# New contractor? Learning the ropes.



## csmith1281 (Apr 28, 2016)

All these posts are awesome fodder for my growth in this business and I truly appreciate all your input. I'm going to buy Markup and Profit as soon as I can. 

I want to hone in on the pricing question. I totally get where everybody is going with the "figure it out for yourself" / "trial and error" / "whatever the market will bear and whatever you're worth" discussion, and that's absolutely where I want to be--charging as much as I can as often as I can--really taking the reins and seeing where I can drive this thing with no limits in mind. 

But as a starting point, let me ask it this way: If the owner of a large, successful custom home building company--let's call him Pete--were talking to a business coach/CPA/potential business partner and that person asked him, "What is your cost per square foot for drywall?" Pete would have a number for that person off the top of his head. Pete isn't a homeowner facing a marketplace of handymen/contractors/builders with varying levels of service and quality. He is a business person looking for a commodity as an input to his finished product at the lowest cost possible. To me, that's the benchmark. I need to be charging AT LEAST the "commodity" price for whatever I'm doing. I just feel like there has to be a pretty narrow range of numbers where if you asked a pro or a supplier the price per square foot for drywall, roofing, framing, painting--whatever--they'd say, "anywhere between X and Z, but probably pretty close to Y." 

Am I right that that range of numbers exists? And if so, I want to know how to find that number...?


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## FrankSmith (Feb 21, 2013)

csmith1281 said:


> Am I right that that range of numbers exists? And if so, I want to know how to find that number...?



You are not right at all. 

Here are two stories to consider. 

A classmate that I graduated with sent me an email requesting a bid for a screened porch remodel. I told her I would come look at it and get her a bid, then she sent me her address. 1.5 hours away. I told her I couldn't do it but if she needed help getting through the process to get a hold of me. Three months later she contacted me to help sort out the bids because she had them ranging from 7k to 45k. 

Second story. My old boss used to get bids from a plumber for work at $100 an hour. The plumber would give not to exceed bids. So on one job 95% of the work was from the plumber. His bid was $7200. The in house labor was $250. The job cost based on that was $7450. His markup multiplier was 1.8. The total job was sold for $13,410. The plumbers invoice came in at $3,400. If the customer had called 5 handymen for this project they would have probably gotten all the bids back n the 2k range.


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## csmith1281 (Apr 28, 2016)

FrankSmith said:


> Your most important advise for the moment. Don't take advise from a business minded individual who is making a profit off you. They can't think with your best interest in mind.


Yes...this is one of the most important things I'm thinking about right now. I have plenty of things building up in my mind telling me I should keep my distance. Just one example: He (let's call him Dick) has subbed two different jobs to me--a roof job and a deck painting job--where he has taken it upon himself to work on the jobs without asking my permission or consulting me. On the roof job, he installed some flashing in a valley on top of the underlayment. He installed the flashing by driving nails through it. I ended up having to go out for a warranty claim on the roof (no surprise there) and decided to hire someone else and pay them a day labor rate to tear up and reinstall the valley. While I was away grabbing materials, Dick signed a work order for the guy that I didn't approve--so now this guy thinks he's getting paid what the work order says when it was $100 more than what I talked about with him. Dick also inspected said deck painting job personally and said it was good. He supposedly met with the homeowner a couple days later before he paid me the full amount and the homeowner allegedly said he had some problems with it. When i showed up to touch up, the homeowner said he didn't notice the problems. I even pointed out one of the items on the list and he said "It's fine--leave it." So I think he just took the opportunity to inspect in detail and decided after the fact he didn't like it enough and blamed it on the homeowner. And when he was there "meeting with the homeowner" he had is fiancee start touching up the deck paint. I asked him why she was painting, and he said, "A simple thank you would suffice. She's trying to help you out." Well, I saw what her "helping me out" looked like. She blooped white paint over the deck paint--of which we were entirely out. That's the rub here--it seems like he's "helping me out" in so many ways just to make a deposit in some kind of moral bank account that he can withdraw from later if he needs it. 

His back story is that he was a successful custom home builder and he got sick, went through a divorce, and lost his business all in the same year about four years ago. I tend to believe him still--even after all we've been through--mostly because it doesn't really matter. He really does know his stuff in the remodeling trade, so he can't BS me about that. We started talking about becoming partners because he liked that I am a clean cut family man, dependable, and I do good work. 

I got a lead through Facebook (a yard sale group--not someone I know personally) about some work, so I invited him out to go look at the job with me, and with his experience and knowledge--which is surely more than mine--he ended up selling not only the back porch remodel I got a call about, but also a patio extension, front deck addition, and window replacements throughout. I was grateful. He put both our names on the proposal and I thought this partnership thing was going to work out great. Next thing I know the people referred work for the husband's mother. They gave her Dick's phone number, and the first thing I heard about it was about 14 hours before the appointment he had set with her: "Hey, I'm going out to Jason's mom's to look at that basement they were talking about--wanna come with me?" I was LIVID! I mean, shouldn't he have said, "Hey great, let me talk to Cameron, and see when we can both get out there," BEFORE making an appointment? I wasn't able to make it to the appointment on such short notice because I had work scheduled. He gave me some BS about it all happening so fast and he had just gotten the call a few hours earlier. So I tried to be cool about it, but I made it known I wasn't happy that he did that. I asked him how it went after he went out there and he said it went fine and he was going to draw up a proposal. As part of our burgeoning partnership, he was going to tutor me on bidding and drawing plans, etc. Next thing I hear about it was a week and a half later when he *informed me* that we would be starting at Susan's house Wednesday of next week. He finally showed me the proposal a few days later and it only had his name on it. I asked him why my name wasn't on it when it was on the proposal he gave to the family that referred us to her. He said, "Do you have an LLC to protect yourself?" No, I don't, but did he talk to me about any of this before it happened? NO!

