$25 bucks a house!

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ITO

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So I get invited to a supply house free BBQ lunch deal and normally I avoid these kind of things like the plague but ended up stopping by to pick up some fuses, then got some food, and ended up doing some networking with some residential contactors. Ok curiosity got the best of me and it seemed like a good idea to get a feel for the local market.

$25 bucks a house! That what these guys are making in profit after it is all said and done. Granted they are paying their own wages and overhead, but only $25 in profit? It made me want to cry.

So this thing called common sense kicks in and it gets me to thinking that maybe somebody is bullshitting me, and I talk to my salesman about it and he confirms it?s no joke. He then tells a story about loosing a material bid over 8 cents. We have guys in my area who are basically giving their services away and haggling over pennys; I just cant believe we are doing this to ourselves and sincerely hope these guys don?t decide to move into commercial work.
 
This is new residential we are talking about? Tract homes for the national/regional builders?

I believe the number. But I thought the point on the tracts was to make money on the upgrades?
 
one of those outfits up here did get into commercial when the housing market died....they closed their doors 2 weeks ago, less than 6 months after geting into commercial....40 years after opening their doors....3 yrs ago they had 220+ guys in the field....2 weeks ago they had less than 40 in the field...it happens...
 
emahler said:
one of those outfits up here did get into commercial when the housing market died....they closed their doors 2 weeks ago, less than 6 months after geting into commercial....40 years after opening their doors....3 yrs ago they had 220+ guys in the field....2 weeks ago they had less than 40 in the field...it happens...
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That explains. the increased phone calls, looking for jobs.
 
If the economy gets much worse we may do a job here and there for a net loss. I know many of you out there recoil when you hear that kind of talk but I will sometimes dig into the company savings to keep a good man on the job.

I've been doing it this way for 30 years now and have been through a few economic downturns. Usually I lay off the less productive people first and then cut back the hours on everyone else. Then we just hang on and make the best of it. If I see a job has the potential for a bunch of extras I may bid it low just to keep things moving (sometimes this comes back around to bite me in the rear).

Tommorow we're going to clean out the warehouse :confused: .
 
peter d said:
This is new residential we are talking about? Tract homes for the national/regional builders?

I believe the number. But I thought the point on the tracts was to make money on the upgrades?
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One would think so, but two weeks ago I get a call from a former customer and she wants us to install 7 ceiling fans and a few fixtures in her new home day before move in. So I was curious and asked why the EC who wired the home wasn't doing it. She said that the only thing in the contract was for the rough of the wiring and they blanked all the boxes, said the EC didn't want the job of installing the fans and some other fixtures. I got a bunch of free blanks that were only a few days old. I charged her $1200.00 for the work we did in 5.5 hrs + 30 mins drive time, she provided fixtures. Got to wonder why a guy making about $150.00 in profit per home here would pass on that. Housing here is not dead but slowing down quite a bit.
 
Ditto, I will do the same thing to keep my good guys, including make work.

However to use no profit on base bid as a business model just seems foolish to me. Contrary to popular believe changes can end up costing YOU money and are a pain the butt.
 
bkludecke said:
If the economy gets much worse we may do a job here and there for a net loss. I know many of you out there recoil when you hear that kind of talk but I will sometimes dig into the company savings to keep a good man on the job.

I've been doing it this way for 30 years now and have been through a few economic downturns. Usually I lay off the less productive people first and then cut back the hours on everyone else. Then we just hang on and make the best of it. If I see a job has the potential for a bunch of extras I may bid it low just to keep things moving (sometimes this comes back around to bite me in the rear).

Tommorow we're going to clean out the warehouse :confused: .
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Just about every contractor I know that tried to keep guys by having them, work at a loss, ended up in trouble sonner or later, did you ever notice the larger companies, even the fortune 500 ones,, lay off workers even before the slump comes, just good business sense, the workers can apply for unemployment benifits, then when you have a back log building sure hire them back, if you treated them well, they will usually return, the work to keep busy or keep guys idea, is a sure way to loose, yet many follow that doomed path, I think they follow emotions, not business practices. The guys that layoff, will not only survive, they may even do better.
 
satcom said:
The guys that layoff, will not only survive, they may even do better.
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CES did both. They laid off when things slowed down, and took work for no or minimal profit to keep the good guys aboard...but they went bankrupt. Maybe that's not such a good example. ;)
 
ITO said:
So I get invited to a supply house free BBQ lunch deal and normally I avoid these kind of things like the plague but ended up stopping by to pick up some fuses, then got some food, and ended up doing some networking with some residential contactors. Ok curiosity got the best of me and it seemed like a good idea to get a feel for the local market.

