New business

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McLintock

McLintock

Senior Member
Location
USA
Occupation
Electrician
Just looking for some advice here. I am thinking about going out on my own. The guy I am currently working for is 68 and has 3 houses lined up for this year and I don’t think much in between.

Do you guys have a advice on how I can still work on his projects and my own?

Do you guys who are owners have a LLC. ?
Any recommendations on insurance?

Any other words of advice?


“ shoot low boys their riding shetland ponies”
 
First thing I would suggest is to have at least a year's worth of income saved up. It isn't as bad now as has been in the past, but you surely will run into down times with little coming in until you get your business up and running good.
As for insurance, I would shop around for contractor insurance and get at least a 2 million dollar coverage.
 
Maybe talk to the gentleman your working for maybe he's looking to retire and you guys can figure out something that works for the both of you.

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Depends on what state you're in. For example here in California they will issue a license to an LLC but there are all these additional bonding and insurance requirements so most contractors have a corporation.

Check out nextinsurance for insurance. I wouldn't use them if I were doing high risk / high dollar work but for resi or light commercial they seem fine.

Little Bill mentioned having a year of income saved up -this is key and cant be stressed enough. Many small business fail because the early business earnings end up supporting the owner who just left his job to start the business and needs the income. Then the business doesn't have any money to operate on, float costs, advertise, etc and quickly falls apart.

One more tip is don't take a job that you can't afford to not get paid for. Never know what could happen and best limit your exposure until your business has built up some financial strength.
 
Depending on what kind of work you're looking to do - service work, small adds/remodel wiring for end users or contractors, new construction, residential, commercial.....

When you work straight for the end-user, you typically get paid on the spot. But this kind of work requires much more advertising expense and sales time. Don't forget to include all the sales time and leg work in your pricing structure. Here's how I sum it up: everyone who says yes has to pitch in to help pay the time you spent with everyone who said no.

But honestly, I would stay away from lead generators

When you work for contractors of any kind, you are almost certainly going to have to wait for your money. Remodel work typically get you paid quicker than new construction, and residential work typically gets you paid quicker than commercial work.

If you have some money on hand, you don't have to worry so much about waiting. But everybody has a point that they are stretched beyond their comfort. Don't be surprised to find yourself waiting to get paid what amounts to 2 or 3 months of income. I'm just a small one-man operation. What is owed to me at any given time ranges between $15,000 and $40,000

Don't be afraid to scratch your boss's back a little bit. If he only has a few jobs a year, you could schedule those in with your other work. I still do that occasionally. And he pays me on a 1099.

There's other stuff, too. But some of it you just can't learn until you jump in and get your feet wet
 
Since your boss is 68, he's likely been in the business a while, built a reputation, steady client list, good contacts, etc. All things being equal, I'd pause to consider how it is an experienced fella like that has so little work lined up in his market for the coming year. And equally consider, how a newbie contractor without all his advantages is likely to fair in that same market. Now, others have pointed out there may be any number of reasons not connected to the economy for this lull and how it may present you with an opportunity. But look at all the issues before making the leap to the contractor world.
 
"Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more."

gadfly56 said:
I'd pause to consider how it is an experienced fella like that has so little work lined up in his market for the coming year.
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Throwing in the towel? Had it up to here?
This 68 YO can tell you what not to do.
 
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You say he has three houses lined up. I'm assuming you mean new construction. This is not a model I would emulate. New construction houses are not very profitable. Remodeling work and repair services will always get you more money.

And speaking of money, the number one most important thing you can do to make your business successful is to charge the right price. Do a search here on how much to charge. You will see a bunch of threads where it is discussed. Here's a summary: You should be charging enough to cover every single expense you have plus a handsome profit. If your hourly rate is only two digits, you're doing it wrong.

Never give anything away free. Even "free estimates" get charged by increasing your hourly rate to cover them. If you are having a hard time understanding this, do this exercise: Imagine your job is to sit in the office and direct your employees to do all the work (both in the field and the office). If your employees would expect to get paid to do something, you must charge for it.
 
Coppersmith said:
You say he has three houses lined up. I'm assuming you mean new construction. This is not a model I would emulate. New construction houses are not very profitable. Remodeling work and repair services will always get you more money.
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I agree no money in new construction. And I would be a one man recking crew, so new is not a option.

gadfly56 said:
Since your boss is 68, he's likely been in the business a while, built a reputation, steady client list, good contacts, etc. All things being equal, I'd pause to consider how it is an experienced fella like that has so little work lined up in his market for the coming year. And equally consider, how a newbie contractor without all his advantages is likely to fair in that same market. Now, others have pointed out there may be any number of reasons not connected to the economy for this lull and how it may present you with an opportunity. But look at all the issues before making the leap to the contractor world.
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He really as only two accounts, and the other “service” work we do is for this friends (some he does not charge for). He says we are busy, while I sit at home for a week in a half, while I get 40 hours a week for 1/2 the year. It’s the fact that he needs to be done at 1 in the afternoon.


