Getting Started

[travis3710]

Hey guys I have just recently returned to the forum after a 3 year laps but anyway.I have been in the electrical business for 8 years in the state of VA. and I test for my masters in October and plan on going in business for my self.I would appretiate any advice anyone can give.Say mistakes you have made,what it takes,etc. Thanks for everyones help.

 

[bphgravity]

Re: Getting Started

Do a good job, treat your customers right, answer your calls (don't let the answereing machine pickup), do what you say you are going to do, introduce yourself to the local inspectors (go to IAEI meetings), and don't be afraid to charge what your services are worth.

Good Luck!

 

[hardworkingstiff]

Re: Getting Started

Yup, what Bryan said.

 

[jeff43222]

Re: Getting Started

My financial advisor has a lot of clients who are ECs, and he told me he's seen a lot of them fail over the years. The main reason: They tried to grow too fast. They got all excited about starting their own businesses and went out and bought a fleet of bucket trucks, every tool under the sun, rented office space, hired a crew, etc., but didn't have the revenue to support all that overhead. I went independent last year, and I've been profitable ever since, mainly because I keep my overhead down.

You will have to spend some money, but be smart about it. I use my personal vehicle instead of having a separate truck, I work out of my house, and I won't even consider hiring anyone until I have a very good grip on the business management side of things. Don't go to the opposite extreme, though. You don't want to skimp on everything (driving a rusted out 1985 Cutlass Supreme as your work vehicle, having your 5-year-old daughter make your business cards, etc.). If you want people to take you seriously, you do have to seem like you have your act together and look the part.

Being good at electrical work is one thing, but running a contracting business, even a one-man shop, is a whole different ballgame. There's a lot more admin involved than I thought there would be.

Make sure you keep records of everything. I started a spreadsheet to keep track of every expense, every bit of income, mileage on the truck, how my advertising is performing, etc. It's a hassle, but worth it in the end. Right now I'm putting it all into QuickBooks Premier Contractor's Edition because I have outgrown the spreadsheet.

When you do jobs for people, make sure you're clear on the scope of the work. If they want to change/add anything after you begin, make sure they are clear that it's a change order, and the price will be adjusted accordingly. Lots of homeowners don't know what they are doing, and they need to be made to understand that time is money. Just because they hired you to add some receptacles doesn't mean they get to have you upgrade the service for free "as long as you are here..."

Most important is to treat people right. It really pays off. Get to know the guys at the supply house, and do what you can to get on good terms with the inspectors.

It can be tough being an independent contractor, but there are plenty of us who have done it and haven't regretted it. Yet.

 

[hardworkingstiff]

Re: Getting Started

Forget the spreadsheet, start with Quickbooks. You will be glad later.

 

[jeff43222]

Re: Getting Started

Originally posted by hardworkingstiff:
Forget the spreadsheet, start with Quickbooks. You will be glad later.

I agree with you there. QuickBooks is definitely the better way to go.

And one more thing I forgot to mention in my previous post: Only buy tools as you need them. I've accumulated quite a collection of expensive equipment, but not all at once.

[ July 25, 2005, 07:42 PM: Message edited by: jeff43222 ]

 

[khixxx]

Re: Getting Started

Don't buy certian tools untill you need them. One of the things i did was saved up money then when i started to buy tools, supplies i got a business credit card with no interest for a year so i pay the min. on the card well i still have my other money buying supplies for projects. My tax man makes a spread sheet which he has done for other contractors and you can just take it to him on a floppy disk. Its pretty nice. he is out of frederick, MD.I use my personal truck, its an f150 with over load springs and a contractors cap. Its not to bad but i just do service work. Hope this helps some.

 

[GG]

Re: Getting Started

When someone calls you and tells you that they are printing a phone book cover and want to place your companies add on the front cover please hang up, for me. Dont be chumped in like I was. After I paid them like $300 a buddy of mine said that the phone book cover is a scam, sure they print some and give you as many as you want, but as far as them handing them out like they say they are, thats not going to happen. When someone calls you asking for your money for some hair brain advertising scheme this helps if your a residential electrician and work alone, think about all those long hot days crawling through someones attic before your quick to give them your $$$$$$$. Wish I had. :roll:

 

[jeff43222]

Re: Getting Started

Overall I'd say that directory ads aren't going to make it into my advertising budget next year, either. I have two published right now, one in the main Yellow Pages published by the company that provides phone service, and another in a specialty directory marketed to a specific segment of the community. I've gotten very few calls from my Yellow Pages ad (cost: $709.80/yr), and none from the specialty directory (cost: $298/yr). Most of my business comes from ads in neighborhood newspapers and referrals. I think people only use directories as a last resort.

The warning about watching out for advertising sharks is good advice. They love to jump on newbies with claims of how much business an ad in one of their directories will generate. Before you take out any ads, get information from an unbiased source regarding what works and what doesn't. The people selling ads are always going to tell you their publication is the best one to go with. The Yellow Pages salesman told me advertising in the neighborhood papers was a waste, something only the fly-by-night guys do. I hope he calls me next year around renewal time so I can tell him what a money loser my Yellow Pages ad was and how my newspaper ads have really paid off.

