Building a business plan....

[~Shado~]

Hi All....

1st...a lil about myself so you will know where I am coming from and wanting to go...

I have been bouncing in the forums for years, and have learned a tremendous amount from you guys. I respect all your time, knowledge, experience, both in business and in the trade. Thank you.....you have helped me to be better and opened my mind to different views, thoughts, approaches in this field that I have busted my rear to try to learn.

I have had no formal training/apprenticeship, I did go to a VoTech school in my Junior year of HS (78/79) but not much was taught back then, basically material names, some pipe binding, etc...very minimal.
I got into the trade in 1981.....and have been running/doing jobs on my own ever since I was a 6 month cub. ( I know...WRONG, BAD, ILLEGAL, etc...) but that's the facts of my life and all that I do know I have learned on my own, from books, trial and error, and from inspection corrections. I have only worked with/under a licensed person (not including the boss) for a rough total of about 4-8 months in all these years. I have worked in several states throughout this time also, and some areas didnt require a license and I would be what was called a lead man.
Having come back home to Colo...I had to do my 8000 hrs all over to get my Journey card, (been licensed since about 2001) since I couldnt get any time for out of state, and my employers from when I used to live here are all gone.
I am and always have been very professional , courtious, respectful, etc...on the job, hence, no real inspector issues thru the years. That has been a bonus for me and yet a downfall at same time since I couldnt get the boss' to hire someone more knowledeable than myself to educate me. Sure they would answer my work related questions, not always with happiness, but that isn't enough. Even explained to them that investing that time in me would make me a better Electrician and would in turn be more productive and make more $ for the both us. They would all say they would do it, but in the end...nope. I have never been a job hopper. Time has come and gone and my age, debt, and family responsibilities won't allow me a 'do over' thru a real apprenticeship. So, as I always have done...keep moving forward and make the best of what life throws my way.

Enough babble...on to the important stuff....

I am about to go for my Masters here in Colorado, and am trying to build a business plan to open up a shop....I know ...in these times I must be crazy!!!
But I still have a dream and a need for my family and future...and would like to try and see it succeed. I am not getting any younger and time is going by faster than I would like these days....

Any help would be appreciated...

1st - Labor.....
I dont want $ figures just percentages for labor. For years, it seemed that a 1st years wages started at about 40% of a Journeyman. What are your percentages for your help in relation to payscales of a Journeyman?
1st years -
2nd years -
3rd years -
4th years -
For those areas that have a Residential wireman license...what % is that to a Journeyman?

I know that pay depends on experience, abilities, etc....just looking for some averages.

2nd - mistakes...
What has been your biggest or worst mistakes when you first opened up?


Sorry...this has gotten too long unintentionally....

Thanks again....

Dave

 

[charlie]

Looks like a large number of questions but it is just a couple. I would give it a shot but I have been out of the trade since 1980. :smile:

 

[~Shado~]

Yes...it does look like alot...but only a few.

Sorry if it is scaring folks off....I cant edit it to clean it up.

Just trying to get my Ducks in the right row.

Thanks for posting


Dave

 

[ohm]

Hi All....

1st...a lil about myself so you will know where I am coming from and wanting to go...

I have been bouncing in the forums for years, and have learned a tremendous amount from you guys. I respect all your time, knowledge, experience, both in business and in the trade. Thank you.....you have helped me to be better and opened my mind to different views, thoughts, approaches in this field that I have busted my rear to try to learn.

I have had no formal training/apprenticeship, I did go to a VoTech school in my Junior year of HS (78/79) but not much was taught back then, basically material names, some pipe binding, etc...very minimal.
I got into the trade in 1981.....and have been running/doing jobs on my own ever since I was a 6 month cub. ( I know...WRONG, BAD, ILLEGAL, etc...) but that's the facts of my life and all that I do know I have learned on my own, from books, trial and error, and from inspection corrections. I have only worked with/under a licensed person (not including the boss) for a rough total of about 4-8 months in all these years. I have worked in several states throughout this time also, and some areas didnt require a license and I would be what was called a lead man.
Having come back home to Colo...I had to do my 8000 hrs all over to get my Journey card, (been licensed since about 2001) since I couldnt get any time for out of state, and my employers from when I used to live here are all gone.
I am and always have been very professional , courtious, respectful, etc...on the job, hence, no real inspector issues thru the years. That has been a bonus for me and yet a downfall at same time since I couldnt get the boss' to hire someone more knowledeable than myself to educate me. Sure they would answer my work related questions, not always with happiness, but that isn't enough. Even explained to them that investing that time in me would make me a better Electrician and would in turn be more productive and make more $ for the both us. They would all say they would do it, but in the end...nope. I have never been a job hopper. Time has come and gone and my age, debt, and family responsibilities won't allow me a 'do over' thru a real apprenticeship. So, as I always have done...keep moving forward and make the best of what life throws my way.

Enough babble...on to the important stuff....

