Construction-getting into the business

[theshack]

Hi all,

A good friend and I have been strongly considering getting into the construction business, primarily doing small houses and remodel jobs-at least as a start. As of right now, both of us are in college and planning this out. Seems both of us are in four year schools for something we can't see ourselves doing several years down the road. I know it's a lot of work and the money comes hard, but for our whole working lives between the two of us we have worked for plumbers, painters, drywallers, carpenters, and an engineering internship. Now I know we don't know a lot, and working under someone would probably be the best idea to get into the business without making very bad mistakes. I also know how much time is wasted while standing around and trying to think how to do things when unsure. Both of us are very willing to go to school for "carpentry" or somthing of the the sort. One of my main questions is, is that would this be a profitable thing to go into now with the housing market on the downward slant. Neither of us are expecting the "get rich quick" solution although it would be great. More of what we are looking for is learning everything there is to learn about construction and doing the best damn job we can. The cost of getting started isn't the biggest issue, it's keeping the business going during the hard times, which may require a different part time job at times, and like I said, we are more than willing to work hard. It seems that working for yourself in a business that you own is about the most rewarding (and sometimes frustrating) occupations. I'm really interested in getting into the construction business, primarily with the idea to become self employed as soon as possible. I know many of you are in the business and see things like this from a different view point then I do right now, so I'm looking for a little wisdom on the topic. Thanks much for any input.

Mark L.

[glenn kangiser]

I've been in business for myself since 1974.  Most of it you won't learn from school although you may get the basics there.  Problem is that a vocational school is better to learn a trade from than a college most of the time.

You can learn about the ways you can get shafted easier by listening to someone who has been there than by learning it the hard way.

Our state requires 5 years verifiable experience in the trades before you can become licensed.  Before you are licensed you are limited to $500 or less contracts.  There are even ways around that.

To get into business it is as easy as saying, "I'm in business."  The trick is staying there.

To start with, study up on a bookkeeping program by Intuit called Quickbooks.  It will eliminate needing an office or a secretary.  In new business you need to cut all the expenses you can.  Forget the rented office - store front - ego trip of being in business.  Go with all the bells and whistles and you won't last a year.

I'm out of time for now - but study on that a bit and we'll talk more.

[MountainDon]

To get into business it is as easy as saying, "I'm in business."  The trick is staying there.

Very true.

Go with all the bells and whistles and you won't last a year.

That's more good advice.

Under capitalization is one of the leading causes of business failure. A good business plan is a must.

I'm of the opinion that nobody should go into any business unless they really know a lot about it. The more passionate about whatever it is the better. Working for someone else is a place to begin. That's what I did. Then when the opportunity presented itself I purchased that business.

As Glenn mentioned there is usually a period (also 5 years in NM) of time that you must work in the building trade field before you can obtain your own license. You need to check that out in your area... that's part of your business plan.

Best of luck!

I am a great believer in luck, and I find the harder I work, the more I have of it. - Thomas Jefferson

Opportunity is missed by most because it is dressed in overalls and looks like work. - Thomas Edison

When I work fourteen hours a day, seven days a week, I get lucky. - Dr. Armand Hammer

If you think you can, you can. And if you think you can't, you're right. - Henry Ford

[peter nap]

Hmmmm.  Glenn and Don gave the sunny side of the street. Let me rain on your parade before you leave school.

First, not all states are the same. I don't know what the current limits are but a few years ago, a county license would allow you to contract up to 1500.00 per contract. You split it up by writing multiple contracts.

A state class B license gave you up to 5000.00 (I think I remember that figure) no experience necessary.

Class A is another world and requires a hefty bond.

Tradesmen like Electricians and Plumbers needed some experience and a test.

It's an easy field to get into....too easy.

If you do this, first, you'd better learn to do it right, Unhappy customers are the worst advertising possible.

Second, every carpenters helper and jackleg plumber will be out there with a Class B license and cutting your prices.

Credit is unbelievably hard to get for years.

The boss is an asshole. That means that no matter how tired you are or how much you hurt or how bad you need a day off, you go to work. NO WORK< NO PAY.