I should back up at this point and say that our first project together was the room and deck addition mentioned above. In the middle of that project, he scheduled us to start a remodel for a real estate investor that "couldn't wait", so we were a three man crew trying to manage two job sites an hour away from each other. Before we were really done working for the real estate investor, (money was running out anyway and work flow was dwindling, so it was kind of a gray area as to whether we were needed there anymore), Dick *informed* me that we were starting next week on Susan's AND Annette's basement remodels and that we would have to be done working for the investor altogether. Mind you, I'm still an independent contractor. I'm his friend, subcontractor, maybe business partner, but NOT his employee! AND we are STILL--as of this writing--working on the room addition/deck mentioned above. So we started at job site #1, added #2, replaced #2 with #'s 3 and 4, and now we have #'s 1, 3, and 4 going all at the same time. And we only have three guys--him, me, and one other part-timer. I called him on this all when it first happened. I told him I was pissed that he took this referral as though it were his own and that he had scheduled jobs and taken deposits without talking to me, and after a few days and several long text messages and e-mails he finally explained to me that he thought we were going to approach this like I was working for him and he was going to train me. The partnership, he explained, was in terms of splitting profits only. It was not supposed to be a situation where he would agree to split management and decision making with me. After all, he said, why would someone with his experience, who has paid his dues and made mistakes that cost him money in the past, want to take me on as a business partner and have to suffer through the process of watching me make those mistakes and learn from them. He said if I think I can support my family running just one job site at a time I've lost my mind. I tried to see his point of view, and after thinking about it for a while I started to see that maybe there was a bigger disconnect in our thinking than I realized. But if I was supposed to be his trainee, why didn't he include me in the estimating/planning process? And then things started happening like the time the cashier at Lowe's didn't ring up 14 2x4s we were about to walk out with. I pointed out the mistake to her and he tried to stop me without her noticing. Then he acted like he didn't know how many were on the cart. "Are you sure? Did you count them?" Yes, Dick, I got the exact number you asked me to get only 20 minutes ago. We went over this before we came up to the counter--remember? No? Well...I'll remember this. And all the times he's said "a subcontractor needs to be at a job site within 24 hours of receiving a warranty call," then the real estate investor we worked for had to call him for a month and had to call me to ask if Dick was mad at him because Dick wouldn't return his call about a single tile that had popped up in the bathroom threshold. When I finally cornered Dick into calling the investor back, Dick told him he'd been having health problems and wouldn't be able to get out there for at least a week. Yesterday he sprung on me that the the homeowner of the jobsite I was supposed to work at wrote him a letter complaining about a few things and I shouldn't go over there today until he has had a chance to straighten it out. I texted him and called him for a hour and he put me off saying "I'm on the toilet...having difficulties...call you in a bit." It was 9:30 am and I made other plans. Finally he texted me back saying he wanted me to help him with such and such but would understand if I had something else to do. I told him I would lay out because I had found something else to do. He texted me back later saying I was self centered and wanted to know if there was something in my life going on to cause me to treat him/others this way. Apparently "it's fine if you have something else to do today" is just something you say. He seems very manipulative at times. He cited how I went out to do deck touch ups and he had asked me to finish assembling and hanging a ceiling fan for him as a "favor." I never told him I would do it because i didn't plan on working for free as a favor to him--hell no. He asked me about it the next day and I said I didn't have time to work on it. That was another thing he said I was being selfish about. 

So in general I've gotten to the point where I say, "Fool me once--shame on you. Fool me twice--shame on me." I definitely do not want to form a partnership with him anymore. I really want to start drumming up more of my own business so I can choose not to work with him if I don't want to. However, I do want to preserve the relationship because he can feed me future work and I can still learn some technical things and business things from him. It's more about not burning bridges out of conservatism than feeling like I have to hang on to him because he's all I've got. Enlightened self interest vs. Stockholm syndrome. I'm just not engaging him in any "why didn't you work for free for me" type discussions to show him where the boundaries are. But I need a mentor to replace what I thought he was going to be for me. I want to get my builder's license and grow into a real construction company and not just a great handyman driving around with all his tools in the back of a minivan with the front quarter panel hanging off of it.


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## FrankSmith (Feb 21, 2013)

csmith1281 said:


> Yes...this is one of the most important things I'm thinking about right now. I have plenty of things building up in my mind telling me I should keep my distance. Just one example: He (let's call him Dick) has subbed two different jobs to me--a roof job and a deck painting job--where he has taken it upon himself to work on the jobs without asking my permission or consulting me. On the roof job, he installed some flashing in a valley on top of the underlayment. He installed the flashing by driving nails through it. I ended up having to go out for a warranty claim on the roof (no surprise there) and decided to hire someone else and pay them a day labor rate to tear up and reinstall the valley. While I was away grabbing materials, Dick signed a work order for the guy that I didn't approve--so now this guy thinks he's getting paid what the work order says when it was $100 more than what I talked about with him. Dick also inspected said deck painting job personally and said it was good. He supposedly met with the homeowner a couple days later before he paid me the full amount and the homeowner allegedly said he had some problems with it. When i showed up to touch up, the homeowner said he didn't notice the problems. I even pointed out one of the items on the list and he said "It's fine--leave it." So I think he just took the opportunity to inspect in detail and decided after the fact he didn't like it enough and blamed it on the homeowner. And when he was there "meeting with the homeowner" he had is fiancee start touching up the deck paint. I asked him why she was painting, and he said, "A simple thank you would suffice. She's trying to help you out." Well, I saw what her "helping me out" looked like. She blooped white paint over the deck paint--of which we were entirely out. That's the rub here--it seems like he's "helping me out" in so many ways just to make a deposit in some kind of moral bank account that he can withdraw from later if he needs it.
> 
> His back story is that he was a successful custom home builder and he got sick, went through a divorce, and lost his business all in the same year about four years ago. I tend to believe him still--even after all we've been through--mostly because it doesn't really matter. He really does know his stuff in the remodeling trade, so he can't BS me about that. We started talking about becoming partners because he liked that I am a clean cut family man, dependable, and I do good work.
> 
> ...


He wants employees that don't have overhead.


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## csmith1281 (Apr 28, 2016)

AGullion said:


> What do you mostly do as a handyman , and what is he throwing at you?


As a handyman, I was doing one-day jobs--sometimes multiple calls in a day. Toilets, faucets, holes in the walls, replacing trim, small paint jobs, pressure washing, etc. Handyman stuff. Since November I have been working on bigger jobs. In November/December I worked on an addition that doubled the size of the house. January I was basically the foreman on a room addition. I came on the job after the floor joists had been installed and ran the job site from that point on. I installed the roof, built the deck, and did some of the painting. My mentor/partner, "Dick," gave me this job and he was there sometimes but mostly not. I have done three drywall jobs for him now, and I'm finding it really hard to make money at that. He paid me $0.65/sqft minus materials for the first job, and for the second and third ones he has "updated" his pricing by calling one of his old subs and getting a number from him of $0.75/sqft. That's labor and materials. I told him the range I saw on three different home repair websites was between $1.20 and $1.90/sqft and he said, paraphrasing, "Real contractors laugh at those websites." 

As a handyman I simply charged $25/hour. I started at $17 and quickly raised my rate. Nobody has ever even bat an eyelash at that price. One person even told me I needed to charge more. It astounds me because before I got into this business I never would have imagined paying someone else $25/hr. I have only knowingly paid that or higher to get my car repaired and that's only because I can't do so many things on my car without the equipment a repair shop has. Anyway, my overhead consists of a $95/month insurance policy and time and fuel to bid jobs, and that's it. Of course, I had to purchase tools. I have about $4000 in tools right now. But I figured that a rate that corresponds to $50k/year should be able to cover insurance and fuel and I'd make more doing that than I ever had in my life before now. Materials are always paid for by the client. 

I really like doing bigger jobs as opposed to scrounging for crumbs in the handyman world. I will still do that work, but I want to get a builder's license and get into more of the fun stuff like bathroom and kitchen remodels, custom home builds, patios and decks, etc.

One way I have thought of bidding these bigger jobs is to add up Materials + Equipment (if any rentals needed) + disposal + labor (if I hire someone else) + profit (which I have considered basically to be my own labor). To figure out how much labor and profit to charge, I estimate the time it would take and multiply that by the hourly rates for my labor and myself, and add it all up and present it to the homeowner. I lost bad on this once because I was repairing rotting eves and the overhang was two feet long. I had to move my ladder so much I think I was moving it more than I was working on the house. There is too much risk in bidding this way (at least while I'm riding the learning curve) because there is so much that I can miss in doing the bid and I'll get into it and find out I charged 1/5 what I would have needed to charge to make a living wage.


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## RossDesignBuild (Mar 29, 2016)

More money my friend. Mark up every thing including your labor and your laborers labor and then figure profit. You might not have much overhead but if your bidding bigger jobs youre probably competing against someone who does.


