Tiger Electrical
Senior Member
- Location
- Northern Illinois
In another thread Celtic mentioned not taking on a job that costs twice your last job. I've read elsewhere that you shouldn't take on a client that's more than 10% of your business. I wanted to offer my experience to the contrary:
A few years ago I had been in business long enough to know better and was very hungry. The problem was marketing, but I didn't know it yet. Our oldest child was going into college & we didn't have any money saved for it. We're pretty frugal, but with 3 kids, mortgage, medical bills, etc. we just didn't have it.
A year or two before I had done a Habitat For Humanity house and ran into a childhood friend, now a Project Manager/GC. They had me do a couple rental houses, but were also doing commercial strip with buildouts. I'm residential, so the 20' ceilings put me off & they had another contractor do it. After about 10 of them the GC calls begging for me to do them. They said they'd give me a lift & their guys when I needed help. I looked at the plan & told the GC "This is going to pay for my daughter's college".
I did that project for the next few years and it did pay for my daughter's college. It was a lot of long hours, with Saturdays and some Sundays. It was also about 90% of my business. The danger of course is that if you lose that big client, how will you stay in business?
In the back of my mind I knew I had a serious problem that hadn't been solved...marketing. Also, the project was in a valley, I had terrible cell phone reception, my schedule was crazy, so I wasn't taking much other work. So while I was working the long hours I also studied marketing, dropped the A name & started Tiger. It was a large investment & about the time Tiger started taking off, the GC dropped me for someone cheaper (an EC who later told me he lost money on his first contract). If I hadn't planned for losing this GC I would've been in serious trouble.
So, don't assume that a much larger job will hurt you. The two dangers I can think of are the loss of the client, and also the cash flow crunch. Typically in the early stages your payables increase substantially while your receivables remain the same. You need cash reserves to handle the increase in expenses.
Dave
A few years ago I had been in business long enough to know better and was very hungry. The problem was marketing, but I didn't know it yet. Our oldest child was going into college & we didn't have any money saved for it. We're pretty frugal, but with 3 kids, mortgage, medical bills, etc. we just didn't have it.
A year or two before I had done a Habitat For Humanity house and ran into a childhood friend, now a Project Manager/GC. They had me do a couple rental houses, but were also doing commercial strip with buildouts. I'm residential, so the 20' ceilings put me off & they had another contractor do it. After about 10 of them the GC calls begging for me to do them. They said they'd give me a lift & their guys when I needed help. I looked at the plan & told the GC "This is going to pay for my daughter's college".
I did that project for the next few years and it did pay for my daughter's college. It was a lot of long hours, with Saturdays and some Sundays. It was also about 90% of my business. The danger of course is that if you lose that big client, how will you stay in business?
In the back of my mind I knew I had a serious problem that hadn't been solved...marketing. Also, the project was in a valley, I had terrible cell phone reception, my schedule was crazy, so I wasn't taking much other work. So while I was working the long hours I also studied marketing, dropped the A name & started Tiger. It was a large investment & about the time Tiger started taking off, the GC dropped me for someone cheaper (an EC who later told me he lost money on his first contract). If I hadn't planned for losing this GC I would've been in serious trouble.
So, don't assume that a much larger job will hurt you. The two dangers I can think of are the loss of the client, and also the cash flow crunch. Typically in the early stages your payables increase substantially while your receivables remain the same. You need cash reserves to handle the increase in expenses.
Dave