The industry has more humps than a sea serpent. The market now is a good example. You have to be fast on your feet to keep busy these days....and remember, NO WORK, NO PAY.

Most of the better tradesmen didn't go to school. They went to work as teenagers mixing mud or hauling lumber. It you didn't make anyone mad and didn't have to count little or big marks on the tape, you might get to cut for the siding man or trim out the insides of closets,

After years of learning the trade, you can go out on your own but...remember, there aren't many PEGS in the world and the hard reality is still......NO WORK, NO PAY.

And those are still the brighter spots.
Insurance is hard to get and expensive, For a lot of contracts you need to be bonded. You will need helpers and in the words of Ms. Daisey..."They're like children...they take things" and if they're not stealing your tools, they're breaking them up
ou need to be a member of the BBB. Greatest extortion racket ever devised. Even then, they keep telling people to never give an advance.

Sorry, welcome to the dark side!

[MountainDon]

Thank you Peter for the big reality dose.

If you do this, first, you'd better learn to do it right, Unhappy customers are the worst advertising possible.

Second, every carpenters helper and jackleg plumber will be out there with a Class B license and cutting your prices.

Credit is unbelievably hard to get for years.

I especially liked the above quotes, agree wholeheartedly with them.

It can be fulfilling to complete a good job, have great satisfied clients, and be paid commensurately for your work. When I did playgrounds, the third was the most difficult to achieve.

Should I point out my greatest business success was in the retail photo equipment business, not the construction trades? Retail photo was difficult enough but at least every Tom, Dick & Harry wasn't trying to sell cameras and undercut us. That was before the internet, before digital photography, back when any self respecting photo hobbiest owned at least one 35 mm camera, a flash, three lenses, dozens of accessories, probably a slide projector and maybe did their own darkroom work. Maybe an 8mm movie camera as well. $$$$

I did run a small playground manufacturing business for about 5 or so years (after the camera business). Redwood and PT materials mainly, some metalwork. I got out of it partly because of the third reason above. Too many people looking at you lie you were crazy for wanting to be paid what the job was really worth.

[PEG688]

 It's an easy field to get into....too easy.

 Nature of the beast, lots  "thinks " they are carpenter's, few are.  

If you do this, first, you'd better learn to do it right, Unhappy customers are the worst advertising possible.

  Small the town bigger the problem. Big city this may not be as bad.  

Second, every carpenters helper and jackleg plumber will be out there with a Class B license and cutting your prices.

  No kidding

Credit is unbelievably hard to get for years.

  Yes that could be a issue.

The boss is an asshole. That means that no matter how tired you are or how much you hurt or how bad you need a day off, you go to work. NO WORK< NO PAY.

  Roger that and he'll be "on your back" day and night!

The industry has more humps than a sea serpent. The market now is a good example. You have to be fast on your feet to keep busy these days....and remember, NO WORK, NO PAY.

  Yup!

Most of the better tradesmen didn't go to school. They went to work as teenagers mixing mud or hauling lumber. It you didn't make anyone mad and didn't have to count little or big marks on the tape, you might get to cut for the siding man or trim out the insides of closets,

  Hey where you "lurking" way back when :-/

After years of learning the trade, you can go out on your own but...remember, [highlight]there aren't many PEGS in the world[/highlight] and the hard reality is still......NO WORK, NO PAY.

   Is this good or bad  :-/ :-?  Some how I feel like a square PEG and a round hole  

And those are still the brighter spots.

  Ya gearing up for a day with the rain blowing side ways , the wind making using a string line impossible , and MUD up to your arse , or better yet doing siding with no gutters installed , most soffit's are just wide enough for the run off to go right down the back of your neck , and ya remember NO WORK = NO PAY! Oh Peter said that.    

 
Insurance is hard to get and expensive, For a lot of contracts you need to be bonded. You will need helpers and in the words of Ms. Daisey..."They're like children...they take things" and if they're not stealing your tools, they're breaking them up


   Yes insurance is very spendy, stay away from multi family building as that insurance is VERY VERY expensive. Yes tool's  go missing , get stolen , get broken and NO ONE (generally) KNOWS ANYTHING ABOUT IT  


Sorry, welcome to the dark side!

