, but they do teach good work practices and open you up to further learning.

To the OP, you may want to look into local HBAs. Our local has a training room attached that will probably seat 40 or more. The $400.00price is significantly higher then any training that I am aware of that has been offered by ours but you could possibly lower the price if you didn't have to concern yourself with covering the cost of a hall.


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## Builder/Lawyer (Mar 22, 2013)

Builder Butch said:


> Don't get me wrong I think face to face is great but I'm thinking for you to brush up on my state laws (Tennessee) travel down here, rent a conference room, take the risk of getting 15 to 20 people minimum so you could cover your time and be profitable would be tough. I love the idea and encourage you to press on. Hit me upif you get anything
> together in my area.


Thanks for the encouragement. You're right about the difficulty in being a specialist in every state. Part of the value is that the program would be streamlined for people specifically in my state. If I can figure out a way to effectively reach more people and not compromise the quality of the program then I may reconsider.


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## Builder/Lawyer (Mar 22, 2013)

BamBamm5144 said:


> My supplier has courses like these for free that they have every few months. For example, the last one was about our specific lien laws. I was one of 10 people there. Did I mention it was free and that class alone was 1.5 hours. Other ones have been subcontractor management, accounting help, etc. the lien law was presented by a top lawyer in the area.
> 
> Besides them being free, lunch buffets are provided.


These are a great source of education. I imagine the lawyers performing these seminars are clocking their required pro bono hours. In any event, I'm happy to hear that suppliers and/or attorneys are promoting and providing the needed learning environment. :thumbsup:

On the other hand, my seminar may be geared a little differently. My program would be developed to address all these issues at one time as opposed to when a supply house offers the classes. Classes offered through a supply house are less likely to be relied upon due to their infrequent nature. If someone is interested in starting a business in the first quarter of 2013, a few classes at the supply house spread out throughout the year may not help them as much as a complete and thorough course held at one time in the beginning of the year.


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## Builder/Lawyer (Mar 22, 2013)

Windwash said:


> Does the State of Maryland have licensing with required continuing education? This may be an avenue for you to pursue.
> 
> In MN we are required to take 7 hrs of continuing education a year and they must be state approved courses or seminars. There are quite a few different people who are putting on these classes and the prices and content vary but are generally between $100.00-$150.00 for the day but some are free.
> 
> ...


The State of Maryland does not currently require continuing education in order maintain a home improvement license. But I wouldn't be surprised if it is around the corner. 

If you don't mind me asking, how much did you pay the attorney after the seminar to have the proper paper work filed for your incorporation?


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## AllanE (Apr 25, 2010)

Do you have an HBA or NARI chapter where you could offer this? That is where I would start.


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## Builder/Lawyer (Mar 22, 2013)

AllanE said:


> Do you have an HBA or NARI chapter where you could offer this? That is where I would start.


Yes, we have both here. Actually, we have a few NARI chapters within approx. 40 miles. Good idea!


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## kubie (Oct 19, 2008)

I agree on the continuing education credits with approved state courses.

The ones we have dont really help much. We need 12 hrs every 2 years.

Our lumberyard has classes, but are about products...decking, tyvek, ect.

Even the classes online are a joke, including the initial test. 


The free classes are great but its wastes time during the day. 

I would rather take a class online at night or weekends and get my credits.

Relying on the free lumberyard classes only, I would never get the 12 credits I need.

If you would break the class down into several 4 point classes for $25-$35 with a 25 question test at the end. We can choose the ones we like.

You dont have to make the class last for 4 hrs. The 4 hrs online classes take around 1 1/2 hr.

Maybe send us a cert of completion when we pass the test.

one example 
http://www.contractor-licensing.com/wisconsin/continuing-education.html


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## MCCarpentry (Feb 13, 2013)

How much would it cost to have a lawyer do all the corporate paperwork? It was 600 bucks at a firm in Dover De a few years back (I'm sure it is probably double by now). A lot of the information you plan to cover is already covered in the Maryland Home Improvement License book. And you can do workshops for that already. I am not knocking this idea as I believe that education is important. Maybe you could set up an online stream-line process that would actually take care of the incorporating documents as apposed to paying to learn about them. As a new business owner, and currently a sole proprietor, this is a very interesting topic to me. However with all the other things involved with business, I think I would rather pay someone who knows what they are doing to file my paperwork, rather than pay to learn about how to do it. Maybe once my business is on auto pilot :no: I will have the time for all that!

Why not water down the education side to things a business owner must know, and then inform your pupils of your law services? Thats what I don't get, if you are a lawyer why would you want to make money on education as opposed to actual law services?


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