I'd be especially wary of any advertiser that contacts you first. Those are the ones that tend to be scams or a real waste of money. I had a few that were almost comical in how they thought their high-pressure tactics and silly tricks (like saying my name over and over again while talking to me) would work. One guy wanted a quick 'yes' after his rapid spiel, but when I gave him a 'maybe', his tune changed completely. He went from being enthusiastic to being a jerk. Once he realized I wasn't going to sign right then and there, he got snippy, packed up his materials and left in a hurry.

[ July 26, 2005, 01:37 AM: Message edited by: jeff43222 ]

 

[megawatt]

Re: Getting Started

The things that have worked the best for Me:
1) Honesty, Be straight with People. If what they are asking for isn't kosher, or will be very costly I tell them. Most appreciate it & choose to go ahead with the work. Others that decided against proceeding will Give You a good reference, or call You back later.
2) Make friends out of Your Customers, They will be the #1 asset You will have. I send Christmas, get well, & sympathy cards, Check up on some of elderly, & often just stop by to say Hi while traveling through their area. They will never be involved in a conversation about Electrical work that YOU are not mentioned. That gets You a foothold with their neighbors,also their civic, Church, and personal circles.
3) As for advertising...I take out the smallest yellow page add possible. Just to appear legit.
Use Your advertising dollars on a nicely lettered vehicle, I couldn't count the business this has gotten Me. Don't forget to letter the back also...get some use out of sitting in traffic.
A neat clean appearance, with a simple company shirt makes You look professional.
4) Remember You are working in some ones home or business, treat it that way. Simple shoe covers,canvas drop cloths etc. leave a lasting impression. One of the best investments I ever made was a small 30 dollar shop vac. Many Customers have made a positive comment about the fact that I would even consider cleaning up.
5)Get a good CPA, they will be Your best friend.


Good Luck to You

 

[tx2step]

Re: Getting Started

Have lots of CAPITAL ! The more cash you have in the bank, the better.

Stay out of debt!

Don't take on any single project that could sink you if you don't get paid in a timely fashion, or don't get paid at all.

Spread your risk -- don't do too much work for any single client. If you get crossways with him you won't have any other work or income to fall back on.

Make sure whoever you do work for doesn't have a reputation of slow pay or no pay! There are plenty of people (including GC's) out there that are always looking for the new (gullible) guy just starting up.

If they say "I'll take care of you, don't worry" -- then worry cause what they mean by taking care of you isn't what you hope that they mean. That's code for I'm going to pick your pocket!

Don't let anyone get very far behind in paying you or get very much $$ built up that they owe you. Don't let it get further out of hand than you can afford to loose. The more that they owe you, the less likely you are to ever get paid.

Know what you state lien laws are. Make sure you file any notices or liens before the required deadlines or you're out of luck. One day late? Too bad.

Know how/if your small claims court system works.

Find the following that specialize in (or at least have a lot of experience with) construction and contractors: 1. Good Attorney, 2. Good CPA and 3. Good Insurance Agent.

Learn about business management, taxes and tax deposits, filing deadlines, sales taxes, payroll and payroll taxes, etc, etc. Know this stuff before you need to use it, or you will pay some expensive experience tuition.

Spend a lot of your spare time reading the older threads on this forum -- there is a lot of golden information there. Threads on topics that don't seem meaningful to you will suddenly take a midstream turn into invaluable topics and information, so at least scan all of them through to the end.

Stay on the forum and ask questions as they occur to you. Keep notes or print threads that have stuff that is valuable to you. Keep a notebook (or folders) divided into various topics so you can find stuff. Just keep your BS detector active -- 90%+ of the guys on this forum know what they're talking about and are very helpful -- but a few sling BS. You'll figure out which is which with a little reading.

Most new electrical contractors go broke within the first couple of years. They're good electricians, but are clueless as to what it takes to run a successful business. Don't jump in before you are reasonably educated in the basics, or you'll find that the cost of tuition exceeds the funds available.

Edited to add:
If you're married, keep the wife working at her regular job. It will help ease the income strain until your business is built up. If she helps in your business, make it part time around her regular work. Otherwise, you'll get desperate for income and take a dumb risk and put yourself under.

About debt -- remember that the bankruptcy laws change in October. You don't want to go there.

[ July 26, 2005, 02:24 AM: Message edited by: tx2step ]

 

[larryl]

Re: Getting Started

also,what bryan said,,
one more thought ,incorperate,you can do it online,talk to your tax guy.there a big help.
have fun with it, its a challageing adventure,
GOOD LUCK!

 

[travis3710]

Re: Getting Started

Thanks alot for everyones help. I have done or in the process of doing all of the things mentioned. I just need to go put there and get work and NETWORK.!!!!

[ July 28, 2005, 05:18 PM: Message edited by: travis3710 ]

 

[redfish]

Re: Getting Started

Good luck on your masters exam, I recently passed mine after the third attempt. It's tricky .