# What do you think about this business strategy?



## jacselee (Mar 5, 2014)

First off...I'm fortunate enough to have parents who are investors. They basically flip houses. For the past two years, I've learned to do quite a lot of things around the house and decided to get licensed as a contractor. 

Unfortunately, It is difficult to work with family, so i decided to venture and create my own business. Again I'm fortunate because i have an extensive portfolio of projects I have done in the past and I am experienced enough to be comfortable out on my own. Of course 2 years is not a lot of experience. I still learn something new every project. 

Well my parents recently wanted me to start an investment company with my younger brother. They buy the homes, finance us and we fix em and we get the profit! Sounds good doesn't it? Not really. They told me, i won't have any income for a while because all of it is going to the business. By the way i have 2 younger brothers in on this, but only one of them is actually working. The youngest is in school pursuing something that has nothing to do with construction/business at all, yet he gets 1/3 ownership of company. 

ANYWAYS, I basically want to make income right away, who doesn't. So here's what i've done. I've created a contracting company; marketed it some what, and have been out and about getting bids. I've recently come across another investor interested in working with me and am getting smaller contracts. But i don't want to necessarily part ways with the family business, because i know, long term, it'll be great for me. 

So here's what I plan to do. I plan to hire one guy @17.00 to be the lead carpenter. He will be taking care of smaller jobs by himself with occasional supervision from me. When it comes to big jobs I can send some guys from my family's crew to help and I will be somewhat more involved. 

NOW here's what I plan to do and here's where i need your advice. This is how I plan to bid on projects. This is a real life example. I plan to tile a foyer 7x10 @ 500 dollars (not including materials) I budget my $17.00 man for 2 days (16 hours of work) that comes out to $272.00. I might spend a total of 2-4 hours at the project to make sure things are up to my expectation. This is temporary because I need to train him how to satisfy my clients and go the extra mile for them. In the end I profit 288.00. This allows me to work with my family and run a business on the side. :thumbup:

What do you think?


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## griz (Nov 26, 2009)

Very difficult to mix biz and family.

Especially with your parents calling the shots...

$17/hr man? A laborer? Before or after your burden?

$288 you have to be kidding......

Raise your expectations and move in to your own place....:whistling:laughing:


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## jlsconstruction (Apr 26, 2011)

A $17 an hour guy costs closer to $25 an hour. You have other overhead on top of that, I figure $40 an hour for guys in the $15 to $20 an hour range. Guys in that pay scale are no way near lead carpenters, try at least $30 an hour and bill out at $60 an hour. I have an 18 year old that grabs tools for use and sweeps the floor that's making $15 an hour


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## mako1 (Sep 1, 2013)

I think you have a lot to learn yet.According to the above example you have no overhead? I can see your math also needs some work.


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## jacselee (Mar 5, 2014)

mako1 said:


> I think you have a lot to learn yet.According to the above example you have no overhead? I can see your math also needs some work.


With what you guys have been saying and with paying a man 17.00 an hour, How much should I be bidding for tiling a 7x10 by foyer?


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## Jhinton (Dec 1, 2013)

Sounds like many of the other "flippers" that call me from time to time. 
The only time a do a job in the $500 range is if it takes me an hour or two or one of my guys a half a day at the most. And then I hope to clear $100 profit.
It's busy work while we are waiting for a job to start.


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## Jhinton (Dec 1, 2013)

jacselee said:


> With what you guys have been saying and with paying a man 17.00 an hour, How much should I be bidding for tiling a 7x10 by foyer?


It has taken some of us a lot of blood, sweat, tears and money to come up with those numbers. Why would we freely give it out? It would also vary greatly depending on who you asked.

I also believe discussing actual numbers is frowned upon here.


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## jlsconstruction (Apr 26, 2011)

Jhinton said:


> Sounds like many of the other "flippers" that call me from time to time. The only time a do a job in the $500 range is if it takes me an hour or two or one of my guys a half a day at the most. And then I hope to clear $100 profit. It's busy work while we are waiting for a job to start.


When I do roof repairs that take me under an hour. I start my pricing at a grand. 

