Questions About Self-Employment

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jimdavis

Senior Member
Location
salt lake city, UT USA
Hi guys,

First let me say that while I rarely post on this forum, I read it religiously every day. I consider the members of this forum to be without a doubt the most knowledgeable in the industry. Thank you all for sharing your expertise.

I am a project foreman for a large electrical contractor. We build skyscrapers, data centers, hospitals, etc. A co-worker and life-long friend of mine is trying to convince me that we should go out on our own. Part of me loves the idea and part of me is scared to death. I have a few questions for those of you who are self-employed.

1. Do you have any regrets about starting your own business?

2. Did the early years require substantial financial sacrifices?

3. What type of work did you target initially?

Thanks in advance for your responses.
 
jimdavis said:
Hi guys,

First let me say that while I rarely post on this forum, I read it religiously every day. I consider the members of this forum to be without a doubt the most knowledgeable in the industry. Thank you all for sharing your expertise.

I am a project foreman for a large electrical contractor. We build skyscrapers, data centers, hospitals, etc. A co-worker and life-long friend of mine is trying to convince me that we should go out on our own. Part of me loves the idea and part of me is scared to death. I have a few questions for those of you who are self-employed.

1. Do you have any regrets about starting your own business?

2. Did the early years require substantial financial sacrifices?

3. What type of work did you target initially?

Thanks in advance for your responses.
Click to expand...

1. Yes. I should have done it sooner.

2. Minimal.

3. Residential
 
1. No regrets whatsoever! Its been extremely rewarding to see things transpire as we grow and prosper.

2. Not a ton of financial sacrifice up front, but I would suggest having a substantial savings backing you as the first few months are pretty lean as far as income is concerned

3. Anything! Residential and commercial service work and small projects mainly, slowly starting to transition into larger more costly projects.

Good luck if you give it a go!
 
Possibly the largest question to be answered is how will you market your company - i.e. how will you land business given that right now someone else brings them to you? Might be a bit easier in the residential market, but large commercial projects are a much different challenge. Ease of success will depend on how much competition exists in your area, bearing in mind that the larger the project, the greater the number of potential bidders_
 
Never regretted -- earned more but longer hours -- stayed a sole proprietor to spend time with kids & family but did all types of work mostly residential -- I now work for a city department in which the paycheck is on time, paid vacations, insurance benefits, stable hours, & can do this work till retirement. no regrets with this job style either. both have advantages & disadvantages you have to decide "why" for yourself.
 
Thanks for the replies. The market for skilled trades here is strong- demand often exceeds supply. There are two HUGE construction projects gearing up right now which will literally suck up every electrician in the state. The work is out there waiting. I believe we can be successful provided we can market ourselves effectively and price jobs competitively.
 
jimdavis said:
Thanks for the replies. The market for skilled trades here is strong- demand often exceeds supply. There are two HUGE construction projects gearing up right now which will literally suck up every electrician in the state. The work is out there waiting. I believe we can be successful provided we can market ourselves effectively and price jobs competitively.
Click to expand...

Good luck. Let us know if you end up taking the leap.
 
jimdavis said:
Thanks for the replies. The market for skilled trades here is strong- demand often exceeds supply. There are two HUGE construction projects gearing up right now which will literally suck up every electrician in the state. The work is out there waiting. I believe we can be successful provided we can market ourselves effectively and price jobs competitively.
Click to expand...

I don't know what you are waiting for. If you are willing to devote your life (at first) to building the business, then it's time. I would however make sure you know what you are getting into with a "partner". If there is just two of you .... how are disagreements settled? You will need to know who gets what if you decide to split up. You should consult with a professional that can guide you through a good partnership agreement.

Personally, I could not have a partner. I make the decisions, I'm in charge (that was my 'tude').
 
jimdavis said:
I am a project foreman for a large electrical contractor. We build skyscrapers, data centers, hospitals, etc. A co-worker and life-long friend of mine is trying to convince me that we should go out on our own. Part of me loves the idea and part of me is scared to death. I have a few questions for those of you who are self-employed.

1. Do you have any regrets about starting your own business?

2. Did the early years require substantial financial sacrifices?

3. What type of work did you target initially?

Thanks in advance for your responses.
Click to expand...

1. no.

2. yes. this time around, started in 2006. in 2009, net taxable income for year was $166, iirc.
no, there is no comma in that number.

3. i mainly did work for people who seemed capable of paying the bill, and were likely to.
i did anything that showed up. i still sort of approach it that way.

the only thing i really see as a red flag, is doing it with a best friend.
that, and my gut tells me we might be having another 2008 about now. what followed sucked.

pushing a 125 man job on a large project sometimes doesn't give you the skill set necessary
to profitably cut in can lights for a middle aged lady who doesn't really know where she wants them.
so, unless you can be doing work that you are good at, it's gonna be a tough row to hoe.
and it's hard to get data centers while starting out as a 4 man shop, and two of the men are the principals.

try this, before going further. go to ellen rohr's website, and download the weekend business plan.
it costs $10. sit down with your buddy who you want to roll this with, and do it.
if you are married, include your spouses for the first part of it, where you set the goals that you want from this.
if your spouses aren't in on the plan, and behind it, it's going to go badly.

http://ellenrohr.com/catalog/

being good sparkies is a good way to lose both your butt, and your friendship.
good sparkies who are broke, are pretty common.

good luck with whatever choice you make.
 