 

 No it's the truth , some of it is just dark  

All that being said , I wouldn't be doing it if I didn't enjoy "most" of it. The pay could be better the benefits should be better , but at the end of most days , well if it's not a demo day , I have built something that will last for years. Something I can touch , feel , maybe even use , well some one will be using it anyway.

 Forget getting rich , unless you get pretty large as a business. Hiring a good lead carpenter , if you can find one , and keeping him and a crew busy will make you,  the businessman richer , than banging nails your self. So it depends on what you want to do , being the guy really doing the building or the boss finding work , bidding , yakking with clients or do you want to be a carpenter?    

[glenn kangiser]

...and if you decide to just sit back and run the show without knowing it inside out, be prepared to close shop.

I made it a policy to know enough of any job to get by and fill in no matter who didn't show or what happened.  Some of your employees will wait until they have you by the short hair then decide to hold you up.  They are not all good dependable conscientious guys like PEG.  If you can't send them packing down the road when you need to - can't get along without them, then you are screwed.  Some of them will stand you up just when you need them most.

I like to run just myself and one or two guys.  After that you need a bunch and then trouble multiplies.  I find I can make more with a couple of us than I could with 5 to 10.  It is a nitch market that I go after though.  Just the people who want to pay me what I think I'm worth or my own contract.

Here a "B" license (my class)  is a general contracting license.  You have to do at least 2 parts of the job now I think - used to be 3.  You are pretty well unlimited in construction here with a "B".  Only thing higher is an "A" general engineering contractor.  There are tons of specialty contractors- sheetrock - electric - plumbing - HVAC- grading - paving -  With a "B" I can do all of that or sub-contract it, as my circumstances and knowledge permit.  .  I also have a C-57 water well drilling license.

I have to carry $1,000,000  contractors liability -- cost 3500 to 5000 per year before I can even get one job.  They will all ask -except some of the small homeowner jobs.  I can work on small home jobs but not tract jobs with this insurance.  For tracts it goes to about $20,000 per year.  Too many people can sue.

[peter nap]

I'm not really trying to scare you off. I just wanted to give you a glimpse of what it can be like and the reality of going into an industry that's crowded.

I used PEG as an example because he's one out of every 1500 or so carpenters. He's good at it and loves the work. The other 1499 are scrambling because they just do not  have what it takes.

If you finish your education, you have something to both draw on and to fall back on. Very few of us settle in the field we were educated in, however, we draw on that knowledge to enhance what we are doing.

There are other things to consider also. In addition to being skilled at what your doing, you need to be fast. Time is money and the next job should be waiting when you finish. It's hard to be out soliciting business when your hammering nails. That means you need to have a relationship with a General Contractor or someone that will be feeding you business.

I got both of my children through college. My son was difficult. He wanted to do what I did. He had several near death experiences while I was getting him through school . As it turned out, he did follow in my footsteps, not in construction but in the computer field. He drew on what I taught him, his education and what he wanted to do. He now works for an international defense contractor and makes double what I do.

I guess my point is....think hard before making life changing decisions.

Oh...if your wondering how I know this, I am a good carpenter, not great! I'm also not in the construction business anymore and haven't been for many years. Draw your own conclusions

[desdawg]

I think statistically speaking most new businesses fail within the first three years. Many people attempt to make their hobby into a job. My advise is to study the area you wish to be located in and evaluate what type of goods or services are lacking. Then go about the business of filling that need. This applies more in a smaller community than it would in a larger city. And as has been stated you need some capital to keep you alive for a while. You won't be getting paychecks immediately. In the beginning much of what you do make will go right back into the company for additional equipment, vehicles, etc. so you can function efficiently. My door signs read "Licensed, Bonded, Insured". None of those things are inexpensive. But they set me above the crowd and make it possible for me to do work for GC's that need those protections for their own purposes. Here in AZ an unlicensed handyman can legally contract jobs up to $750 which in todays world doesn't amount to much. And splitting a job into several contracts will get you into trouble if you are discovered. Every level of government will have their hand out to get a share of what you produce as if they have done something to deserve it. You will have to be flexible and able to wear many hats. You will need to be the salesman, purchasing agent, designer in many cases, draftsman, permit runner, bookeeper, collection agent, advertising writer and the personnel department in charge of hiring and firing. Large well established organizations have people for all of those functions. You will have yourself.
One other caveat I might throw out there is this: Partnerships are one of the most difficult forms of business ownership IMO. It takes a highly self motivated, strong willed opinionated person to run a business and to find two such people who are compatable is very difficult. I won't elaborate any further than that. But it is very difficult.