I am about to go for my Masters here in Colorado, and am trying to build a business plan to open up a shop....I know ...in these times I must be crazy!!!
But I still have a dream and a need for my family and future...and would like to try and see it succeed. I am not getting any younger and time is going by faster than I would like these days....

Any help would be appreciated...

1st - Labor.....
I dont want $ figures just percentages for labor. For years, it seemed that a 1st years wages started at about 40% of a Journeyman. What are your percentages for your help in relation to payscales of a Journeyman?
1st years -
2nd years -
3rd years -
4th years -
For those areas that have a Residential wireman license...what % is that to a Journeyman?

I know that pay depends on experience, abilities, etc....just looking for some averages.

2nd - mistakes...
What has been your biggest or worst mistakes when you first opened up?


Sorry...this has gotten too long unintentionally....

Thanks again....

Dave

Congratuations Dave, you're about to take a big step, but it sounds like it's a lifelong dream.

Until you pass your Masters every waking moment should be spent studying for it otherwise you won't be able to even pull a permit. Don't let your boss know about your plans..he may replace you before you're ready.

For the first few jobs, I would charge double whatever you've been making and mark material up by 20%, until you decide if it's enough...or too much (no business).

Be prepared for long hours & little take home pay until you have a reliable truck & tools.

Hang flyers around town, carry a pocket full of business cards and don't go anwhere without handing out a card. If you don't have work to do bang on doors.

I'm sure this list will grow, good luck!

 

[~Shado~]

Thank you Ohm for advice.
This has been in the works for many years, just not acted upon. In the old days, as long as I made enough $ to pay bills, put gas in truck to keep working, and money to play I was good to go. Didn't think too much about the future.....
Then I met my wife and her daughter and knew I had to set my goals much, much, higher, having a family to look after. Just been locked into that daily grind all these years and skittish on taking the leap...but...now that I am unemployed, it seemed the best time to go for it. Work is slow here for employment....so...I want a slice of the pie that sounds so good. hehe

I have many books and have been studying, have bought an estimating program(learning it now), got legal info CO, insurance figures,and working on rest of $ figures, hence the questions.

Already have all the tools, ladders, benders, etc....van is next needed item.

Long hours dont spook me, already used to little money...haha...

 

[480sparky]

Thank you Ohm for advice.
This has been in the works for many years, just not acted upon. In the old days, as long as I made enough $ to pay bills, put gas in truck to keep working, and money to play I was good to go. Didn't think too much about the future.....
Then I met my wife and her daughter and knew I had to set my goals much, much, higher, having a family to look after. Just been locked into that daily grind all these years and skittish on taking the leap...but...now that I am unemployed, it seemed the best time to go for it. Work is slow here for employment....so...I want a slice of the pie that sounds so good. hehe

I have many books and have been studying, have bought an estimating program(learning it now), got legal info CO, insurance figures,and working on rest of $ figures, hence the questions.

Already have all the tools, ladders, benders, etc....van is next needed item.

Long hours dont spook me, already used to little money...haha...

Unfortunately, you picked about the worst time in decades to decide to hang out your shingle. Just because you're going to be self-employed doesn't guarantee you riches. Quite the opposite is usually the rule.

You say you have benders, ladders, etc. So you've got the cheap stuff. How are you going to buy the expensive stuff (vehicles, tuggers, large benders, hydraulic KO sets)?

Who is your accountant and who is your lawyer? What's your business plan say? Have you done a balance sheet? How's your credit score?

 

[peter d]

For the first few jobs, I would charge double whatever you've been making and mark material up by 20%, until you decide if it's enough...or too much (no business).

With all due respect, that is just about the worst advice you could give to someone who wants to go out on their own. That advice is the fast lane to going back to working for someone within a year or two, or poverty, or both. Likely both.

You need to figure out what your costs are, and then decide what you want to make (take home pay). You also have to figure out how much profit you want to make, and a host of other things that need to be figured into your hourly rate. Once that's determined, you charge accordingly. As for markup, there is a great thread about that going on here.

There are others who are far more well versed on business than I am who will hopefully chime in.

 

[Greg Swartz]

Welcome aboard!

Welcome aboard!

Welcome aboard, Dave,

First off, let me congratulate you for making the decision to take you and your families lives into your own hands...

Second, I welcome a nearby EC. Now I will have someone to refer work too...

Wages: Well, that's a tough one, but I'll give it a try. Remember these are Colorado Springs rates
Non-DB wages: Journeyman - $21-$25, 1st year - green $8-$9
I have a 3rd year that makes $16 and I give him a fuel allowance because he WANTS to use his vehicle.
Residential wireman: About $23. Some I know were making more, but that company went out of business. Residential wiremen are worth their weight in gold... if used properly.

If I fail an inspection, and it is due to something stupid like nail plates or stackers... I usually ask the guy to fix it on his own time (I still pay for materials)... should have known better (and they do). He could have taken the extra 15 minutes to double check and I would have never known it... in fact, I would have appreciated it.