I was employed full time, Friday, unemployed by nightfall and self employed Monday.

Thought about Quiting several times.

$13,000 was my worst year, with it being our only family income. Three kids, wife, dog, cat and house payments. I don't know how we managed.

Did anything available and still do, with the exception of new residential which is on the bottom 2nd page of my preferred work list.

Take the time to make a plan other than mere survival. Investigate the Ellen Rohr deal. I spent more on beer last year.

Partnership with a friend is a flag. I see it as a marriage, but you get to sleep with the spouse, which helps for a while anyway.
 
jimdavis said:
Hi guys,

First let me say that while I rarely post on this forum, I read it religiously every day. I consider the members of this forum to be without a doubt the most knowledgeable in the industry. Thank you all for sharing your expertise.

I am a project foreman for a large electrical contractor. We build skyscrapers, data centers, hospitals, etc. A co-worker and life-long friend of mine is trying to convince me that we should go out on our own. Part of me loves the idea and part of me is scared to death. I have a few questions for those of you who are self-employed.

1. Do you have any regrets about starting your own business?

2. Did the early years require substantial financial sacrifices?

3. What type of work did you target initially?

Thanks in advance for your responses.
Click to expand...

I have no regrets for going into business...I had my own through the eighties doing commercial. But I shut the company down and went back to work as chief estimator for companies doing commercial, like skyscrapers, data centers and hospitals.
It was hard to get over the hump on my own in commercial. Working for good GC's (as you probably know) takes a lot of building up confidence in your work, your estimating, and performance. Also takes bonding to even bid on large jobs.
GC's around here that do that type of work, only use and invite a hand full of EC's that have proven themselves over many years.
I'm sure I would have succeeded had I stuck it out, but I'm glad I went the route I did. I had a great salary, plus benefits, company vehicle allowance, expenses, plus bonus at the end of the year.
You are a foreman for such an EC, so I know you enjoy the same perks as I did. You and your friend will no doubt have the experience to go out and be successful, but it will be a slow growth, small jobs, small pay until you get over your hump.
I'm sure you have some GC's to hand you work, and help you out (at least you better). You may have a good financial footing, but you will need it.
Sounds like you will be in good shape either way, but I appreciate your fear to make that move.
Of course...if you're going into resi service and construction, you got a truck and a ladder, you're good to go
 
Thanks for the replies. Its a big decision and one which will take me out of my financial comfort zone, at least for a while. The work will likely be different than what I'm used to but that doesn't really bother me. After 29 years in the trade my skill set is pretty diverse. Thanks again for all your input.
 
Watchout

Watchout

No regrets, as someone else said sol owner, made my hours I wanted and spent time with my family.

No money problems that I could not live with.

Machine control upgrade and design.


Some watchouts from my second business though.

DO NOT use retirement money for the business, if you don't have enough saved don't do it.

DO NOT stop paying house bills, to pay business bills.

MAKE SURE your other half is 100% ok with it.

I made them three mistakes and will live with it till the day I die !
No retirement money, house burnt without insurance, almost divorced.

Good luck
Cowboy
 
1. Looking back, programming was where the money was.

2. Yes, more than I could imagine or guess.

3. Public works plans and specs jobs.

Having the right accounts or high in demand niche specialty skills, there's money there. You will find out right away if you can throw a high price on it and get paid. You may be able to trial bid some work to see where the market is before making the move

Regular electrical work, you may be surprised how low the quality of the competition is. They are where the market price is, surprisingly low, and the quality of the work they do there is low beyond my comprehension.

Customers can be very low quality also, the type that want the light fixed but don't want to pay for the ballast.

In the data centers and hospitals surely you've seen some of the specialty vendors who are sole source in their specialty, whatever it may be. ATS gear, BMS BAS controls, testing companies. That's what you would want to target, something that you are specc'ed into as part of the equipment package and the customer just calls you and no one else for that service. Hopefully something with recurring do nothing highly paid service (no joke). Maybe start by getting hooked up with the manufacturers as specialty installers and field service. Each big gear type has a specialty service requirement.

This assumes you are not planning to bid against your employer for the same work you do now. If so, the financial aspects are dominant, floating that size, being able to buy with his discount off list, and not taking the hit for everyone else's malfeasance.

Also not to be overlooked, the data centers and hospitals hire their own in house friendly idiot people to babysit what you have installed. Those are the good jobs.