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## heavy_d (Dec 4, 2012)

It's quite obvious to me the guy is using you. He needs you more than you need him it sounds like.


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

A 4 x 8 sheet of sheetrock costs 31 cents per foot. How much do the mud and fasteners cost? Sounds to me like youre making .1 per square foot. Hang tape and texture 10 sheets for 32$?


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## csmith1281 (Apr 28, 2016)

csmith1281 said:


> Am I right that that range of numbers exists? And if so, I want to know how to find that number...?


I talked to a guy at a drywall supply warehouse today and he said the big homebuilders that build 50-100 houses per month are paying $0.73/sqft for drywall and if it's a basement they try to get $1.00. 

So I'm a little bit confused about what game I'm in. I'm clearly not a big drywall subcontractor with multiple jobs going on at once where I just pay my guys 10-12/hr and make my money from several jobs that all make a small profit. There's no way in hell I could make a living getting paid $0.73/ft minus materials. But that's the game I've been playing for the past couple months--and losing big. What does a guy have to do to get out of the drywall-as-a-commodity market and into the "get-paid-what-you're-worth and whatever the market will bear" market? 

Also, what's everyone's take on the following news i got from the drywall supplier: 

He says that labor prices fell drastically in the crash of 08 and since the market is coming back the big builders have refused to pay higher labor prices because they are making big margins. I tend to believe that this is a market condition that will correct itself in time.


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## RossDesignBuild (Mar 29, 2016)

Are you talking about hung and finished or just hung?


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## csmith1281 (Apr 28, 2016)

RossDesignBuild said:


> Are you talking about hung and finished or just hung?


Hung and finished.


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## AGullion (Apr 19, 2015)

Smith, I have your answer 
If you want out of the rat race, but I'm going to tell you, it takes a lot of effort . Here's what I did:

First, learn everything you can on how to do your trade better, faster and cleaner than anyone.

Know every technical detail you can imagine, know how gypsum is sourced, processed and made into drywall. 

Then keep learning .


Next , go out and sell to people everything you do different, technically better, than the other guys. If you keep drywall 1/2 inch off the wall, show prospects why. Explain a level 3 finish , a 4 , a 5.

Vacuum out walls, seal around pipes, anything to set yourself apart.

Do insanely good work. Take care of everything . Importantly, take time during the job to show the client your attention to detail.

Next, raise your prices , then take the profit, and invest it in better equipment, zipwalls, dust containment , vacuums, tarps, you name it. 

At this point people will just start asking when can you start. Keep doing it. Build a legendary reputation . 



The clients you want will find you, and most of them will be remodeling, not new construction.

Will this happen overnight ? No, a good overnight success takes about 10 years.

But any honorable way you have to do it, don't wrestle with a pig ..you can't win, you get filthy and the pig loves it.

I wish you the best, and I'm not trying to sound snotty, and i realize drywall is a hard trade to differentiate yourself as its price shopped heavily .


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## RossDesignBuild (Mar 29, 2016)

Are you taping and jointing or skim coating? After labor and materials on say a 1000 sq ft 32 sheet job your left with maybe $250 dollars for yourself. I pay much more than that here in new England maybe things are different here than there.


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## RossDesignBuild (Mar 29, 2016)

Well I shouldn't say "much" more it's not that far off. Drywall is a tough business I would stay away from it unless youre able to blow out houses in a day and have another one lined up the next.


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## AGullion (Apr 19, 2015)

Ross has a point . 

Here's another take on it -

Small jobs, repairs and service work...a sharp, organized drywall guy could pull down some good money, and name his price, if he did that , hustled and knocked them out efficiently.


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## csmith1281 (Apr 28, 2016)

AGullion said:


> The clients you want will find you, and most of them will be remodeling, not new construction.


I'm really starting to see that part of it. I can't make money in the assembly line approach to the trade. By working directly with the homeowners I cut out the middle men, and I can sell myself as high end/premium to people who will actually want that. 

This post is AWESOME! Thanks. I'm going to be doing some research.


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## AGullion (Apr 19, 2015)

Exactly.


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## Creter (Oct 13, 2009)

csmith1281 said:


> I'm really starting to see that part of it. I can't make money in the assembly line approach to the trade. By working directly with the homeowners I cut out the middle men, and I can sell myself as high end/premium to people who will actually want that.
> 
> This post is AWESOME! Thanks. I'm going to be doing some research.


Here's another thing to put into the pot - Showing up is half the battle.

If you show up when you say you will, do what you say you will do and complete the project within the time frame you will be golden in the eyes of a remodeling general contractor.

(At least in my eyes you would)

There is something about drywall installation that gets the homeowners all giddy during a remodeling project. It's like there is a full moon out day and night during the drywall phase.

Most of it being from we're going from the ugly rough in stuff they care nothing about to putting the room back together to where they are used to seeing houses.

(seeing wood framing, wires and plumbing is second nature to us)

So my point is that if during your part of it - 

if you would come in exactly when you say you will. 

Work during normal business hours - staying late is ok if that is communicated before to the general so he can advise the homeowner - but starting late is NOT ok unless the home is vacant and you had that agreement with the contractor.

And have the job manned from the start date to completion every day - even if it just one guy working on the finishing

You will be golden.

Why because you will make the general's life easier for the duration of the project. If the drywaller hangs out the general to where he has to do a lot of covering up or explaining what why and the other to the homeowner about the whereabouts of the drywall contractor it immediately loses trust in the homeowner's eyes with the general.

After the **** bag drywaller finally finishes the job and of course has his little grubby hand out to be paid, the rest of the journey for the general is miserable.

Accountability - have that no matter what with a clear and concise schedule and you will awesome.

Last tip - when speaking with whomever that is in charge of the scheduling the job. When you speak with that person don't get caught telling them what you think they want to hear. You will end up being very busy and have a tight schedule running non stop. If you really think in your mind that you will be there Tuesday - tell them Friday.

If you can make it sooner - everybody is happy because the job is basically hanging on the drywall phase. If you end up needing a little extra time on the previous project and end up showing on Friday everybody is still happy!

Good luck!

:thumbsup:


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## AGullion (Apr 19, 2015)

Every sub on earth needs that posted on their dash.


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## csmith1281 (Apr 28, 2016)

Creter said:


> Here's another thing to put into the pot - Showing up is half the battle.
> 
> If you show up when you say you will, do what you say you will do and complete the project within the time frame you will be golden in the eyes of a remodeling general contractor.
> 
> ...


It's good to hear you say all this about just behaving like a business person who wants to do a good job--about showing up on time and working during normal business hours and doing what you say you are going to do. Dick is awful about changing plans at the last minute and saying "this business is very fluid. Plans change." His plans have changed so much that my paydays have gotten farther and farther away as he uses me to put out fires all over the place without regard to the fact that I am NOT HIS EMPLOYEE and don't get paid hourly. I finally told him to go shove it a few days ago and informed him that I would be working 8 to 4 from now on--take it or leave it and I would be working on one job site until it was done and not starting any new jobs or helping him on any other job sites. If he wants to have 3 jobs going with two and a half guys and spend his mornings doing "office work" until 10 am, that's his deal. I'm not going to run my business like that anymore. 

Thanks so much for confirming that what I thought was important really is important.


