# A big decision



## livingsoulsdie (Sep 29, 2006)

Well after a lot of thinking & a lot of people telling me I am finally starting to get the courage to go off on my own(within the next 6 to 8 months). 

But before I make any stupid mistakes I would like to have most of my cards in order. 

I have been working for a GC in-house for close to 9 years now. I started not knowing anything not even knowing how to read a tape-measure & picking up garbage to the guy to go to when you need to figure out something the guy that figures out all the materials & the guy that handles all the on-site decisions when the boss is not around (which is everyday).

I love where I work and who I work for, but the money I earn just does not seem to be enough for the effort and the knowledge that I have & put in everyday. To be honest I am scared to death but I know I can make it & I know if I do not start soon the time will just pass & pass until im working for someone else for the healthiest part of my life. 

I'm laying everything I have out on the table and would appreciate any advice to those who have been in my spot. I am looking to start a small roofing & siding business. I'm not looking to get rich quick or be the greatest thing since sliced bread. I'm doing this because I want to start a family soon. I want to be a good provider for my future kids(something I never had growing up). 

For years I have been coming on these forums taking in and learning tons of information from some of the most knowledgeable people out there about the different trades work an honestly it has been nothing short of a godsend for me.

Unfortunately as good as I am doing trades work I completely lack in business & being a business owner. 

I am only looking for practical advice maybe things that you wish you hadn't done when you started up, things of that nature. You guys don't know how much you really helped me throughout the years. Thanks for reading and taking the time to comment on my post.


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## griz (Nov 26, 2009)

After 9 years you should have a pretty good understanding of the trade stuff...:thumbsup:

It's the business end that will kick your arse.....

Do you understand and know your overhead?

Licenses & insurance in order?

50g or better in the bank?

Trade accounts established?

Line of credit established?

Tools & equipment in hand?

Competent labor pool available?

Ready to work 18 hour days?

And thats just the beginning.....


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## CarpenterSFO (Dec 12, 2012)

Griz is right about all this stuff.



griz said:


> After 9 years you should have a pretty good understanding of the trade stuff...:thumbsup:
> 
> It's the business end that will kick your arse.....


Yep.



griz said:


> Do you understand and know your overhead?


Better understand this right away, and start doing the numbers.



griz said:


> Licenses & insurance in order?


One slip and you're done for.



griz said:


> 50g or better in the bank?


Enough money to fund operations for a while, plus money to live on for a while. It helps if your S.O. makes a good living, can pay the rent, buy groceries, etc.



griz said:


> Trade accounts established?


Get out there and get accounts. Fill out their apps. Let them know you're just starting out. You might get a couple thousand at first - that will go up rapidly if you pay on time.



griz said:


> Line of credit established?


Takes a while for most folks.



griz said:


> Tools & equipment in hand?


If you need it, buy it, else don't.



griz said:


> Competent labor pool available?


You need to hire good folks when you need them, but you are NOT a charity or a social welfare organization. You have to take care of yourself before you take care of your employees. Be as lean and as mean as you need to be.



griz said:


> Ready to work 18 hour days?


Welcome to the club.



griz said:


> And thats just the beginning.....


Let us know what happens.


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## Calidecks (Nov 19, 2011)

Thing is most of us started our business not knowing the details of what it really takes to run a business. We had our trades down. I can't think of how else you can learn without just jumping in. Unless you have experience completely running someone else's company. A lot of us may have been foreman's, leads or supers. Some may of had a family member that was a contractor. The smart thing is get yourself established before you have kids. Once you have kids it's can be too risky to gamble. 

Only take on the jobs you can handle. 

Get an account with a good supply house and treat them good because they will probably be your partner for the duration of your business. The relationship I have with my Lumberyard is one of the biggest assets my company has. They bend over backwards for me and I am never late paying bills. Good luck!


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## PatChap (Jun 1, 2012)

Californiadecks said:


> Get an account with a good supply house and treat them good because they will probably be your partner for the duration of your business. The relationship I have with my Lumberyard is one of the biggest assets my company has. They bend over backwards for me and I am never late paying bills. Good luck!


But with roofing and siding don't be afraid to shop around even if you have a good relationship. My dad dealt with one dealer from 1983 until a few years ago, and once he started spreading the money around found major savings on a lot of things. Now we only go to that one supply house a few times a year for things only they stock.


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## VinylHanger (Jul 14, 2011)

The most important thing is a good accountant who knows construction and a good book keeper.

I wish I had had this advice when I started.


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## livingsoulsdie (Sep 29, 2006)

I see I have a *lot* of work to do & a lot to learn. I'm thankful for all the advice and checklist so far info I do not want to fail. I have lots of time to gain an understanding of this stuff, even if I go past my 6 to 8 months from now goal atleast I will not be going out there un-informed and just winging it.


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## CompleteW&D (May 28, 2011)

VinylHanger said:


> The most important thing is a good accountant who knows construction and a good book keeper.
> 
> I wish I had had this advice when I started.


This is absolutely CRITICAL. A good accountant will save you WAY more than you spend on them in the long run.

