Originally posted by jimwalker:
The trick to residential is get large fast.
I think the trick to any business, is to be a smart business man. (of which, IMO alot of tract home contractors are not)
The owner of small companies need to make there living from maybe 4 or 5 employies.
I only need to make a living off of One man, myself. Hiring more employees, doesn't necessarily mean more income for the business owner.
They get no price breaks on material and just manage to stay open.
I can tell you right now, that we get price breaks on just about everything. And I know for a fact that we buy alot of materials for less than most of the local 'tract home' companies.
When a company wires 2,000 homes a year things change fast.
Start with buying power,pallets of romex,panels,box's,etc.
Buying power comes not only with quantity, but with ability to pay thier bills. After the ability to pay their bills is established, comes their credit history. ie. do they pay their bills.
There savings on material are easily 5%to 10%.
I don't know that this is 100% true also. They might get a 5-10% break on certain items, and they might be getting slammed 20% on others. It's all relative. And really needs to all be on the same perspective.
They hire installers that know next to nothing if even that much.Hand them drawings showing what wire to run where.
This I agree with
They might have one $12 an hour guy to oversee the job with 5 guys under him at $8 .
The pay rates probably vary from area to area.
They walk in and wire a simple bare min 3/2 in one day.
Now if you have 8 crews doing roughs and another 8 crews doing trims ,you are turning a house an hour.
Maybe. If each crew is getting done in 8 hours. What about the crew who has a sick guy, does that throw it off at all?
At $300 per house you take home $12,000 a week.
Profit does not equal "owner's salary'.
It requires hiring a few good men to go behind fixing problems and some good office help.
So there went the profit margin. How much does each return trip effect the profit margin? On $300 I bet it is more than you think.
Bottom line is the owner makes his money by buying materials cheap and making only a few dollars an hour off each mans hourly wage.
I make my money by working hard, being on top of things, putting together a good 'team'.
Think about it and you will see why his price is cheap.He will beat a normal shops prices every time.
His price is cheap because he is a moron. He is not a good business man. If he were a good business man, he would not want such a slim profit margin.
Think about it, if he was making $600 per house using your figures, he would be making $24,000 a week.
Because these guys think of 'Quantity', they lose site of the 'Big Picture'. They are ruled be G.C.s. They let the G.C.s tell them what the'll pay. When the building boom slows, they are the first to go out, and the electricians who make an honest wage take over.