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## Jay hole (Nov 12, 2013)

Another red flag is when they say they will buy the materials, I'd say 80% again are not good customers.

Also I believe there is a difference between customers and clients. Customers are bottom feeders and clients are people you do repeat work for. I also believe in building a strong relationship with clients. Take your time with them and listen to them, even if there not talking about the work they want, find a common interest with them and BS with them get them to feel comfortable around you.


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## AGullion (Apr 19, 2015)

Jay is right. Also , learn to identify ECONOMY OF MOTION. this means they can decide, write a check, and get going . People that don't have that trait will wear you out.

Here are a few others:

1. The job is geographically inconvenient.

2 . They act angry, rude or dismissive

3. You don't like them

4. Your gut tells you it's bad 

5. They wear you out on decisions and details 

6. You can't understand what they want you to do

7. It's not a job you typically do well.

8. A quick look at the numbers tells you you won't make money 

The list goes on, and there are exceptions too. Reading people well comes with experience also.

All the best 
Andy
.


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## AGullion (Apr 19, 2015)

If you will commit to charging more, doing incredible work, being extremely clean , and giving awesome service, you will build a clientele that will wait for you , and pay you what you need.

It took me a while , but today I drive beautiful F -250, have a cabinet shop, 5 trailers , 12 employees, and make a great living . At the same time, I flirted with bankruptcy in 2011 and have made tons of mistakes along the way, and still make mistakes and have things challenge us. 

That's life really. It's not about being big, it's about being satisfied .


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## heavy_d (Dec 4, 2012)

Great posts by everybody so far. Very helpful to not only the new guys but everyone who has skin in the game.

I liked the economy of motion comment. This is a great way to determine if a customer is a pita. Just ask yourself - is this person wasting my time? Do I get the feeling they will waste my time? I have a family member who I love very much but she is the absolutely worst customer ever. Big time waster.


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## AGullion (Apr 19, 2015)

There's one...friends, family , social acquaintances...tough territory.


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## Jay hole (Nov 12, 2013)

AGullion said:


> There's one...friends, family , social acquaintances...tough territory.



For them you either charge double or do it for free!!!


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## FrankSmith (Feb 21, 2013)

> What kind of homework assignments can I give them? What kind of information would I want them to e-mail me?


More then likely it will be pictures or product info. It doesn't really matter. It could be to start a conversation with a HOA and get back to me. Just something to get them further involved with your business and open up another line of communication. For people who I will be sending a proposal to that day, I don't really want them to do a "homework assignment" I will ask them to send me a blank email so that when I send them a proposal I know it is getting to them. Most people can do that while you are standing there with them. 




> Also, aren't you worried they will take your proposal and show it to another contractor who will try to undercut your price and take the bid you worked hard on and copy it so they don't have to come up with their own stuff?


Not at all. For a few reasons. 

1- I just don't care. I try to identify the kind of person who would hand my proposal to someone else to try to get their price down before bidding and decline. If I happen to miss the clues and they pull this move, I feel lucky to not be the contractor stuck with them. 

2- It really never happens. I have been told many times that I am not the only bidder. I make a point to bid higher when that happens. I take it that they are telling me that to try to nudge me towards a lower price. I resist by bidding higher. They should not be reworded for bad behavior. Having said that, I have never had a customer tell m e another bidders price or hand me there proposal. I am sure it has happened, but its nothing to worry about

3- Most importantly. Stop thinking about people who are shopping based on price. Most customers do not hire the lowest bidder. If you are stuck in a rut where you are usually the lowest bidder, it might be hard to understand. This means you primarily deal with people who are hiring based on price. Most people want a job done that will last and look great. They want the process to go smooth. That requires dealing with someone they like who is responsive and does what they say they will. If you are meet these needs and have people speaking well about you, people will WANT YOU. That means they will pay you your price because they know you will do the job well. People are terrified of having someone come do a bad job that they will have to keep fixing and possible redoing. This is why the low bidder is often avoided.


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## FrankSmith (Feb 21, 2013)

csmith1281 said:


> What does a bad job look like? I see with the shower bid I was talking about earlier (gawrsh, I've learned so much just in a couple weeks in this forum--thanks guys!) why that would have been a bad job--she never called me back after I said I wouldn't come down on my price. But what can I look for when I meet with the client and do the bid that will tell me they are probably not good to work for?


This is where asking them to do things comes in. A good customer respects you and your time. If you ask them to call tomorrow they will. If you ask them to email they will. The ones who don't do these things are either not serious or don't respect your time. The ones who don't respect your time may still hire you but you won't make money.


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## aptpupil (Jun 12, 2010)

I'm popular on yelp and one way I weed out the tire kickers is to give them homework: "can you take a picture of the thing you want fixed" is the most common for me. The people who do that are genuine, the people who don't just want a number.


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## AGullion (Apr 19, 2015)

Frank is dead right . It's also obvious he knows exactly what he is doing , and has developed a business model that keeps him where he wants to be .

I'm going to resay something Frank said, but I'm going to word it a little stronger ...

If you want to be the the cheapest guy out there , and cater to people who are looking for that ...here is what you need to realize .

1. People that scream lower price still demand high quality. It's the personality type.

2. You will always work harder, have less and be more likely to fail. Almost sure to.

3. People that can't part with their funds are very difficult to deal with . You are choosing the absolute worst market segment .

That just an adult conversation.

Now I'm going to take it a little further ...

You may be new to the game , and simply not aware of what's really going on. I say that , because I was too. Had no clue a bathroom remodel could pay 30-40,000 dollars .Wanted to stay busy so bad , I was appalled at the thought of raising my prices .

Bottom line is this, and it may have taken me too long to figure out how to make good money, but what I have learned is things go smoother when their is good profit in the job, and everything is more fun .

This work is dangerous, fraught with liability and challenges , and takes really being on your game to succeed. Succeed anyway, and get paid well for it. 

Once they get out on their own, most people still relate their income to some kind of hourly wage they made before ...thinking if they made $15 an hour at the cabinet shop then $25 an hour is just killing it, and find out eventually it doesn't work . 

It cost to be in business, and cost about 10 % more , according to Bob Tasca, to operate first class. It's a bargain.


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## AGullion (Apr 19, 2015)

I will say this though , Smith is aware some thing is wrong , and that things aren't all they could be....and that is really good.

That means he's looking for a better way, and that is where you start.


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## csmith1281 (Apr 28, 2016)

AGullion said:


> I will say this though , Smith is aware some thing is wrong , and that things aren't all they could be....and that is really good.
> 
> That means he's looking for a better way, and that is where you start.


Yes, I am aware something is wrong because I am in dire straits with every single bill I am responsible for past due and about to be cut off. THANK GOD my wife made $1400 this month in affiliate sales commissions or I might be thinking of doing something really stupid...prostitution, suicide, bank robbery...I'm off the hook for another month. 

