1. Marketing, Marketing & Marketing
You could be the best contractor in the world. If nobody knows your in business you will not get any work. A huge mistake most businesses make is under investing in marketing. If you have zero marketing skills such as graphic/web design or a home printing shop then you better have $2,000.00 when you start your business. $1,000 to create and manage your online presence in the first year. And another $1,000.00 for business cards, car magnets, T-shirts or newspaper advertising.
2. Don’t wait till that last minute preparing your accounting system
Many contractors starting out make the mistake of juggling profit/loss number in their head for the first six months. They are so focused on the money they forget to record what happening for tax purposes. As soon as you open you business get a small file cabinets and at the very least save all your receipts in a different folder for each job and a separate folder for overhead. Print or download you checking and credit card statements at the end of each month for record keeping purposes. Also remember, if that huge job comes along, you need to charge your customers for the time you spend doing paperwork at home or hiring an accountant!
3. Under Promise & Over Deliver
In today’s competitive market it’s very easy to get caught up in the moment and promise perfection on a shoestring budget. But be realistic. Tell you customer that the color will be a close match but not exact. Or that starting a job while the plans are still in plan check may results in a price change once the plans are approved. You may not get every job but I have learned it’s better to walk away from some customers before money gets involved than waiting until your half way through and arguing constantly.
4. Save Any Extra Income
At some point in your career there will be High Highs. There will be that great month in which you earn triple what you used to earn working your old job. Do yourself a favor and hold off on the champagne and caviar. There will be months of Low Lows when nobody is calling for work and somebody ran off with your new an expensive tool sitting in your parked truck. Successful business people save their money and invest. The good and bad times never last but tough people do. Be conservative.
5. Always be studying.
Benjamin Franklin – ” An investment in knowledge pays the best interest.” So you started a business and you have arrived…or not? As your business grows so will your responsibilities and challenges. Be prepared by taking time to invest in an education. Commit yourself to reading 4 hours per week. Time is the friend of the investor and when you spend time investing in knowledge the rewards can be great. Great knowledge will allow you to exploit future opportunities. Knowledge is as important as money in the bank.
6. Keep a well stocked Truck
This is my personal pet peeve. If you claim to be a professional then you will take the time keep all the right tools and parts handy. Constant trips to home depot will slow you down and place unnecessary stress on yourself and vehicle. Also it will reassure your credentials in front of your customers that they did call they guy who knows how to get the job done. It will also earn you the respect of your fellow tradesman. Never be naive enough to think you can be a purely paper contractor. Subcontractors will always show up missing a few random pieces or forgetting about xyz and planning to come back tomorrow only to ruin your schedule.Be prepared!
7. Define Hourly Labor Rates
Have you ever felt that someone was trying to rip you off? Its not a great feeling. By creating labor hours sheet you can simply present the hourly charges or materials charges directly to the customer with all your overhead and expenses built right into the price. It will also help you estimate jobs easily. Call around to contractors who provide other trade services and ask for their hourly rates. Its is wise to charge market prices because if you ever get into a situation where you must travel out of town or become sick you will already know that you can have another contractor come and finish your work on budget.
8. Find Someone Smart To Help You
I personally have a great deal of experience writing construction proposals. However I still have someone review them before they are sent. The person doesn’t need to have construction experience but it definitely helps. Have them check your contract and emails and ask them the following; Are there spelling errors? Is this price within expectations of a consumer? Did you make any errors with a calculator when assembling your estimate? It may seems trivial but when there is a $10,000.00 mistake because you forgot an extra zero you have a whole new appreciation for third party review.
9. Save all estimating Data
It is required by law that plans and accounting records are saved. But often times you will have repeat customers and having all your old files handy will allow you to bid the job without making another trip to measure. It will also allow you to keep your pricing consistent with their expectations from previous jobs. Often times when doing a new type of work I will create an excel file with unit measurement pricing. This will make it easier to bid the next time around.
10. Don’t be to Hard on yourself and dont give up
Construction is a tough business. Most business start ups fail. Most contractors I know made every mistake possible their first year in business. The real difference between the winner and losers is whether you learn from your mistake and keep moving forward. Plan for the worst and be unwilling to accept failure. It will take few years but your blood, sweat and tears will pay off eventually.