$25 bucks a house! That what these guys are making in profit after it is all said and done. Granted they are paying their own wages and overhead, but only $25 in profit? It made me want to cry.

So this thing called common sense kicks in and it gets me to thinking that maybe somebody is bullshitting me, and I talk to my salesman about it and he confirms it?s no joke. He then tells a story about loosing a material bid over 8 cents. We have guys in my area who are basically giving their services away and haggling over pennys; I just cant believe we are doing this to ourselves and sincerely hope these guys don?t decide to move into commercial work.
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I guess it depends on how many houses you do in a year and of course what the profit margin was.
 
Loyalty is a two way street and I have a long memory. I have worked too hard and suffered way too many drunks, slackers, malcontents and other defective losers off the bench to give up on the good ones I have now. I don't care what it costs, I will not lose my good men over a silly thing like needing work. Besides I can do quite a few jobs at cost before it starts to hurt and even when it does hurt I can still keep making it work just to stay in business.
 
ITO said:
Loyalty is a two way street and I have a long memory. I have worked too hard and suffered way too many drunks, slackers, malcontents and other defective losers off the bench to give up on the good ones I have now. I don't care what it costs, I will not lose my good men over a silly thing like needing work. Besides I can do quite a few jobs at cost before it starts to hurt and even when it does hurt I can still keep making it work just to stay in business.
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Good mechanics are hard to find and harder to replace I have three guys that I will absolutely keep working because when it picks up in the spring I can easily get box nailers but I went through twenty druslacmaldefeloosers to get these guys and I cannot afford that every spring.
 
Satcom; I don't think it's a "one size fits all" world. I keep track of things pretty closely. I'm sure that many people would fail trying to run their business the way I run mine, and I know I would fail trying to run my company strictly "by the numbers". My way of doing things has worked well for me for 30 years now, I make good $, I've been able to put some away for later, I'm happy and my men appreciate working here. I pay $27/hr for my JWs, they have paid health ins, paid vacations, paid holidays and company trucks to drive home if they wish. Life is good.
 
If the profit margin is very low at the start it doesn't take much to turn it into a loser. I'm curious from these posts. When you switch from working alone to having employees does your business change from pricing to make a profit to pricing to feed the hungry payroll monster?

Dave
 
Tiger Electrical said:
If the profit margin is very low at the start it doesn't take much to turn it into a loser. I'm curious from these posts. When you switch from working alone to having employees does your business change from pricing to make a profit to pricing to feed the hungry payroll monster?

Dave
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Actually I have found it easier to turn a profit with employees than when I was solo. Working alone I seemed to pay the bills ok but found it hard to get very far ahead unless I worked a huge amount of hours. Back then I'd work 8-10 hours in the field and another 2-3 at the office billing, bidding, returning calls etc. Now I can run the whole thing working about 8-10 hours/day and a little on Sat/Sun when needed and I'm making more $$.

Another weird thing is that when I send a service-man out I usually don't get much complaint about the rates. When I go myself people seem to think that I really don't need to charge as much.
 
Tiger Electrical said:
If the profit margin is very low at the start it doesn't take much to turn it into a loser. I'm curious from these posts. When you switch from working alone to having employees does your business change from pricing to make a profit to pricing to feed the hungry payroll monster?

Dave
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Do you understand the difference between profit and profit margin?
 
Tiger Electrical said:
Rewire, I'm illiterate when it comes to accounting. I call it profit or profit margin, but I calculate it like margin.

Dave
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Think how much it takes to make $1.00 if it takes you .90 cents to make $1.00 you have a profit margin of 10% so at a 10% margin you are spending $9.00 to make $1.00 profit so profit margin is more important than what the profit was
 
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