But now I feel like it's even worse. I finally bought Markup and Profit this morning and I'm in chapter 2. I just did the math and I have to sell, build, and collect $391,400 to sustain my lifestyle. It goes something like this: 

Family income needs after taxes, tithing, savings, and a miscellaneous buffer of 10% (we have always done tithing and savings before I read this chapter so I will definitely be doing that still): 3582/month or 42,984/yr. I have seven kids but i don't have a car payment. My health insurance is only $212/month through the National Guard. I allotted $1000/month for housing because I live in a fixer upper mobile home and that covers my mortgage plus what I would like to spend on materials in a month to do improvements. I can't get it any lower than that--really. I don't drink, smoke, or gamble. I don't own any motorcycles, boats, ATVs, or anything else. It's me, my wife, 7 kids, 2 paid-for vehicles, and my work tools. I'm not even paying my mortgage right now because I don't have the money. My mother is the lien holder on our home and she won't foreclose on me. Thank God for the little things, right? 

Anyway--

Annual after-deductions income needed: $36,744. Add back deductions of tithing, savings, miscellaneous, and 35% taxes (what Mike Stone says would be the max in the range of possible taxes), that comes to $80,836 gross salary. Subtract my annualized laborer salary @ $16/hr of $33,280, Sales commissions paid to myself @ $10,000, and my National Guard annual salary of $6,244, and I get $31,312. Divide that by .08 profit and get 391,400.

(I had a hard time settling on a number for the salesman commission because the gross volume target is an inverse function of the commission salary I deduct from my gross salary needs and I'm not a mathematician--so I figured keeping it lower would project my sales volume target higher and give me a good buffer if I don't meet that goal.)

I arrived at a gross sales goal of $391,400 and immediately got depressed. I've never even heard of $391,400, let alone seen that much money or known anyone that had that much. 

How in the world am I going to multiply my sales by 10 in time to not fail?


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## AGullion (Apr 19, 2015)

Take a deep breath , talk to anyone you owe money, and take it one day at a time .

You can win out here. ..and nothing teaches like pain.

You have your life ahead of you, so don't do anything crazy man .


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

Youre not going to do 400k by yourself. Especially handymanning.

Lets try it another way. You want 80k per year. Thats about 1600 a week net. Totally doable as a one man show. might be hard as a handyman but doable as a specialty contractor. Tile, floors, paint, carpet, sheetrock etc... if youre doing the work yourself that would be about 2500 a week in labor sales not including material. You should be attempting to sell 12 to 15k per month. Or about 200k per annum. 

You need to understand your market and honestly assess your strengths and weaknesses. 
Handyman is tough because there is so much waste. Always a different tool kit. Lots of leftover parts, materials, trips to the store. When you specialize waste is cut by I would say 60 80 percent. For instance, I can by sandpaper in bulk for six months business at a time. No trips to the store its just delivered. I buy at a discount and I know I will use every bit of it as long as I stay in business.

Last thought. Ask god for a loan. You should give yourself a 36 month break from tithing and build your business. God owns it all anyway; no matter what you do he'll still get his due in the end anyway.


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## CCCo. (Jul 19, 2009)

I think you've done some math wrong there :whistling
Better sharpen your pencil and go at it again :laughing:

-


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## Jaws (Dec 20, 2010)

A lot of success in sales and contracting comes from attitude, imo. At least if the skills are there to begin with. 

Don't look at it as OMG how am I going to do it??? Look at it like I should have my minimum covered by June, no problem. Make a plan, network, get in front of a lot of people, do great work and go above and beyond. Be prepared to work your ass off, go way above and beyond and not be home much for a while. Save everything you don't need for the first few years. 

Always be networking.


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## gbruzze1 (Dec 17, 2008)

Here's my one tip...

You're never gonna hit that goal by charging customers $25/hour. I know it varies by area, but you can come around here as a carpenter and get $25/hour easily if you know what you're doing, working for someone else. You need to at least triple your billable rate. The fact that a job came down to you and some Mexican at Home Depot should be a huge sign that there is something very wrong with your business model. 

Good luck, please keep us posted. 

And seven kids?!?!? My god man, budget for a few rubbers 

Sent from my iPhone using Tapatalk


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## aptpupil (Jun 12, 2010)

Where are you located?
Being a handyman is about knowing what to accept and reject, being very organized, and doing piece work (avoid hourly once you know how long things typically take... May take you a couple years).
In the right market, six figures is very doable working about 40-50 hours a week.
Hopefully a couple of those kids are old enough to help a bit cleaning the truck, shop, jobsite, doing prep work, hauling things, etc.
You did the math wrong because profit isn't the only thing that comes to you... You also get a wage. Profit goes back into the business.


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## TxElectrician (May 21, 2008)

Metro M & L said:


> Last thought. Ask god for a loan. You should give yourself a 36 month break from tithing and build your business. God owns it all anyway; no matter what you do he'll still get his due in the end anyway.


IMHO this is the worst advice ever given on this site. To keep it from being kicked to PR, I'll leave it at that.


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## Jaws (Dec 20, 2010)

Making subcontractor connections in networking will help you bolster your sales revenue. You need some capital though, to pay subs and suppliers in case a draw is late for any number of reasons. 

Using good subs and doing what you personally do best, say carpentry, leaving yourself time to make more sales and be a better job/ customer service manager will allow you to do more volume while producing great work, and providing the service that will make your reputation sell more work through refferals. 

Provided you have the experience to handle the projects that need subs.


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## FrankSmith (Feb 21, 2013)

csmith1281 said:


> Anyway--
> 
> Annual after-deductions income needed: $36,744. Add back deductions of tithing, savings, miscellaneous, and 35% taxes (what Mike Stone says would be the max in the range of possible taxes), that comes to $80,836 gross salary. Subtract my annualized laborer salary @ $16/hr of $33,280, Sales commissions paid to myself @ $10,000, and my National Guard annual salary of $6,244, and I get $31,312. Divide that by .08 profit and get 391,400.


I have not read the book so forgive me. My take is this. Your profit should not be to pay yourself. It is the money the business makes after all costs are covered. That includes paying yourself. But if I am wrong and the book tells you otherwise I have another thought. What if you increase your hourly rate you pay yourself for labor to $35. Run the formula with a proper hourly rate for labor and you no longer have to steal money from profit and overhead to live off of. You can cover your income as a job cost. Based on the paragraph I quoted this will bring your volume goal way down. If all you want to do is make 80k a year all you have to do is stay busy in the field all year paying yourself 40 an hour. If you keep your cost of doing business to 20k a year, your only other expense is material and subs. If you are doing primarily handy man work that could be a low number. But lets say its 60k a year. We are only talking about 160k a year of volume to be able to make 80k a year.


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## gbruzze1 (Dec 17, 2008)

Side note...for owner/operators, do you pay yourself a salary to do the field work and also a salary as the owner? So your fixed costs would be say salary to yourself of $1,000/week as carpenter, and then say $1,500/week as the owner. Would you adjust your margins doing it this way or another?


Gary


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## Driftweed (Nov 7, 2012)

Well, if you need to do 400,000 in sales to make $40,000 salary, just stop right now.

I don't know what nonsense your reading, but burn that book.

I did $80,000 last year in labor only sales. Of that I kept 28 for my salary, the rest going to subs/overhead

I pay $80/month liability,

$150/month workers comp for myself

Budget $500/month for advertising

I can live comfortable at $30k a year salary here.

So, how the hell did I almost meet my 30,000/year salary, pay all those business bills, and do it all under $100,000 in sales...