I'm small time, don't get me wrong, but if I'm not making 10k a week I'm loosing money


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## Jhinton (Dec 1, 2013)

jlsconstruction said:


> When I do roof repairs that take me under an hour. I start my pricing at a grand.
> 
> I'm small time, don't get me wrong, but if I'm not making 10k a week I'm loosing money


It's a little easier down here in Alabama.... Overhead is cheaper thus prices tend to be a little lighter than in NY.
But boy would I love to be able to charge a $1,000 for quick roof repairs...


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## FrankSmith (Feb 21, 2013)

Lets say your multiplier to calculate overhead is very low. We will say 1.3 for example sake. That means you have $385 to build the job and $115 to pay the bills and hopefully make a profit. The job is bid based on $385 for 20 man hours. This does not including biding the job, ordering material or invoicing and record keeping. What would be the point of this? Too much head ache not enough gain. You would be better off to convince a tile guy to give you $25 for a referral than to involve yourself in this.


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## Chopsaw Chick (May 6, 2011)

Jhinton said:


> Sounds like many of the other "flippers" that call me from time to time.
> The only time a do a job in the $500 range is if it takes me an hour or two or one of my guys a half a day at the most. And then I hope to clear $100 profit.
> It's busy work while we are waiting for a job to start.


Hey, now. I'm a flipper and a licensed contractor. There's NO WAY that I could afford to tile a foyer for $500. I think the OP is forgetting or underestimating the costs of things like insurance, taxes, hourly pay, gas money, accounting, materials, wear and tear on tools/vehicles, risk the client won't pay, risk your employee will screw something up and the inevitable extra trip (or two) to the supply house for something that your employee needs immediately. 

Flipping houses and working for others between projects is a great plan if you are smart about your flips and experienced with the real costs of doing business in the construction industry. But it looks like you need to do a little more research to get a good grasp of your actual overhead costs first.


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## Metro M & L (Jun 3, 2009)

jacselee said:


> First off...I'm fortunate enough to have parents who are investors. They basically flip houses. For the past two years, I've learned to do quite a lot of things around the house and decided to get licensed as a contractor.
> 
> Unfortunately, It is difficult to work with family, so i decided to venture and create my own business. Again I'm fortunate because i have an extensive portfolio of projects I have done in the past and I am experienced enough to be comfortable out on my own. Of course 2 years is not a lot of experience. I still learn something new every project.
> 
> ...


I think that you will make a lot more money a lot sooner if you leave your parents nest. It will be hard but it will put you in a better negotiating position when they come calling because they need someone young they can trust. Btw work cheap today for blue sky tomorrow is THE OLDEST FLIPPER TRICK INTHE BOOK and your folks are using it on you too.


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## VinylHanger (Jul 14, 2011)

jlsconstruction said:


> When I do roof repairs that take me under an hour. I start my pricing at a grand.
> 
> I'm small time, don't get me wrong, but if I'm not making 10k a week I'm loosing money


New York must be a whole lot different than around these parts. If I was making 10K a week, I would be really big time here, at least in the remodel/repair biz. I suppose it depends on the size of your crew though. I am just me, and even I couldn't afford to do many small tile jobs for 500 bucks. :no:

I do the small stuff to keep the wolves off and keep myself in the minds of my customers, but that is too small. Especially if you aren't doing it yourself. I've did an interior rental repaint for 500 bucks once. Spray and pray, all one color. I did back roll it though. :whistling A guy can't do any kind of real quality for that money.


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## TRMolnar (Mar 19, 2012)

Most guys I know that make less than $20 an hour A: need to be supervised And B: couldn't lay a floor that size in two days. Also even if your still living at home your prices are way too low. There is so much more to consider.


I would suggest working for someone for a few years and gain the experience in running a business in construction from someone that's been doing it. Also, go out and buy a book called profit and markup ( maybe one of the other guys know the author) it's a must have for running a business... 

Its all well and good to learn as you go when working for your parents, they'll still like you if something goes wrong... however learning something every project on someone home isn't exactly ethical in my book. If something isn't done properly no one is there to catch it... It's just my honest opinion. No offense intended


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## Big Shoe (Jun 16, 2008)

jacselee said:


> I plan to tile a foyer 7x10 @ 500 dollars
> 
> I budget my $17.00 man for 2 days (16 hours of work) that comes out to $272.00.
> 
> ...