[PEG688]

 

[highlight]If you finish your education, you have something to both draw on and to fall back on.[/highlight]

[highlight]
There are other things to consider also. In addition to being skilled at what your doing, you need to be fast. Time is money and the next job should be waiting when you finish. It's hard to be out soliciting business when your hammering nails.[/highlight]

[highlight]
I think statistically speaking most new businesses fail within the first three years. Many people attempt to make their hobby into a job.[/highlight]

[highlight]You won't be getting paychecks immediately. In the beginning much of what you do make will go right back into the company for additional equipment, vehicles, etc. so you can function efficiently.[/highlight]




[highlight]Every level of government will have their hand out to get a share of what you produce as if they have done something to deserve it. You will have to be flexible and able to wear many hats. You will need to be the salesman, purchasing agent, designer in many cases, draftsman, permit runner, bookeeper, collection agent, advertising writer and the personnel department in charge of hiring and firing.[/highlight]


[highlight]You will have yourself.[/highlight]

 And the Boss , you , will ALWAYS BE ON YOUR BACK, day and night!


[highlight]Partnerships are one of the most difficult forms of business ownership IMO. It takes a highly self motivated, strong willed opinionated person to run a business and to find two such people who are compatable is very difficult. [/highlight]


[highlight] I won't elaborate any further than that. But it is very difficult[/highlight]

 Sage advise!


  When I had my business 80 hours a week was common , bidding at midnight , 2 AM , was common. Finding help that could work at the level I demanded my company's work to meet was almost impossible.

 Meeting with client and saying your job will cost XX amount of dollars and being looked at like I was a crook was the worst part , people want (generally) way more than they can afford.

 To much  mis-placed guilt ( on my part ) ,  one of the many down sides of being raised Catholic . Catholic's teach guilt , Jew's are born to it , I was taught well      

[peter nap]

[highlight]Catholic's teach guilt , Jew's are born to it , I was taught well  Grin  [/highlight]

Your gonna catch more flack than I did when I wrote this the other day

http://news.oldva.org/?p=31

[MountainDon]

Both Paul and peter are correct in what they wrote.

[glenn kangiser]

I'm leaving all of that alone.

One other caveat I might throw out there is this: Partnerships are one of the most difficult forms of business ownership IMO. It takes a highly self motivated, strong willed opinionated person to run a business and to find two such people who are compatable is very difficult. I won't elaborate any further than that. But it is very difficult.

I did the partner thing for about a year.  BIL was my partner.  I worked from 8AM until 1AM and weekends about every day.  He got off at 5PM and played on weekends per his rules.  He also wanted 1/2 the money per his rules.  He was Mr. show and big business.  He got a piece of steel in his eye when he hit a a tractor "A" frame pin on another piece of steel.  

We had insurance.  He was then off for several months and decided to sell out to me.  He wanted 1/2 the money.  I asked the bookkeeper what I should pay him.  The bookkeeper said we had already drawn everything out of the business and that half of nothing was nothing.  I gave him $4000.  That was a bargain for me -- going $4000 in the hole to get out of that partnership.  He then started talking crap about me because as soon as he was out I went into building steel buildings and started making a few dollars.  Too bad.  That only lasted about six years then all business pretty much crashed in 1982 and I was in the hole over $100,000 for payments on equipment to do over $1,000,000 and the crews were dragging 1 week jobs out to 2 weeks or more  because they knew there were no more coming.  Per an old boss - drop extra help as soon as you see there is no way you can afford to keep them.  They will quit on you the moment they find something that is better whenever they can --there can't be a lot of loyalty there when both are playing the game of survival.