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## BamBamm5144 (Jul 12, 2008)

gbruzze1 said:


> Side note...for owner/operators, do you pay yourself a salary to do the field work and also a salary as the owner? So your fixed costs would be say salary to yourself of $1,000/week as carpenter, and then say $1,500/week as the owner. Would you adjust your margins doing it this way or another?
> 
> 
> Gary


For me, since I work on the job physically now, I pay myself a modest hourly wage ($20 hour). I also pay myself a modest sales commission for selling the job. I also take a small salary and put that in a completely different account.

Margins should always stay the same. I hear a lot of guys say "I sell the job so I save the homeowner money by not paying a sales guy". We all know that's untrue. Pay yourself separate for everything you do. If you see your bank account getting smaller, you aren't charging enough and will never be able to expand your business.


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

TxElectrician said:


> IMHO this is the worst advice ever given on this site. To keep it from being kicked to PR, I'll leave it at that.


Didn't think that would be popular. 

I respect your principles. Everyone has different priorties.


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## FrankSmith (Feb 21, 2013)

Driftweed said:


> Well, if you need to do 400,000 in sales to make $40,000 salary, just stop right now.
> 
> I don't know what nonsense your reading, but burn that book.
> 
> ...


You need a new business plan as well. You may be able to get by on 30k, but not well. If you work as hard as you do, you should have a decent house and some money to have fun like the rest of us. I would be willing to bet based on the amount you work and those numbers that you are charging less then half of what you should be.


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## Driftweed (Nov 7, 2012)

FrankSmith said:


> You need a new business plan as well. You may be able to get by on 30k, but not well. If you work as hard as you do, you should have a decent house and some money to have fun like the rest of us. I would be willing to bet based on the amount you work and those numbers that you are charging less then half of what you should be.


I am in year 4 of rental painting, growing 50% year over year. Not only do I live comfortable, I have started a 2nd residential bathtub resurfacing business this year. And I am doing good all this pay as you go, the hardest way possible.

So something is going right at these numbers. In may I paid myself, bought a vehicle, new titan 440 sprayer, new Milwaukee drill set, etc...year 5 on the rental side will be stagnant as profits from that business will pay for the new startup. 

My business plan is working just fine. I set a goal of initial salary, and 3 years later met it. Should I wish, next year I could increase it accordingly. 

I own a house that I could flip for double at any moment, I can afford quality tools, food is on the table, all bills are paid, and I have 3 months reserves in savings. I know what I am making 2 months ahead of time and plan every penny for maximum gain. 

And I definitely didn't need to do some absurd number in sales to pull it off. 

Now, don't get me wrong, getting sales to those large numbers is a goal. But to say you have to have 400,000 in sales to pull home 40,000 in salary is just bogus.


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## FrankSmith (Feb 21, 2013)

Driftweed said:


> I am in year 4 of rental painting, growing 50% year over year. Not only do I live comfortable, I have started a 2nd residential bathtub resurfacing business this year. And I am doing good all this pay as you go, the hardest way possible.
> 
> So something is going right at these numbers. In may I paid myself, bought a vehicle, new titan 440 sprayer, new Milwaukee drill set, etc...year 5 on the rental side will be stagnant as profits from that business will pay for the new startup.
> 
> ...


If things are good in other areas that is great but 30k is a very low annual income. That is almost a third of what a union painter makes. I am not here to insult you. I just think anyone who works as hard as we all do should enjoy better then average income.


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## Driftweed (Nov 7, 2012)

FrankSmith said:


> If things are good in other areas that is great but 30k is a very low annual income. That is almost a third of what a union painter makes. I am not here to insult you. I just think anyone who works as hard as we all do should enjoy better then average income.


I fully agree, but in the first 5 years of business making ANYTHING should be considered a win.


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## AGullion (Apr 19, 2015)

It took me years to get over 40k, for a lot of reasons . I wanted to quit a lot of times.

In my opinion, Smith is overwhelmed, and trying to predict a plan based purely on these numbers isn't going to get him there.

He may need a change of perspective, and change in self image and behavior .

Not saying he's a bad guy....what I am saying is if he works hard, treats people wonderful, does really good work, and presents himself as clean,polite and caring, and starts charging what he is worth, he's going to be fine .

The key is not to quit , but to learn from what's happening , and to expand his horizons , just like he's doing by getting on here .


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## Driftweed (Nov 7, 2012)

Set small goals. Don't immediately try to go big, that will happen in due time. By setting small goals, you can feel positive sooner and THAT will change everything. It will help fight off the depression that comes with slow times and smooth out the emotional roller coaster.

Many times, my customers say I remind them of the tree house show guy. That's the kind of vibe you want your customers to pick up on.


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## AGullion (Apr 19, 2015)

That's good advice .


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## hansol04 (Feb 14, 2008)

I'm not sure how exactly you're doing your math, but it seems a bit off. Here's a really simple visual example of what you're looking at, based on the assumption that you need about $38,000 after-tax to maintain your lifestyle:

Gross revenue................$100,000
Less:
.Labourer........................(33,000)
.Other exp........................(8,000)
...................................-----------
Income b/f tax..................59,000
.Tax @ 35%.....................(20,650)
....................................----------
After-tax income.............$38,350
...................................======

So assuming you bill yourself out at $25/hr, that's 4000hrs you will need to work to hit $100k gross. This works out to 77hrs/week, and unfortunately isn't realistic if you want to maintain your sanity.

On the other hand, a $70/hr rate works out to 1428hrs/yr, or 27hrs/wk. Very do-able. I still agree with the other members here though that recommend you raise your rates closer to $100/hr or more. There's a huge difference between running a business, vs. working for wages. 

For what it's worth. 



csmith1281 said:


> ... How in the world am I going to multiply my sales by 10 in time to not fail?


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## csmith1281 (Apr 28, 2016)

aptpupil said:


> Where are you located?


Atlanta


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## csmith1281 (Apr 28, 2016)

FrankSmith said:


> I have not read the book so forgive me. My take is this. Your profit should not be to pay yourself. It is the money the business makes after all costs are covered. That includes paying yourself. But if I am wrong and the book tells you otherwise I have another thought. What if you increase your hourly rate you pay yourself for labor to $35. Run the formula with a proper hourly rate for labor and you no longer have to steal money from profit and overhead to live off of. You can cover your income as a job cost. Based on the paragraph I quoted this will bring your volume goal way down. If all you want to do is make 80k a year all you have to do is stay busy in the field all year paying yourself 40 an hour. If you keep your cost of doing business to 20k a year, your only other expense is material and subs. If you are doing primarily handy man work that could be a low number. But lets say its 60k a year. We are only talking about 160k a year of volume to be able to make 80k a year.


At one point it says profit is profit, it is not the owner's salary. Owner's salary is an overhead expense. 

But when he runs the reader through all these calculations, he says to do it like this: 

What do you need to survive? $AA,000 per year
Subtract what you will pay yourself on the job $BB,000 per year
subtract what you will pay yourself in sales commissions $CC,000 per year
That final number is what you need to make as profit, so you divide that by your desired profit percentage of .08 to determine your sales goal. So in this scenario, he is telling the reader to count a part of his take-home pay as THE profit for the business. 

But that doesn't make sense. At one point he says your salary is overhead, and in all these calculations he says your salary comes partly from profit and partly from your field work. 

This book came highly recommended from several people in this thread, and the website www.markupandprofit.com seems to be doing very well with a large following including a coaching business and a blog. I don't know what I'm missing or if these two different calculations are actually the same...it's very confusing. Does anyone who has read the book have any input?


