I have my feet wet, now the big jump, going into business for myself. Need some help

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I have 15 years in the trade, most with commercial running jobs up to a million. I started my own business in 2009 after I received my md state masters. I've picked up two property management clients and do small jobs on week days or weekends after my normal electrical job for the large company I work for in Washington dc. I have no problems doing the work, the jump from a steady paycheck to getting paid once a month or whenever the draw is set for worries me alittle, could be lack of knowledge on the process of things. My estimating skills are lacking. I'm use to the first day on the, looking threw the prints and writing up a start up baulk order. But to estimate even a small 50,000 dollor job I feel would take me a week. Is there a system and easy way to do this without exspensive estimating software?? I've searched for classes for estimating but have not had much luck. I have however found classes at my college for solar installation which is government funded and paid for by the going green grant. If it's free why not.
Thanks Phillip
 

renosteinke

Senior Member
Location
NE Arkansas
I see a lot implied in your post - but, no matter .... the answer I'm going to give is meant for a general audience, and not specific to you. (How can it be? I don't know the first thing about you. I'm sometimes amazed at the touchiness some folks have on the internet.)

OK, so you've mastered two trades, so to speak. You're a master electricain and a journeyman manager. That's all very nice. The problem is, you've only learned to operate someone elses' business. The next trade you have to master is that of 'business owner.'

I've licensed in two states. I can only assume the rest of the country is similar in that the little contracting book they want you to have is a gold mine of relevant information. Make a point of SLOWLY reading the entire thing, ESPECIALLY the parts you think you already know. Insurance, workmans' comp, liens, taxes, etc. are critical.

Then back up and read that section on "business model" again. Real close. You need to be able to explain, usine small words, short sentences, and no more than two pages exactly where you expect to find customers, what you expect to do for them, and what you plan to do with the money- in minute detail. Then gat some actual small business owners to read the thing and tell you what they really think.

You've already discovered that your time has value. I am told that the Holt materials on estimating are of value ... the price is a bargain if the reviews are correct. I'm a little less sanguine about estimating programs.

The fact is, you're going to lose your shirt the first few years - unless you're simply assuming known jobe from known customers with established prices. You'll need that time to get control of your overhead and to get accurate data regarding your costs to do a job.

Wild guesses and rules of thumb? Sure, they exist .... but they're only good for a 'reality check.' They're not cast in stone. I will now voice two practices used by others:

1) A certain NRTL bills out its' jobs at 275% wages + materials (no mark-up) to its' customers.

2) A certain "Do It Right" contractor on TV has said a job should not cost much over double the cost of the materials.

The reality is probably somewhere between those two extremes. I know one successful contractor - a very small shop - where the owner won't leave his house for less than $1000 over the cost of the materials. There's some truth to that .... with the expense of set-up time, travel time, etc. You can bleed to death from a stream of $200 jobs; you lose half a day just going to and returning from a job.
 

satcom

Senior Member
I see a lot implied in your post - but, no matter .... the answer I'm going to give is meant for a general audience, and not specific to you. (How can it be? I don't know the first thing about you. I'm sometimes amazed at the touchiness some folks have on the internet.)

OK, so you've mastered two trades, so to speak. You're a master electricain and a journeyman manager. That's all very nice. The problem is, you've only learned to operate someone elses' business. The next trade you have to master is that of 'business owner.'

I've licensed in two states. I can only assume the rest of the country is similar in that the little contracting book they want you to have is a gold mine of relevant information. Make a point of SLOWLY reading the entire thing, ESPECIALLY the parts you think you already know. Insurance, workmans' comp, liens, taxes, etc. are critical.

Then back up and read that section on "business model" again. Real close. You need to be able to explain, usine small words, short sentences, and no more than two pages exactly where you expect to find customers, what you expect to do for them, and what you plan to do with the money- in minute detail. Then gat some actual small business owners to read the thing and tell you what they really think.

You've already discovered that your time has value. I am told that the Holt materials on estimating are of value ... the price is a bargain if the reviews are correct. I'm a little less sanguine about estimating programs.

The fact is, you're going to lose your shirt the first few years - unless you're simply assuming known jobe from known customers with established prices. You'll need that time to get control of your overhead and to get accurate data regarding your costs to do a job.

Wild guesses and rules of thumb? Sure, they exist .... but they're only good for a 'reality check.' They're not cast in stone. I will now voice two practices used by others:

1) A certain NRTL bills out its' jobs at 275% wages + materials (no mark-up) to its' customers.

2) A certain "Do It Right" contractor on TV has said a job should not cost much over double the cost of the materials.