Some other advice that echo's what you've already been given.

1. Pay all of your taxes first.
2. Pay all of your support structure ie. Accountant, attorney, insurance, license, certifications, rent, utilities etc. next.
3. Pay your suppliers.
4. Pay your subs.
5. Pay yourself last.

Never, never, NEVER pay yourself before paying 1 - 4 above. Once you get behind on any of the above, you're pretty much screwed.


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## Imakenice (Jul 9, 2013)

If you don't have any experience estimating, this is a big one..

I learned the hard way-underestimating some of my first few jobs big time... you do the math on your profit and you suddenly get a migrane...if this does happen though- best to just get it finished, all the little details and everything- important to get a referrals and start to build a reputation.. But if you are unsure about a job, don't guess.. it is better to not have work than to be in debt just paying for materials and hired help.

Just keep in mind that if you are too low consistently your business will never get where it needs to be, and will not be able to be a self sustaining business... if you are too high for your target market, well then you will be wasting a lot of time of bids with not enough work..just takes practice/trial and error.

Also I think it is wise to be frugal starting out- If you don't need that brand new mitre saw and stand, don't buy it until it really makes sense.. Account for all your costs in bids- Caulking, painting supplies.. little stuff that is easy to overlook, but adds up.

Sometimes it is best to listen to your gut as well-If you get a certain bad feeling about a customer or job... better to just trust yourself and move on..


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## Oconomowoc (Oct 13, 2011)

CompleteW&D said:


> This is absolutely CRITICAL. A good accountant will save you WAY more than you spend on them in the long run.
> 
> Some other advice that echo's what you've already been given.
> 
> ...


I really hate to say this because you're a good guy and I always like your posts but.........

Pay yourself first! Always! It's the one common rule of wealth building that is always guaranteed to work. Of course, this requires discipline.

My Dad always taught me that no matter what happens, pay yourself first. 

Nothing about that is a bad habit, in fact, it's the best habit a business owner can develop early on in the process. Once this habit is developed a person will never be broke. From the very first job you take to the last one before retirement, always pay yourself something.

With this habit in place a business owner has a high chance of success long term. It teaches you quickly the importance of bidding. Unfortunately, people have become far too comfortable accepting the fact that bills get paid first. 

Even unprofitable companies follow this rule. In the business world even start ups with partners pay themselves first.

Employees also get paid. 

If a person works they need to get paid, even if it's small. It takes less than a month to learn how important bidding is and knowing costs when using this proven method. If your bidding a remodel and nails are bid at $100 it's no different than saying you should pay yourself $300. Treat it as a bill.

These are the habits that breed longevity.

Mike


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## Jaws (Dec 20, 2010)

Oconomowoc said:


> I really hate to say this because you're a good guy and I always like your posts but.........
> 
> Pay yourself first! Always! It's the one common rule of wealth building that is always guaranteed to work. Of course, this requires discipline.
> 
> ...


I disagree.

I always pay my debts, period. Even if I have to pay for business expenses out of my personal savings. I would sell chit before I didn't pay a debt, for personal and business reasons.


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## Jaws (Dec 20, 2010)

Oconomowoc said:


> I really hate to say this because you're a good guy and I always like your posts but.........
> 
> Pay yourself first! Always! It's the one common rule of wealth building that is always guaranteed to work. Of course, this requires discipline.
> 
> ...


I do agree you should see your salary as a bill, its just last on my priority list.

If you know how to find work and bid it properly, you should certainly be able to pay yourself well, and make a decent profit.


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## Oconomowoc (Oct 13, 2011)

Jaws said:


> I disagree.
> 
> I always pay my debts, period. Even if I have to pay for business expenses out of my personal savings. I would sell chit before I didn't pay a debt, for personal and business reasons.


Not once did I say a person shouldn't pay a bill. This is a serious issues among business owners. A payment to yourself is no different than paying a bill. Outside of construction based businesses this is a very standard practice. 

Let's look at what happens to a business when they don't write themselves a check. They limp along, sometimes for years not knowing what the heck is happening until one day the say "gee, I should charge more because I'm always broke".

Start off doing it the right way. Pay yourself right out of the gate. And if, at the end of the month, you don't have enough what happens? Do you stop paying yourself? Or do you raise prices?

You see, this is taught in every business school in the country. But for some reason inn this industry it doesn't happen, which is a shame. The ABSOLUTE key to a successful business is to follow this rule.

By following this rule you will understand the bidding process and it will help you be a business man instead of just a worker.

Also, I didn't say "salary" either. Paying yourself a salary is a different business component and a different topic entirely.

My very first plumbing job I did I took out $25 and put it in savings. Been making money ever since.

Mike


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## Jaws (Dec 20, 2010)

Oconomowoc said:


> Not once did I say a person shouldn't pay a bill. This is a serious issues among business owners. A payment to yourself is no different than paying a bill. Outside of construction based businesses this is a very standard practice.
> 
> Let's look at what happens to a business when they don't write themselves a check. They limp along, sometimes for years not knowing what the heck is happening until one day the say "gee, I should charge more because I'm always broke".
> 
> ...