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## Driftweed (Nov 7, 2012)

You are an employee of your business. Never treat yourself as owner. It makes calculations easier and clearer.

Sit 20% off ALL checks into savings. 

Don't worry about taxes, get a good accountant who bring your tax liability as close to zero as possible. Why pay taxes unnecessarily? Deductions are king in this arena. make the tax system work for you, instead of you working for it.


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## csmith1281 (Apr 28, 2016)

Driftweed said:


> You are an employee of your business. Never treat yourself as owner. It makes calculations easier and clearer.
> 
> Sit 20% off ALL checks into savings.
> 
> Don't worry about taxes, get a good accountant who bring your tax liability as close to zero as possible. Why pay taxes unnecessarily? Deductions are king in this arena. make the tax system work for you, instead of you working for it.


How does that work? I know about deductions and reducing my tax liability and all, but the only way to have zero tax liability with an LLC is if I don't put anything in the bank.


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## Jaws (Dec 20, 2010)

Been a while since I read the book, so I cant remember what his methods were on everything. 

The main thing is to find a way I charge what you need for your salary, pay ALL of you overhead, and make a profit to build your business and later invest in building wealth. I would start by concentrating on making an overhead list of everything you have to pay to be in business. 

Personally, I have always had an annual salary, which I can live comfortably with. I fit my lifestyle into the salary, not the other way around. It covers everything including my daughters school, christmas, small vacation, a little fishing and hunting, school clothes ect.... but it requires budgeting for sure. 

I don't pay myself any bonuses throughout the year, other than three instances ( had to do with high profit jobs that required me to work 16 or 17 hours a day and a lot of travel). 

We only take distributions in December. For me it makes it easier to stay diciplined. I have had situations where my operating capital was twice my annual salary and I was completely broke in personal accounts because of medical bills and buying a rent house. But we pulled it off. Don't get me wrong if the lights were going to get turned off I would take a distribution, but it's important to me that I live on that salary. If not before long I'd be needing those distributions. Makes it easier knowing the company has money in it than just plain being broke. The companies money is the companies though, for us. Just something to think on. 

I put salary under overhead and job costs. Project management is a line item on my project cost sheets, and when we are busy it more than pays my salary. Profit is what's left over after all overhead and salaries, and some of that, some years most of that, stays in the company as part of the growth plan. 

I personally don't charge a sales commision, although I do charge for proposals. I don't know any GCs who charge a sale commision, so it never occurred to me. If I did it would stay in the company until December. The proposal money stays in the company. 

You just need to find what works for you. I use a sliding scale mark up for all my projects, which he doesn't recommend in the book, and have been profitable every year. I have a loaded labor rate and mark up all job costs from porta potty to inhouse labor, subs, ect.... with a builder fee. That wouldn't work for everyone, but does for me. Marking up 50% as suggested would not get me many large remodels or custom homes, and I make more than 50% on some smaller jobs. The book was very good at showing me all the things I needed to consider when doing all business plan though, highly recommend to new contractors and have read it several times.


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## AGullion (Apr 19, 2015)

That's easy with a good accountant, and can be done ethically.

My advice is don't worry about all the numbers and details ...

Worry about doing each job well and profitably and paying bills. I was nearly $200,000 down once .


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## Driftweed (Nov 7, 2012)

Although you should pay taxes quarterly, your first few years would be best to do it annually. Your quarterly taxes are based on last year's performance anyway.


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## csmith1281 (Apr 28, 2016)

Alright...I'm to the point where I know I'm either going to quit or take what I'm learning and improve my business, raise prices, operate profitably, and one day look back at all this and laugh. I hope it's going to be the latter. 

The one sticking point for me at this moment is that I don't have any work lined up--which could be a good thing because I am not committed to doing any work at underbid prices. So if I'm going to keep trying, I need to line up some work ASAP. I have gotten a lot of work off Craigslist and Facebook, but I think those are the kinds of customers I don't want to work for anymore because most people there are just bottom feeders/price shoppers. 

What are some effective, inexpensive ways to advertise?


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## csmith1281 (Apr 28, 2016)

csmith1281 said:


> At one point he says your salary is overhead, and in all these calculations he says your salary comes partly from profit and partly from your field work.


I see why I was confused...I think. He says to 

1: project gross sales based on desired salary. Then you use a chart to figure out what your overhead should be based on the gross sales number you found--and he gives a range. 

2: Project overhead based on the range in the chart. 

3: Choose a profit goal (which, in his examples, happens to be the same 8% goal he used to figure your desired salary--so it was the same number--and it made it seem like the salary was both overhead and profit. But I know now it's not both--salary is overhead. Hourly wages paid to yourself are job costs. And profit is profit--it's what the company uses to expand.)


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## AGullion (Apr 19, 2015)

Man it's great to see the big picture , and have an overall plan.

But, it will never be realized unless you can do the small things that comprise it :

Can you :

Sell jobs so that they pay you well ?

Cash flow it?

Plan it where you can execute it smoothly?

Handle whatever you run into ?

Service it where it knocks their socks off?

Collect it?

Generate referrals from it or attract them to hire you to do more?

I'm talking about the day to day reality of making it work, getting it done.


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## mtb (Oct 11, 2012)

Metro M & L said:


> Didn't think that would be popular.
> 
> 
> 
> I respect your principles. Everyone has different priorities.




At the risk of binging down the wrath of god-ly people... I consider myself a religious person, I believe in God and try to respect all things as His property, which we are given very temporary care of. 

But at the point where you are unable to pay your mortgage and are struggling to care for your family, I don't think He would complain that you aren't donating enough to your church. 

I believe churches and communities should support their members when in need. That is why we live in communities to begin with. We give when we can and receive support when we need it. Being humble enough to accept help is certainly as important a lesson as being selfless enough to give it. End of rant...

All the business advice in this thread is excellent, I'm still working through it.

I found "profit and markup" to be very helpful to get a handle on basic accounting principles.


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## csmith1281 (Apr 28, 2016)

Customer question. I applied some knockdown texture to a ceiling today. I called the homeowner to come over to the house to look at it as I was knocking it all down--the sprayer was still set up. He said "everything looks good. At the end of the day, she's the one that has to like it." referring to his wife, of course. He texts me late tonight asking if I was going to go over the ceiling some more. There was one spot he saw in the middle of the ceiling that needed some more texture he thought. I told him I was planning to return the sprayer in the morning and that's why I had him come look at the ceiling. I told him it would be another $100 for the sprayer rental for another day ($60 at Home Depot PLUS my markup of 1.58, which I have figured recently, rounded up) and I would charge hourly for the extra time. I also told him that "Mediterranean knockdown" as his wife called it when they requested it is not supposed to be 100% uniform--it's supposed to be random. And that there were some flat spots where the texture got smoothed out because of bows in the ceiling sheetrock (I inherited this job from the homeowner--he was trying to do it himself and got sick of it and hired me--so there is a lot of mud in some places, which could be causing the bow-like effect in the topography of the ceiling). 

So...feedback on whether I did/said the right thing and what I can possibly say to him in future conversations tomorrow? 

Then I asked him if we could talk about it in the morning because I was putting my kids to bed at 9:06 pm as he was texting me. 