The reality is probably somewhere between those two extremes. I know one successful contractor - a very small shop - where the owner won't leave his house for less than $1000 over the cost of the materials. There's some truth to that .... with the expense of set-up time, travel time, etc. You can bleed to death from a stream of $200 jobs; you lose half a day just going to and returning from a job.

Yes, he is running in to the fire when everyone else is running out, in the last 2 years i watched as well over 75% of the EC's in my area closed shop and moved on, they just could not find work to keep paying the bills. what was funny was as these guys closed, a new green guy with a new license ink still wet, rushed into the EC business, and in most cases said they did it because they lost their job, so now here we are 2 years later and another batch of new EC's closing shop. but not to fear, there will be a new batch of EC,s with nice new trucks or old ones with all the rust covered with a thick coat of paint, ready to bid any and all jobs at any cost even if they have to pay the customer to work they will be in their own business, America what a great country, any can start with a little money and Bingo, in a few years they will have more debt they they can pay in 10 years.

He has one big thing going for him, he has a day job, and likely he has benies to keep food on the table and pay the rent, if he is careful and gets plenty of good jobs, it may only cost him a little bit for those first 2 years, and he may stand a chance of making a go of it. He is in Hagerstown, where the history of business in that town was really a trip, in the 60's the city was listed as depressed, and jobs were so hard to find that many had to drive 50 or more miles one way every day to work in distant cities, since those days many new roadways lead to hagerstown, so he may be in the right place and time to make a go of it.
Try to get some long term service and maint contracts with local manufacturing and commercial business, bid work and waiting for the phone is like playing the blackjack, have some solid contracts in hand, before you jump ship.

Good Luck
 
Thanks

Thanks

Ive seen alot of local companys close the doors and a ton of new EC come from out of the blue. For now i'm sticking to the tortoise speed, slow and steady. I've sat down and thought is this career going be stable in the future and i'm not really sure. Like the rest of america i have to much time and my life style today is build from the years i've already put in this trade. To jump now would be a big backpedal. I decided that getting better educated would never hurt me. Solor i do beleave is the future however it's not in many peoples budget now days. The jobs i have done since i started made good money. Adding up all the jobs i've looked at and gave free estimates for draws it back to making me think maybe it's easier working for someone else. I've seen people make it in this field thou, i know it can be done. Everyone is telling me that i will get now where for the first few years. First I thought I would then i soon relized that i grow stronger with every mistake i make.
 

Benton

Senior Member
Location
Louisiana
My situation is similar to yours. I can appreciate the advise you were given. Just stay wise and stay out of debt.
 

Fulthrotl

~Autocorrect is My Worst Enema.~
I have 15 years in the trade, most with commercial running jobs up to a million. I started my own business in 2009 after I received my md state masters. I've picked up two property management clients and do small jobs on week days or weekends after my normal electrical job for the large company I work for in Washington dc. I have no problems doing the work, the jump from a steady paycheck to getting paid once a month or whenever the draw is set for worries me alittle, could be lack of knowledge on the process of things. My estimating skills are lacking. I'm use to the first day on the, looking threw the prints and writing up a start up baulk order. But to estimate even a small 50,000 dollor job I feel would take me a week. Is there a system and easy way to do this without exspensive estimating software?? I've searched for classes for estimating but have not had much luck. I have however found classes at my college for solar installation which is government funded and paid for by the going green grant. If it's free why not.
Thanks Phillip

i did a service truck as an apprentice, and the guy who owned the shop
who'd been in business about 40 years at that point, told me two things...

"son, we don't get paid for pretty, we get paid for done"

"if it's a doctor or lawyer, get the check first, go to the bank, convert it
to a cashiers check, and THEN do the work."

the first one i can disregard if i want to make it pretty for free.
i usually do. it's a luxury of being self employed.
the second one, damn if he wasn't spot on. the ONLY people who've
every bounced a check to me, were doctors.

while the training wheels are on, my suggestion is to not to get eyes bigger
than your wallet.... while you are capable of running a job of a million,
you may not be capable of getting PAID for a job of a million.

i'm a little muppet, but my tools are paid for, my vehicle is paid for,
and in these uncertain times, i don't do any jobs that i can't afford
to not get paid for. that keeps my ego somewhat in check.

somewhat.

a book recommended on here is worth a read... i'm going thru it now.