I have seen successful contractors who routinely profit from the customers mistakes, bad designs and implementations resulting in repeated recurring rework attempts. Things that were obvious, sometimes obviously illegal, to me but were the customer's demands fulfilled by smiling contractors happy to come back repeatedly to fix the same things over and over.

It's really a completely different skillset and mindset where the wrong action may cause the right result (profit) and doing the right thing causes poverty. If it was just work and get paid, your specialty would get overrun with cheap low quality competition.
 
I would never go in as a partner. I would either be the boss, and pay the other guy really well and I'd make the final decision, or I'd let him be the boss, pay ME really well, and he make the final decision. Its hard to make all the work come out exactly 50/50, and somebody always thinks they are getting the short end of the stick. Running a business is not a 7 to 3:30, 40 hour a week job.
 
frankft2000 said:
I would never go in as a partner. I would either be the boss, and pay the other guy really well and I'd make the final decision, or I'd let him be the boss, pay ME really well, and he make the final decision. Its hard to make all the work come out exactly 50/50, and somebody always thinks they are getting the short end of the stick. Running a business is not a 7 to 3:30, 40 hour a week job.
Click to expand...

Take this post to heart. After 40+ years in this industry, I have never known any partnerships that lasted more than a couple of years. From good friends - to business partners - to bitter enemies. In the end, it ends up dragging down everybody involved.
 
jimdavis said:
Hi guys,

First let me say that while I rarely post on this forum, I read it religiously every day. I consider the members of this forum to be without a doubt the most knowledgeable in the industry. Thank you all for sharing your expertise.

I am a project foreman for a large electrical contractor. We build skyscrapers, data centers, hospitals, etc. A co-worker and life-long friend of mine is trying to convince me that we should go out on our own. Part of me loves the idea and part of me is scared to death. I have a few questions for those of you who are self-employed.

1. Do you have any regrets about starting your own business?

2. Did the early years require substantial financial sacrifices?

3. What type of work did you target initially?

Thanks in advance for your responses.
Click to expand...

1) No regrets starting it, but I didnt run it well, certainly not well enough to survive the 2008-2010 crash,

2) All of my profits the first year went into buying tools. $700 rotohammer, $125 bits, $200 ladders, holesaws, corded drills, nail-biter wood boring bits, upgraded toolboxes, telecom tools, etc etc etc. Had I had another $50k, I could have spent that as well (Fluke DTX 1800 w/fiber modules was ~$20k alone).

3) Initially, commercial communication (voice/data/video) and security (camera) wiring for new con hotels, 60-150 rooms.

Great advice from the above posters; I'd add that you need to keep in mind that your profit will not be steady. When I started, I was turning down jobs because I didnt have the manpower. Constantly busy, making very good money. Spending lots of money to expand the business when the market turned. People were taking jobs in the red just to keep the labor around for larger projects, for better times. I couldnt operate that way, wasnt diversified enough to do other things electrical related, so I folded. Had I not done so, I would have left sooner or later as the travel was a major strain in my marriage, which dissolved anyway.

Good luck!
 
I don't regret going into business, but I do regret some of the decisions I made.

For several years I did just about ANY THING electrical. Residential, commercial, new construction, remodel, lighting jobs, data/phone, service calls, --- whatever. This is a mistake! Its too hard to train guys to do all that stuff, much less be proficient at it yourself and estimate, schedule, collect money, yada yada yada.

Pick something your good at and spend your time pursuing that market. Don't run the rat race everybody else is in.

AND -- Don't be afraid to put the tool belt away and train somebody else to do the work. That way you can concentrate on making the business run smoothly. This is something else I was never good at.

Charge large or don't do it at all. It's just not worth the headaches & hassles otherwise.

Good luck and God bless!
 
New Member, On my own, Need help growing.

New Member, On my own, Need help growing.

Hey folks,
I was a member of a company in upstate NY whose owner died. Supervisors scrambled to get rid of their competition within the company. I was fired for a fender bender after 12 years of making the company money. Fired on Thursday, DBA on Monday, Van full of tools and material by Saturday. No experience running a business.
Its been hard but I've been in business now for 7 years and have been pretty stable in work flow but stagnate on financial growth. Still going at it paycheck to irregular paycheck. I get about 50/50 residential/commercial work. Mostly small projects like fit ups and service calls. Sometimes the oddball call comes in for industrial machine repair,... Never afraid to try working on something I'm not familiar with.
1. I need to hire someone exactly like me. (HA!) Someone who cares about the customer, the business, and work quality. I'm not afraid to hire, but I am a bit weary of my ability to read others and their qualifications. Any suggestions?
2. Saving money as a one man shop isn't easy, but I can't see how to grow without employees. Catch 22? How do I go about obtaining a reserve to make payroll before the benefits of an employee come in?
3.How far ahead do I put in reserve for payroll?
4. Does profit sharing work?
I have read a lot of the advice on this site and am thankful to Mike for creating it. I appreciate the wisdom found here and am ready like a kid at Christmas to gain from the experiences others have had. Any help would be greatly appreciated.

Regards,
JoeP
 
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