First off you need to buy a calculator. :whistling

It sounds like you are motivated. And you will get beat up a little until you figure it all out.

Good luck to you. :scooter:


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## jlsconstruction (Apr 26, 2011)

VinylHanger said:


> New York must be a whole lot different than around these parts. If I was making 10K a week, I would be really big time here, at least in the remodel/repair biz. I suppose it depends on the size of your crew though.


Don't forget we have 8 months a year to work if we're lucky


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## libbycop (Dec 5, 2011)

chopsaw chick said:


> hey, now. I'm a flipper and a licensed contractor. There's no way that i could afford to tile a foyer for $500. I think the op is forgetting or underestimating the costs of things like insurance, taxes, hourly pay, gas money, accounting, materials, wear and tear on tools/vehicles, risk the client won't pay, risk your employee will screw something up and the inevitable extra trip (or two) to the supply house for something that your employee needs immediately.
> 
> Flipping houses and working for others between projects is a great plan if you are smart about your flips and experienced with the real costs of doing business in the construction industry. But it looks like you need to do a little more research to get a good grasp of your actual overhead costs first.


bingo!


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## SailingandSuch (Mar 24, 2013)

jacselee,

Hey man, I'm from Alabama, what part are you in?

I'm fairly young, 26, but probably a few years older than yourself. I've been working in construction/remodeling since I was 16 years old and I have been on my own full time for about 2-3 years now. I have certainly learned a lot about running a business since jumping out on my own and there is still a lot more to learn. 

I second the book Markup and Profit that you can find on Amazon, it is a MUST READ. Without it my business would be struggling. I read it a year ago and my company has made a decent profit last year. (more than I paid myself.....) 

I'd be happy to talk with you about your pricing and the business side of things. I know it's tough when you feel like you have a great idea and you come to a forum and your ideas don't seem so great to everyone. Don't let it get to you, be thankful that you are getting honest feedback and take it as everyone doing you a favor.

Feel free to send me a Private Message and we can exchange emails and chat back a forth or maybe something different. Feel free to check me out at BuildWithRLS.com


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## Fender (Jul 22, 2013)

VinylHanger said:


> New York must be a whole lot different than around these parts. If I was making 10K a week, I would be really big time here, at least in the remodel/repair biz. I suppose it depends on the size of your crew though. I am just me, and even I couldn't afford to do many small tile jobs for 500 bucks. :no:
> 
> I do the small stuff to keep the wolves off and keep myself in the minds of my customers, but that is too small. Especially if you aren't doing it yourself. I've did an interior rental repaint for 500 bucks once. Spray and pray, all one color. I did back roll it though. :whistling A guy can't do any kind of real quality for that money.


Same for me, but I think he has a decent sized crew so he has to get that kind of volume. I'd be killing it if I did 10k a week, but it's just my brother and I right now.



TRMolnar said:


> Most guys I know that make less than $20 an hour A: need to be supervised And B: couldn't lay a floor that size in two days. Also even if your still living at home your prices are way too low. There is so much more to consider.
> 
> 
> I would suggest working for someone for a few years and gain the experience in running a business in construction from someone that's been doing it. Also, go out and buy a book called profit and markup ( maybe one of the other guys know the author) it's a must have for running a business...
> ...


Michael Stone is the author you're thinking of.

I worked for my dad and step mom for a long time, and it got to be miserable. You're always under their thumb and you more than likely aren't going to ever have any real power or control of the business. It ended up getting really bad between my dad and I and we are coming up on a year without speaking. Now, my dad's a bit of an ******* so it's no guarantee that the same happens with you. But I'd suggest getting into your own thing as soon as you can. As someone else mentioned, go work for someone else for a while and learn everything you can. Helped me a ton. I learned more in the couple years working for that other contractor than I had the previous 6-7 with my dad. It's awesome to get another perspective on things.


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## AustinDB (Sep 11, 2006)

the family thing sounds like a heaping pot of trouble-the guy who put in all the work up front is probably going to harbor resentment down the road. 

learn how to price jobs so that you do make money, then with every job dissect the numbers to understand how much labor, materials, man hours, and whatever other details are involved to understand what it takes to survive.


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