We are at the same point now.  The dollar is in the crapper, housing is stopped and there may soon be a giant crash.  I would drag it out a bit before starting anything.

The Bookkeeper was another mistake.  Paying out tons of money to have someone who thinks they are an unofficial IRS agent do my books and taxes.  That was before the age of computers and Quickbooks.  Eliminate them.  They wouldn't even take all of the deductions I was entitled to because they thought it may raise a flag.  Fortunately they have been replaced by computers.

Well -- that's too much for now.

[theshack]

Thanks for all the input, it's exactly what I was looking for. I would just like to see it through the eyes of experience from someone whose been there. There will be much planning before anything is decided on but I'm just trying to get a feel for how the career would be. Sounds like the best thing would be to work in the field for several years, then move on or make your choice. Just a few days ago the local Weyerhauser plant closed down, leaving 150 people without a job. They also closed down two plants in Canada recently and laid off 80 in Kentucky. Being a major manufacturer of wood products, it would seem that this is a direct cause of the construction industry slowing down. Also after talking to my old employer, a local plumber, who is usually busy with new houses year round didn't have a single new house last year. He also told me that all the local carpenter/contractors are very slow and have laid off all their temporary helpers down to the bare minimum. Most of the contractors have built spec homes, and have ended up selling their old houses and moving into the spec homes because they could not sell them. The craziest thing about this is that our area in Central MN has had more growth than most other parts of the state. All this slow down in the area I would like to live in is making me think I should either move into another area/consider a different career or live very simply with as few bills as possible without being like the "Average American" and always wanting more. I guess it kinda comes down to the more you earn, the more you spend-without happiness coming from spending more than needed. Well I guess I got off of the subject a bit, thats all for now. Thanks again for the input.


Mark L.

[desdawg]

Cemex is going to build a big portland cement plant here, spending $400M to put it together. Their projected date to start operating is in 2012. That is a pretty good inidication of when this housing cycle we are in should straighten out. They chose this area in northern AZ for a number of reasons, one being it is centrally located to Phoenix and Lost Wages, ah Los Vegas. They have purchased 7400 acres in an area that is good for quarrying limestone and has excellent access to the Burlington-Pacific RR. Cemex is 101 years old and I think they do their homework pretty well. So look at this housing market as a five year turnaround IMO.

[glenn kangiser]

That seems to make a lot of sense and agrees with the cycles I have seen in the past, unless the politicians, bankers  and big business can screw things up this time much worse than before.

[glenn kangiser]

Both Paul and peter are correct in what they wrote.

Crimoney, Don -- good one -- you almost shot that one over my head.

Let's see now -- Mark wasn't in on this one was he? :-?

[peter nap]

I think most of us have Partner stories. Mine is pretty much a rerun of Glenn's, so I won't bother posting it.
The worst one I know of took place about 20 years ago.

There was a builder here that was putting up a lot of houses. He was bad about not paying bills (or subs) but he kept on building.

He went into a partnership with a fellow that put in septic systems and wells. He was straightforward and had a good reputation.

It wasn't a partnership, it was a Corporation and the Builders 2end cousin was the a director of the company and the accountant. She was also a knockout!

They were making money hand over fist and had half a million in the bank.

The builder went on vacation to one of those third world islands and took his cousin with him.

While he was there he had the local judge grant a divorce from his wife. He then married his cousin. They had an impromptu board of directors meeting and voted the builder a bonus of everything in the account.

They deposited it somewhere, no one is sure where.

He got back and the septic fellow had him arrested. The judge here declared the divorce unlawful but since that would make him guilty of bigamy, he granted him a new divorce

It goes on and on but the bottom line is he was never prosecuted and the septic fellow was left with no money and a ton of bills. The builder is still building and doing very well.  

[MountainDon]

Crimoney, Don -- good one -- you almost shot that one over my head.
Let's see now -- Mark wasn't in on this one was he? :-?

As far as I know Mark had nothing to do about this.   :-/

[desdawg]

Don't go getting biblical on us here. No mention of Mathew, Luke and John?

[glenn kangiser]

Haven't seen Matthew or Luke, but I think John's lost his head in another part of the forum. :-/