Advice for newbie contractor.

bjp_ne_elec · May 7, 2006

I've just received my NH Masters and am interested in what you guys would offer as advice for someone just getting started. My plan is just to be a one man shop for a bit, eventually maybe picking up and apprentice. Don't have any intent of going big, and would like to focus on residential and light commercial.

I have found Mike Holt's Code Forum invaluable in helping me review for my Masters exam, and I'm really anxious to see the feedback as I work to establish a small business.

Thanks,

Brett

eric stromberg · May 7, 2006

Brett,
Best of luck to you.
And, with all seriousness,
"May you live long and prosper."

Eric

Oakey · May 7, 2006

1) Set up as an LLC
2) Get a good accountant.
3) Learn to write contracts as if every one will be shown in court.
4) Make friends with a guy whos been in the business for a while and ask as many questions as he can stand

Good luck

bjp_ne_elec · May 7, 2006

Eric - thanks for the kind words.

Oakey - great advice. Definitely going the LLC route, and I have talked to an Accountant already. I've indicated to him, as I'm at the ground level, I'd like to do my own bookeeping, but would use him to help me get set up, and then look over my books on a quarterly basis.

Looking forward to some more great advice!

Brett

hardworkingstiff · May 7, 2006

When I first started on my own, I asked a guy who had been in business for 30 years what was the one most important piece of advice he could give to a newbie.

His answer: "Never take a job you can't afford to not be paid for".

I've broken this rule a few times, but the advice is sound.

Here are some from me:

You can't lose money on a job you don't get.

It costs more money to go back and fix something than it does to slow down and do it right the 1st time.

Try to look out for everyone, but be true to yourself.

SAVE! Rainy days (sometime months) do come.

Invest for retirement, it also will come. There is no stopping it.

Do what you say you will do.

Be honorable.

I'll stop now.

77401 · May 7, 2006

When I started my first Co. In Mass. I opened it in my full name with Master Electrician behind it. Thought being most homeowners won't be able to fit it all on the check & just make the check out to me. Then I just cash it & report the big jobs. Uncle sam doesn't expect you to make much money as a new company.

Insurance out the butt! You can never have too much, just in case.

Never assume...

Murphy('s Law) will visit you.

Advertise where you want to work.
Underbid your competition for a year or two, till you have a loyal customer base & learn the business side of this. Then slowly raise your rates, expect your first customers to leave as they will always find the lowest bid.

Call your competition, act like a dumb homeowner. ask what they charge for a ceiling fan installation. This will tell you what their minumun charge is. You got to have a minumun and stick to it.
Then, Ask for a quote on four 6" recessed cans, with an attic, and the wiring is already there from a ceiling light. this will tell you their price per can installed. tell them your not sure which way you want to go. Tell them you'll call them back after you talk to you wife. SOUND FAMILIAR?

Forward all your calls to your cell phone, some customers will go with the first person they talk to. Don't let them hang up till you schedule an appointment.

Keep your paperwork simple, you don't need to document every fittin & wire nut for every job. Your the only one working.

Join a good Gym as you'll have lots of time off between jobs.

tincan44 · May 7, 2006

bjp, Best of Luck to You. If you follow the truly great advice given so far AND are willing to work hard you WILL succeed!

hardworkingstiff · May 7, 2006

tincan44 said:
AND are willing to work hard you WILL succeed!

Oh, yea, that is the most demanding part, :lol:

tincan44 · May 7, 2006

I would like you to think very carefully about part of 77401's advice.

"Thought being most homeowners won't be able to fit it all on the check & just make the check out to me. Then I just cash it & report the big jobs. Uncle sam doesn't expect you to make much money as a new company.

Without being generous I say "Give to Caesar that which is Caesar's" Once you stick your neck in that noose it can sometimes be very difficult
to get your head back out.

hardworkingstiff · May 7, 2006

tincan44 said:
Without being generous I say "Give to Caesar that which is Caesar's" Once you stick your neck in that noose it can sometimes be very difficult
to get your head back out.