They offered to go buy the extra mud and go pick up the sprayer for me--they're always offering to buy materials. They are doing a lot of stuff in their house themselves and they both have family who are in the construction business--so as I'm getting educated here and by reading Markup and Profit, I just see and hear, "yadda yadda yadda...this is what I want you to do because I want to save money," and I'm wishing I had had another job to take on so I could have had more room to negotiate with them. They're nice people and all, but they are bottom feeders.


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## LI-Remodeler (Feb 3, 2015)

Take my word for it and this is coming from a guy who can write a book on how to lose money in business. 

Throw all those books away because they are making you think too hard. Figuring out profit margins, net, etc etc.. Much too complicated and just confuses things.


Want to make more? then charge more. 

I didn't realize how easy it was to really start making big money until I started to NOT TO BE AFRAID to charge a LOT OF MONEY for what I do. Put your pride aside because that will get in your way of making real money. 

You're not going to get a lot of jobs from the average consumer, but you don't want them because they can't afford you anymore.


but if you want to be the average schmuck contractor afraid you're going to be too high and lose the job to the other "guy" then go on being a poor working stiff just making the bills.


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## AGullion (Apr 19, 2015)

Yes, you handled it ok.

I ll tell anyone , if you think for a minute that some perfect formula of math is going to solve all the problems , it won't ..termites , delays , changes don't do math.

What you will find , is most remodel jobs cost you about 20% more than your calculations ...that's not a rule , and some go better , others worse.

This is why contractors fail more than any business, aside from restaurants .

You have to plan well, start early, work hard and charge and collect....and do it over and over .


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## Philament (Dec 9, 2014)

AGullion said:


> What you will find , is most remodel jobs cost you about 20% more than your calculations ...that's not a rule , and some go better , others worse.


This.
I tell every customer of sizable renovations at the estimation stage: 

"This is my estimate for the work we've talked about, but I have never completed a renovation of this scale that came in at the quoted number. On average, renovations this size end up being 30% more than the initial quote. It's not because we're bad at our job, contractors get a bad reputation for not being able to estimate well, but the truth is that 15% of that overage is from the customer adding "while you're here" items and 15% is from problems found during the renovation. We can't quote what we can't see. If this is right at your budgeted limit, I do not suggest going forward. 

This isn't to scare you, you might be might the first customer I have who comes in on target, but I would rather tell you up front how this has went in the past. I'd rather delay this project until you have sufficient funds if this is really tight rather than rush in hastily because neither of us want to be in a position where you become over leveraged during the renovation. "

It never fails, every customer will say at the start that they are going to exercise self restraint and be the one that doesn't change or add anything. First day on site: "We were thinking that since you're opening that wall there, maybe we could add another outlet and change this fixture, and ...."


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## AGullion (Apr 19, 2015)

Beautifully said . it's usually self inflicted.


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## gbruzze1 (Dec 17, 2008)

Can't believe how much I've learned since I started reading more of the business related threads and less of the trade related threads


Gary


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## AGullion (Apr 19, 2015)

Here is a huge tip . Take a few minutes during your jobs to involve clients , show them why or how you are doing something, or what is special about how you do it .

It will foster respect and appreciation for what you do.

It's also a good chance to show them why something may be unfinished, and stop them from getting critical.


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## CCCo. (Jul 19, 2009)

AGullion said:


> Here is a huge tip . Take a few minutes during your jobs to involve clients , show them why or how you are doing something, or what is special about how you do it .
> 
> It will foster respect and appreciation for what you do.
> 
> It's also a good chance to show them why something may be unfinished, and stop them from getting critical.


Always, :thumbsup:


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## csmith1281 (Apr 28, 2016)

Dick is at it again.

Let me try to make a long story short with relevant details. 

The drywall job I mentioned above where he is trying to save money after I installed extra boards that didn't make it into our original measurements for the job--now this is all according to him, and I don't have any way of independently verifying his stories until I start talking to the homeowner and/or contacting the construction company that referred this job to him (the owner of the company--Dick's contact--is named Mark). 

I have been out several times to do touchups. The first few times were legitimate--I had a baby, Dick's terrible time management skills, etc...it all added up to make the situation difficult to work through at best and miscommunication/unnecessary pressure caused me to do less than the best work the first time through. I was there till 1130 pm one night trying to get the job done in the basement because the thing had dragged on for three weeks already (installing and finishing 85 boards--remember--Dick had two and a half guys working at three job sites!). That pissed off Mark, who the homeowners reported to that the job was not going well. The last time I went out I felt like it was a dog and pony show but I went along and felt like OK, this is finally it. There won't be anything to complain about after this. So I get a video text from Dick saying that the homeowners paid Dick for the materials but aren't happy with the job and are holding back the payment for the labor. They had a NAHB manual and cited a page that talks about drywall finishing standards and say the job doesn't meet their standards. Dick says he thought it looked just fine and they are being picky at this point. He says he thinks they may be running into financial problems and just don't want to pay right now so they're stalling. He said if their payment ends up covering more than the material costs he will give me any "overage". He paid for most of the materials--I probably paid 10% of material costs just out of convenience so I could have what I needed at the job site when I needed it. But we worked it out so that I would be paid $0.75/board minus materials and he would cut me a check for the difference. So he's saying he got a check from them for the materials only and he is meeting with them on Monday to try to get it all squared away and if that meeting didn't go well he would get Mark involved (he built the house and he came out once to inspect my job and said it needed touch up--so he's kind of in the homeowners' eyes an authority figure, and I feel like if they know Mark knows how they're acting they might back off--and Dick makes me believe he feels the same way about getting Mark involved.) 

Meanwhile Dick is asking about getting his roofing nailer back from me because he has a job to do on Monday and he has quit working for these people until they pay him for this drywall job plus some labor he has done there and says they haven't paid him for. I told him, and I quote:

"Depending on how you do the math [a reference to the fact that he's trying to change the story on how payment was calculated], you owe me between $782.54 and $1182.29. I am not discussing anything else with you until you pay me for my labor on the [HOMEOWNER'S NAME--WE'LL CALL THEM THE GOLDBERGS] drywall job. My contract is with you, not Yente Goldberg. If you are having a problem collecting from her, that is your business. You owe me for a completed job which I have you on video saying was completed satisfactorily. You can either write me a check or I'm gonna start using what recourse I have available. I also have you on video saying that you have received a partial payment from her. Legally and morally you owe me whatever she paid you up to the amount you owe me."

Any advice?


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## csmith1281 (Apr 28, 2016)

Let me put it another way--

PLEASE...ADVICE???!!!


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## jrp458 (Jun 13, 2016)

There is some great info in this thread for someone looking to get into the field. Glad I joined this site.


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## Driftweed (Nov 7, 2012)

Time to climb the food chain, and explain to the ho why you are about to lien their house.

Give a firm date for payment due, and enforce it with the lien.


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

Small claims would be another route. The problem is of course collecting the judgement.


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## csmith1281 (Apr 28, 2016)

aptpupil said:


> I'm popular on yelp


How does one get popular on Yelp?


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## Driftweed (Nov 7, 2012)

Not by paying! 

Just get reviews, and time


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## AGullion (Apr 19, 2015)

I'm with Drift on the lien...I have seen contractors lose lots of money because they didn't know how and when to file liens ....liens work very effectively if done correctly in most situations....but you have to know the laws in your state. 

You don't need to do it without just cause, but you will get attention when you do it.

Again. Know your states laws first .


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