I understand and comprehend your point. Although I didnt take a degree, my business*prof's made their point, as well. 

While you should definitely bid everything to pay yourself a good salary and make a profit, WHEN chit goes wrong (hopefully not often), pay everyone else first. 

Thats how you build a rep as a stand up contractor.


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## Oconomowoc (Oct 13, 2011)

Jaws said:


> I understand and comprehend your point. Although I didnt take a degree, my business*prof's made their point, as well.
> 
> While you should definitely bid everything to pay yourself a good salary and make a profit, WHEN chit goes wrong (hopefully not often), pay everyone else first.
> 
> Thats how you build a rep as a stand up contractor.


Missing my point entirely. You are worried about order, that is irrelevant. When schit goes wrong who is in better standing? They guy with a savings account? Or the guy with nothing?

Nothing trumps having money. Nothing. The only way to have it is to save it. The reason you have money is so when schit goes wrong (your words) you can deal with it. That is how you become "a stand up contractor".

There's just no possible way I could ever agree with your theory. A business owner who pays himself first thing ends up knowing his/her costs much much faster than a constructor who doesn't. There's a reason why the failure rate in this business is so high, this is one of the largest culprits.

Mike


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## Jaws (Dec 20, 2010)

Oconomowoc said:


> Missing my point entirely. You are worried about order, that is irrelevant. When schit goes wrong who is in better standing? They guy with a savings account? Or the guy with nothing?
> 
> Nothing trumps having money. Nothing. The only way to have it is to save it. The reason you have money is so when schit goes wrong (your words) you can deal with it. That is how you become "a stand up contractor".
> 
> ...


First, the  in my above was a accident. 

Second, I have money in my bank because people know I do what I say, when I say, and I pay on time and the full amount. Period.

The first few years, I had to back that up. I paid for screw ups with my money (saved as an employee, mostly, and smart business transactions) and didnt take a bi weekly check 7 times. It hurt, but I am a better builder for it.

7 missed checks sucks, but not as bad as being called a hack or a deadbeat, and I will remind my nephew and maybe a future son of that if they take this over. I have made that up MANY times over. 

When your subs and vendors know you are:

Knowledgeable and a guy who will work well past when you hands begin to bleed, to pay them, even if you cant pay yourself, your rep will flourish among the trades, and it will spread to clients. :thumbsup:

Im OLD SCHOOL, admittedly. I would rather be in the gutter than be a late payer or dead beat.


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## Jaws (Dec 20, 2010)

Oconomowoc said:


> Missing my point entirely. You are worried about order, that is irrelevant. When schit goes wrong who is in better standing? They guy with a savings account? Or the guy with nothing?
> 
> Nothing trumps having money. Nothing. The only way to have it is to save it. The reason you have money is so when schit goes wrong (your words) you can deal with it. That is how you become "a stand up contractor".
> 
> ...


The hell the order isnt relevant, Mike. 

Im a GC, everyone and everything getting paid is my responsibility.

The risk is mine, not my vendors, suppliers , subs or my employees.


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## Jaws (Dec 20, 2010)

The reason this industry sucks, is GCs pay themselves before their men, subs, suppliers and vendors.


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## ohiohomedoctor (Dec 26, 2010)

Wait, Im supposed to get paid?  and intentional


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## fast fred (Sep 26, 2008)

Jaws said:


> The reason this industry sucks, is GCs pay themselves before their men, subs, suppliers and vendors.


exactly!!!!!!!!

you cannot argue this point, end of discussion

mr occonowa (whatever) I understand your point of view and it is solid, but it is why people fail and get bad reputations, I think the best way to look at it is, you should make 1000.00 a week, but because things are just getting rolling maybe you only make 400-600 a week.


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## Oconomowoc (Oct 13, 2011)

Jaws said:


> Just like the " Golden Rule", do as you would have done to you.
> 
> When you were an employee or sub, would you be ok with not being paid on time? Ever?


Look, what on God's green earth are you talking about? I think big, not small. Of course you pay people. That was never In question.

Do what you want to do, it doesn't matter to me. Your twisting this so you don't lose face. They guy with money can easily pay his subs and his distributors. It's not complicated.


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## Jaws (Dec 20, 2010)

Oconomowoc said:


> Look, what on God's green earth are you talking about? I think big, not small. Of course you pay people. That was never In question.
> 
> Do what you want to do, it doesn't matter to me. Your twisting this so you don't lose face. They guy with money can easily pay his subs and his distributors. It's not complicated.


IM TWISTING IT? 

I don't give a chit about saving face. I know I am ugly. 

(I ) have stuck with my original post. Find a place I changed my opinion, Mike. 

If you cant find it, your full of chit, and thats disappointing.


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## griz (Nov 26, 2009)

OP got his answer.

Good Night all.....:thumbsup:


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## Jaws (Dec 20, 2010)

My first and last point, be a ****ing man and pay your bills no matter what. Its simple for those with integrity, no matter what your profession. 

Save face my azz, I can find posts I posted 3 years ago saying that.


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