Steps: Master's license, Register for FEIN ($5-$15), Register with state as EC (I think it is $50).
Then get insurance: Liability to start. Worker compensation if you want. When you have employees, you will NEED it.
After insurance, register with the local RBDs. Denver is $200. I believe Arapahoe is covered by the state, so that is free. Aurora may be free too.
Register in the close areas, and especially the free ones.
I am not registered in Denver, mainly due to money, but am in Colorado Springs and Pueblo... they are free (although Pueblo requires a quarterly audit and sales tax issues)

If you take your test now, you will be covered and not need to take the renewal in February.

Mistakes when opening up:
Not advertising: Word of mouth is the best advertising, however, you need to get the word out that you are going into business. I had 8 good months while working for another EC in town before he got tired of me being an EC... then the next day, I was supporting my family. It was hard. I had 2 commercial jobs going, and a few residential ones coming my way, but it all dried up fast. Lesson: Advertise.
Don't waste your money advertising - be smart. There are lots of free advertising places: Craigslist, Angie's List, many yellow pages on the internet, citydata.com, merchant circle, benspost... A lot of people will try to get money out of you. Besides, the more places you are on the internet, the more your name will come up. We now routinely come up when someone types in "Colorado Springs Electrician"

Good things when opening up: Bought a laptop, Quickbooks, and a portable cordless printer (HP460 - about 50 pages per charge!), had shirts made, made professional letterhead, and professional business cards
I printed estimates from my truck... people thought that I provided a professional image (shirts, business cards, professional letterhead).
It also worked against me, because people thought I was more than a 1 man shop.

Removed Greg's contact information, please contact Greg with the PM system for contact information. Sorry, Charlie

Regards,
Greg

 

[~Shado~]

480...as in my OP... I knew some would think I was off my rocker. The wife and I have discussed this many times over the years. As for trying now...if I can succeed while times are tough....then...things should hopefully only get better in the future.

I only plan on growing to about 8-12 employees down the road.

There are no guarantees in life...on my own or under another contractor.

However, I am no stranger to owning a business. I learned from my uncle who was a pipefitter with the Local. As soon as he was in and had enough $, he started a side Business in property investments, and various other things.
Since I was 19, I have pretty much had some sort of LEGAL side business going (licensed, insured, paid taxes, etc..) ranging from manufacturing trampolines, commercial janitorial for truck stops, painting, etc...I married young and had a family, debt, so needed extra $ to keep afloat while learning this trade. We were high maintanence, I had unrealistic goals for us, then, things changed, she had other ideas (a whole other topic), etc...but debt was still there.



As far as what you term big $$...I can only operate on my experince (remember...I am pretty much totally self taught) I know what I know...nothing more, and that mainly consist of custom Resi, Tenant finish, Service work, small Core & Shell...No large jobs. I have only had a need or used those items perhaps a dozen times in my whole career, if needed, I would just rent as we did then.

peter d....thanks....I do know my cost, etc....this forum has brought new insight to items I really never considered.

Greg...Thanks too...your wages are pretty much on par with up here, I am however suprised at the RW rate. I have never met an RW making same as Journeyman. Usually between $18-20/hr. Doesn't seem to give much incentive to strive for Journey card.
My 1st employer....this was his preached gospel. "Time spent now, is money made....Time spent later is way more money lost!!" (in a loud voice, no less)

Dave

 

[Greg Swartz]

There are no guarantees in life...on my own or under another contractor. Dave

(Well, I guess there is 1 guarantee in life, but that's another thread.)

That was the hardest thing to get my wife to understand.
I call it "pseudo-security." People see a big business and think that means security...

Greg...Thanks too...your wages are pretty much on par with up here, I am however suprised at the RW rate. I have never met an RW making same as Journeyman. Usually between $18-20/hr. Doesn't seem to give much incentive to strive for Journey card. Dave

Dave, I agree. However, running rope gets very tiring around age 35 when you've done it for 15 years... One company in town was paying $25 for some of their top RWs. They had (I think) 26 electricians on staff.

My 1st employer....this was his preached gospel. "Time spent now, is money made....Time spent later is way more money lost!!" (in a loud voice, no less)
Dave

Keep that thought loud and clear in your head.

 

[~Shado~]

Bumping this thread......

Had to put the actualities of this happening on hold, until now (I am slated to test in June and hopefully will be putting into action shortly thereafter)....but the planning has continued, and brought up some new questions.

I have started redoing my financial figures and am looking for input from you all. No $$ figures....just comments, formulas, averages, etc.....

- I am starting to create figures for Shop rates (Bid), Service (T&M), and Flat rate pricing. So here is how I am looking at structure......

1-2 days work = Service rates
3+ days = Shop rates

After researching threads and other forums....it seems average billable hours is about 5 a day or 63%.

Question 1 - Do your service rates tend to be about 35% higher than your shop rate so it can all average out to be same?

Question 2 - Since I have no history yet, are your Flat rate prices based on Shop or Service rates?

Question 3 - Labor units....how does Durand compare to NECA? Is one more accurate than the other? I am adding Items and Assemblies to my estimating program and wanting a MLU to work from.

Thanks for your input.....