The E-Myth Constractor, by Michael E. Gerber

available electronically, or in print.

the other thing that was recommended on here was a Neat scanner, for
keeping control of the paperwork.

get one. now.

you can set it up however you want, but it'll let you get your numbers
correct for tax purposes, and keep up to date, so you know how you
are REALLY doing.

the illusion can be strong if you are having two or three things running
all at once, and a bit of money moving back and forth, that all is well,
when it really isn't all that well.

good luck, and this is one of the best places to go with questions you
will have.

you'll have a lot of them.

welcome.
 

Jamstoyz

Member
I have 15 years as well and quit my job to go on my own beginning this year. I use to work my day job than my own at night and weekends. It got really tough and the time came when I was busy enough to go on my own full time. With that being said, you will need some kind of bank roll to keep you going. I would say at least $10 to $20 grand. I to only get paid once a month and sometimes longer. Next is you have to be better than the next Tom, Dick, and Harry and make yourself stand out from the rest if you wanna be successful. I still estimate by hand and it works pretty good for me. Im wanting to make the jump and purchase some kind of software. If your good at doing it by hand, you will be ok.
Sure its scary quitting a great paying job to go on your own but to me it was well worth it and have no regrets what so ever. I wish you best of luck in what ever you decide.
 

knoppdude

Senior Member
Location
Sacramento,ca
I have 15 years in the trade, most with commercial running jobs up to a million. I started my own business in 2009 after I received my md state masters. I've picked up two property management clients and do small jobs on week days or weekends after my normal electrical job for the large company I work for in Washington dc. I have no problems doing the work, the jump from a steady paycheck to getting paid once a month or whenever the draw is set for worries me alittle, could be lack of knowledge on the process of things. My estimating skills are lacking. I'm use to the first day on the, looking threw the prints and writing up a start up baulk order. But to estimate even a small 50,000 dollor job I feel would take me a week. Is there a system and easy way to do this without exspensive estimating software?? I've searched for classes for estimating but have not had much luck. I have however found classes at my college for solar installation which is government funded and paid for by the going green grant. If it's free why not.
Thanks Phillip
Phillip, first, listen to what the posters here are saying, and hang on to your day time job until you are absolutely ready to let go. These are successful contractors, and businessmen. Everything they are saying is true. If you haven't, contact your local SBDC, and talk with them, they can help a great deal. Third, Mike Holts estimating guide, and the E-Myth book. The second book is published by a private business assistance organization, so go to their website as well, they have tremendous resources for business. Good luck.
 

brian john

Senior Member
Location
Leesburg, VA
One word of advice given to me years ago.

Nothing makes you work hard for the success of your company, than not having your day job to fall back on.

Not suggesting you go or don?t just a thought.
 

bradleyelectric

Senior Member
Location
forest hill, md
I Solor i do beleave is the future however it's not in many peoples budget now days.

Keep in mind that solar is not cost effective and the only thing that makes it seem so is government subsidies and creative salesmanship. If the government stops paying people to have it installed the true cost would be prohibitive. Just saying that market may go away fast if the subsidies get cut.
 

Dolfan

Senior Member
I have been in business for 4yrs and have had enough of it. I would love to have a job, so that I could have my mind back to thinking about things that really matter in life....like fishing. That being said, I'm glad I'm not just starting out. If I were to give you a piece of advice, save money for the company. This will give you the opportunity to be more selective on the type of work that you take. Screen all leads over the phone, don't just jump in your truck and tell them you will be there. Last, collect money from people you don't know yet, never trust anybody. Good luck....The Dolfan
 

jerrysounds

Member
Location
San Diego
At this time I would NOT start a business. The phones stopped ringing in San Diego about 2 months ago and the ship is going down, unless something big happens soon. It may be better in the east but I here the same thing coming out of Chicago! Dudes are working for $20hr cash here.
 

cowboyjwc

Moderator
Staff member
Location
Simi Valley, CA
At this time I would NOT start a business. The phones stopped ringing in San Diego about 2 months ago and the ship is going down, unless something big happens soon. It may be better in the east but I here the same thing coming out of Chicago! Dudes are working for $20hr cash here.

My ship came in and wouldn't you know it, I was at the train station.:roll:
 

Sparky555

Senior Member
One word of advice given to me years ago.

Nothing makes you work hard for the success of your company, than not having your day job to fall back on.

Not suggesting you go or don?t just a thought.

I'm not sure I'd take the "burn the ships" approach in this economy unless desperation is a good motivation for you. Maybe you can get some more property management work. I assume they are the monthly checks. The large invoices that go 90 days can be killers.

You might consider keeping your day job (40 hours) and working your own business until it goes from 20 to 30 hours invoiced a week. I find 60 hour weeks manageable. It's good to start with $30-40k rather than the usual unemployed guy starting with nothing.
 
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