“ shoot low boys their riding shetland ponies”
 
McLintock said:
Just looking for some advice here. I am thinking about going out on my own. The guy I am currently working for is 68 and has 3 houses lined up for this year and I don’t think much in between.
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How much experience do you have? Can you do the jobs you are on with him, without his presence? Are you licensed yourself?
McLintock said:
Do you guys have a advice on how I can still work on his projects and my own?
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Talk to him and let him know your desire (or need if that is all the work you get) and enlist his help and let him know you wish to keep helping him to finish his projects. Your rates when working for your own would likely need to be different than if you are working for him out of consideration. Don't burn that bridge.
But before you strike out on your own make sure you have your insurances.
McLintock said:
Do you guys who are owners have a LLC. ?
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From a business perspective minimally having a DBA and a TIN for business purposes advisable. There are many times another contractor or GC will want some tax ID for purposes of subcontracting (1099's) and you would want to keep your social security number private. It also opens doors to lines of credit not link to your personal credit.
McLintock said:
Any recommendations on insurance?
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Get liability, and WC (will open doors to higher end work), and your commercial vehicle insurance upgraded as you would likely be carrying customers product, (will cover products if damaged in vehicle accident).
McLintock said:
Any other words of advice?
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What everyone else has said, and get your license if you dont already have one. You may need to work out arrangements with your current employer if your areas requirements are such that different level of licensing required. Know your state and local requirements for setting up an electrical construction company. Whether it be and LLC, DBA, or just your name.
 
You have already been at this too long. For both of you. Do what you need to do to start a business and let him know you will help him as time allows, or quit entirely.

Various threads have been started on this subject and while all have advice on what should be done you still need to Sh...or get off the pot.

Times have changed but I was unemployed on Friday and self employed by Monday. All the suggestions given are for a preferred situation. Working half a year will never get you a years income in the bank.

I‘m at the opposite end. Time for me to retire, but I just can’t pull that trigger. That’s a decision in itself.
 
Fred B said:
How much experience do you have? Can you do the jobs you are on with him, without his presence? Are you licensed yourself?

Talk to him and let him know your desire (or need if that is all the work you get) and enlist his help and let him know you wish to keep helping him to finish his projects. Your rates when working for your own would likely need to be different than if you are working for him out of consideration. Don't burn that bridge..
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The equivalent to 7years. I do have a Masters license. Most the time I do work without him, he just shows up tells me what needs done, goes get the stuff I need and goes home.

Another aspect of this is over the past two years we’ve been talking about what it would take to buy the business from him. So last month we sat down and he told me what he want/needed for the business, do not really give me any hard numbers on income or expenses just ballpark numbers. Also at the end of the meeting he says he just runs everything though self- employment, so everything is in his name and no real business to sale( and wanted way to much for that)

So trying not to burn a bridge at all, but he tells me he’s get to keep working for another 18 months ( to pay for wife’s health insurance)

He’s been really good to me otherwise over the past to years


“ shoot low boys their riding shetland ponies”
 
There is not much to buy from an independent contractor aside from possibly equipment, material, or real estate. Unless he had several high end contracts for service or new construction there isn't really anything to buy. You can't sell/buy just a customer list, there isn't much value in that. So my advice would be to just explain to him that you are willing to help him along side with starting up your own business. I wouldn't pay him anything unless it's physical items that you can actually see/use.
 
Little Bill said:
You can't sell/buy just a customer list, there isn't much value in that..
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So why sell or retire at all, when home phone & JW's are available to run jobs & service calls.

JW's get severance pay from materials & tools they used on their side jobs, then go back to the hall when done with you.
 
I think if you only have 2 years with him, and he wants an arm and a leg for his contacts, you may be looking out for him more than he's looking out for you. I wouldn't consider it "burning a bridge" if you move on.

Honestly, here's what I would do. Start hitting the pavement, whatever that looks like. If you want to serve the end user, make a simple website and Facebook page. Start asking your friends to like your page. Start taking pics of your work, and post daily that you're looking for new customers. You'll have some call.

If you want to work for some remodeling contractors, start writing down phone numbers you see on yard signs, and cold call them. You'll find some who are willing to take a bid from you.

As you get a little bit of work trickling in, schedule it a few weeks out if you can. And tell your boss you need some time to go take care of something.

I think he needs you enough that he'll go for it.

You just might find that as your work picks up, the amount of work he has available for you might be tapering off.

And it just might work out that you are on your own at the same time that he's looking to get out
 
I agree with Little Bill. There isn't much worth buying. Normally the only thing worth anything is the phone number and that assumes people are routinely calling for work. Doesn't sound like that is the case here.

If you feel like you owe this guy something, stay with him. Otherwise, you could start your own business tomorrow.
 
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