Start up costs

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Coppersmith said:
Florida requires you have a minimum of $10K in the bank to start a contracting business. Having started one three years ago I would say a minimum of $30K is more reasonable. There are a lot of startup expenses.

Here's an expense to avoid: advertising. Most of it is a waste. Don't wrap your vehicle, nobody notices. Don't do newspaper ads or any other print. Print up business cards and join a BNI group (google it). You want your business to run on word of mouth advertising only.
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I started with 10,000 and went through it fast. It would have been enough in better times, but I started in 2008 and shut down in 2013. I had some good profitable work but not nearly enough. Lots of small stuff that barely kept the wheels spinning. 30,000 may have kept me alive.

Dittoes on advertising. I did keep a yellow pages ad; that used to be a sign around here that you weren't fly by night. I should have gotten a simple website. I could have gotten one for about 500 but would have had to set it up myself. I didn't have the computer skills. Nearly everyone looks to the web now. I had a free listing in The Blue Book for awhile. I got lots of offers to bid but usually got them right at deadline. The rep said free listings got the offers no one else responded to and that a paid listing would get me 1st priority. I turned them down. 300 a month. It sounded fishy to me that no one else wanted fast food or retail projects when work was so hard to find. People I knew of all trades were taking work they hated, just to stay alive. I did buy a few ads in various directories but what I mostly got from those were more advertisers calling to sell me more ads.

I did sign my truck with simple magnetic signs on both sides and the back. I got enough calls from that to be worthwhile. I think the 3 signs cost me about 100. Do be careful though and remove the signs occasionally. I still have a few paint bubbles where I left one in place too long. I also bought 2 cardstand signs to put on my jobsites. They were about 25 each. I also had a small magnetic sign on my sawpole.

Good luck to you. It's tough out there.
 
If possible keep away from big purchases or lease/ finance instead of taking a big chunk of money out of cashflow. Early on I spent 30k on a nice work truck for my service tech. Would've been better to pay hundreds monthly rather than take 30k outta circulation.
It wouldn't have been such a problem if receivables were always up to date but more often than not; bigger jobs, smaller margins and later payments
 
Fulthrotl said:
a business plan, with all the numbers filled in.
https://ellenrohr.com/catalog/the-bare-bones-biz-plan/
don't even consider going out to seek fortune till you do this.

six months living expenses, in the bank. not in theory.

your largest customer is no more that 15% of your net income.
gross doesn't count. and if your gross is waaaaayyyy out of ratio
to your net income, your risk factor escalates.

how much money are you putting into a job for the yield?
that is your risk.

normal contracting, if your profit is 20%, you are doing awfully
well. that means to make $100k a year, you are going to roll
the dice with half a million, that anything can happen with.

my "bad" customers are my most valuable asset. i have to go
talk to more people and get more customers, so they aren't
two thirds of my business.

when my least desirable customer is 15% or less of my income,
i'm good. when they are 65% of my income, i'm screwed.

i'm blessed that i have generally excellent customers. that is
the result of a business plan, and some amazing luck.

no plan, is you take whatever washes up on shore.

i am probably more fortunate than i honestly deserve.
i took a look back thru receipts last week, i had my
first deadbeat loss.

it was $500, on almost $4M in receipts. that is stupid good.
ask on here about losses... the point is, how much can
you afford to lose, and not end up over a steam vent?

any losses come right out of that six months prudent reserve.

good luck, and have fun. remember, the devil isn't in the
details, the profit is.
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I'll second that emotion.
 
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