I was told there is no statue of limitations on fraud. Don't know if it's true.

JohnE · May 8, 2006

I would not recommend evading the taxes. There definitely is no statute of limitations with the IRS according to my sister-in-law a CPA and CFO.

I'd recommend joining an organization such as NECA. In MA we have MECA. If you go to meetings you'll meet other contractors, and they can be very helpful. Just like here in the forum, many want to help others. You'll get to discuss all aspects of contracting with those in your area. The organization can also help with insurance and other issues. One time they helped settle a dispute between us and a wiring inspector.

Meeting other contractors might give you some resources if you need to "borrow" some expensive tool someday such as a puller, bender, or a lift. I have a few friends who have made these offers to me.

cowboyjwc · May 8, 2006

I gave this advise to someone on another thread.

1. Charge a fair price. Don't bid it out at 6 hours if you know it's only going to take you 3.
2. Do top quality work. Enough said.
3. Show up when you say you are going to. Never leave a customer hanging. I've not hired guys for not showing up when they said they were going to to give me a bid.

and one more.

4. Learn when to say no and walk away. If it doesn't feel right, trust your instincts. Nothing worse than being half way through a job wishing you had never taken it.

Good Luck.

bjp_ne_elec · May 9, 2006

Hardworking, TinCan, 77401,j_erickson, and Cowboy - I want to thank each of you for the advice you've given. I"m taking notes!

Thanks again,

Brett

Minuteman · May 9, 2006

One thing for sure. Incorporate! Have a CPA advise you which is best, but you can become a C-corp or a L.L.C. I thought that I would just remain a "Sole Proprietor" and not incorporate until I "made it". Bad choice. Taxes killed me.

Also, I hired a hand full of guys, just because the work was there. I used a payroll service rather than doing payroll myself. I will spare you the gory details, but after a while, I felt like the Caboose on a run-away-train.

Now I am the license holder for another company. One thing I know for sure. It takes more than being a great electrician to be a good businessman.

aline · May 9, 2006

Here's a couple of links that may be helpful to you.

http://www.catalystservicemarketing.com/

http://www.inc.com/resources/solo/

77401 · May 9, 2006

One more suggestion
Get seperate credit cards for business & Personal
Use business for gas, Supplies(Home Depot) postage Office max, anything you can deduct. Then at Xmas buy gifts for family & friends at home depot, charge it to work! Get it? :twisted:

tedge · May 9, 2006

Here's one: pay your estimated taxes. If you don't know how much to pay, pay something. You can get the payment vouchers online on the IRS website. There's nothing worse than struggling along, finally making some headway, then finding out you owe $9000 or $10,000 in taxes that you should've been paying all along.

memyselfandI · May 10, 2006

I am a type "S" corporation and this was suggested by an accountant. I am in the business to make money, not pay Uncle Sam. I am a one man operation and I have been in business for three years. First year or so was tough, some start up costs, TAXES, things like that. Not a whole lot of funds headed into your pocket. After that first year though things started to pick up and pretty soon I was making better money to a point where I could give myself a salary every month. Now I have the wife running around doing the admin work so I can concentrate on the jobs. My bills ar paid and so are my taxes and whatever is left over is invested back into the company or into retirement or both. My advice is if you want to do it, do it. You never know until you try. If it doesn't work out, at least you went out swinging. Don't spend a dollar to save $0.38. Pay your taxes and cash is king. No plastic (unless it wrapped around a bunch of cash).

dlhoule · May 10, 2006

Michael said:

Now I am the license holder for another company. One thing I know for sure. It takes more than being a great electrician to be a good businessman.

I'll 2nd that. It is possible to be both though. Right help in areas and listening at the right times can go a long way too.

Best of luck to you. It is one great field to be in!

bjp_ne_elec · May 17, 2006

Thanks - very good advice. I'm definitely archiving this link. Good bunch of people on here, and I know when I was studying to take my Master's, this site was invaluable.

Thanks to Mike Holt for setting this up!

Thanks

Brett

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