Things you wish you would have known.

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Little Bill said:
Not a surprise to me as I had been warned, but you need to have either a spouse with a good income ...
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Spouses (or really committed significant others) are actually much more valuable than their income potential. Mom and Pop businesses require one. Your spouse can very likely assist you greatly by doing the office related stuff while you do the field stuff. If they are capable, a spouse who sends out invoices, answers the phone, makes deposits, updates the accounting, and runs to get permits and then doesn't require you to pay them regularly is a fantastic asset!
 
electrofelon said:
IRS only wants to see a small amount of salary and the rest can be reimbursements (My guy knows the figure, its small like 5k maybe, he told me years ago but I dont remember). That gets you out of most of the self employment tax.
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there may be situations where this applies, but business owner that is doing work in the field needs to have salary comparable to what it he would pay employee doing the work
 
Coppersmith said:
Spouses (or really committed significant others) are actually much more valuable than their income potential. Mom and Pop businesses require one. Your spouse can very likely assist you greatly by doing the office related stuff while you do the field stuff. If they are capable, a spouse who sends out invoices, answers the phone, makes deposits, updates the accounting, and runs to get permits and then doesn't require you to pay them regularly is a fantastic asset!
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Absolutely true! I had one for almost 20 years until she passed away 3 years ago.
 
I am also in the "charge enough" camp. When you are considering your hourly rate, remember that the hourly rate needs to cover your salary when you take holidays, vacations, or get sick (although as a self employed person you probably will not take vacations and work sick, but you should still ge paid for those days). Plus you need to have a retirement plan, FUND IT!!!

I also discovered that good customers feel better about paying more because they have more confidence in the contractor. Customers that are willing to pay better are the best customers, the keepers. :) They also expect to be treated well, and they should be.

I also found that cheap customers are the most difficult to work for, so charge a profitable rate and they will go elsewhere, problem solved.

Do not fill up your schedule with cheap work, you won't have time for the very profitable job that needs to be done soon.

Don't let a smooth talking GC get you into financial trouble. They love to fund the project with your money by slow paying or not paying.

If I could go back and change anything, I think it would be to charge more. I understand that sometimes charging less is what it takes to get in a door, but I would suggest using a discount method (15% off coupon?) and keep your normal rates instead of selling a lower rate with no discount.

Best of luck to you!
 
Before starting a business, where that business is your only source of income, have 12 months of your personal bills set aside. This money is for you to live on, not to float the business with. So many new business fail because the owner has to take money out to live on and the business doesn't have the cash it needs to operate.

Don't take any jobs so big that you can't afford to not get paid.
 
Brandon B said:
That’s the game plan. I’ve taken a few guys under my wing at the company I work for now. Hopefully I can get one of those guys to help me out. I don’t expect to keep any person working for me forever, but what do you think is the best way to keep someone wanting to work for you?
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An employee's number one concern is getting enough hours and getting paid for those hours. No amount of loyalty will keep a person working for you if they need the money and you are not supplying it. This is why you should not be in a hurry to hire if you can do the work yourself until you get established.

An employee's second concern is feeling like they are being treated with respect. People quit good jobs all the time because of lack of respect.

This is followed by liking the work and having a good and safe working environment.
 
oldsparky52 said:
I understand that sometimes charging less is what it takes to get in a door, but I would suggest using a discount method (15% off coupon?) and keep your normal rates instead of selling a lower rate with no discount.
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I'm a big fan of giving discounts (when warranted at all) instead of just a lower price, it shows customers the actual value of what they're getting. Even when doing a free job for a charity, give them an invoice with a 100% discount.
 
Coppersmith said:
Spouses (or really committed significant others) are actually much more valuable than their income potential. Mom and Pop businesses require one. Your spouse can very likely assist you greatly by doing the office related stuff while you do the field stuff. If they are capable, a spouse who sends out invoices, answers the phone, makes deposits, updates the accounting, and runs to get permits and then doesn't require you to pay them regularly is a fantastic asset!
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So instead of paying someone $500-1000 a week, your spouse works basically for free. What a deal for both of you. :)

I have never understood the attraction of working for less for yourself than what you could make working for someone else.

My understanding is the majority of small businesses fail within a few years and most of them never make it to the point where the owner makes more than he would have working for someone else.
 
petersonra said:
So instead of paying someone $500-1000 a week, your spouse works basically for free. What a deal for both of you. :)

I have never understood the attraction of working for less for yourself than what you could make working for someone else.

My understanding is the majority of small businesses fail within a few years and most of them never make it to the point where the owner makes more than he would have working for someone else.
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I have never understood why guys bring negativity into these threads, especially when the negative post has nothing to do with the OP. Yet I hear you man, some people are just built different. If you don’t take the shot you’ll never make the shot. If a company does fail I’m sure the lessons learned are invaluable, which in turn makes that person more valuable. I’m young enough to F my world up and come back from it. Feel free to disagree.


On a side note I would like to thank everyone for the awesome feed back on this thread, I was a little weary about posting on here not knowing what you all would say, but I was pleasantly surprised. Thank y’all.
 
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Brandon B said:
I have never understood why guys bring negativity into these threads, especially when the negative post has nothing to do with the OP. Yet I hear you man, some people are just built different. If you don’t take the shot you’ll never make the shot. If a company does fail I’m sure the lessons learned are invaluable, which in turn makes that person more valuable. I’m young enough to F my world up and come back from it. Feel free to disagree.. . . .
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. . . .some people are just built different.

You’re absolutely right.
However, different people also possess different perspectives--and maybe more astute in seeing a better vantage point-- albeit-- clear understanding of what is in store for offering help to someone’s endeavor.

You are being different as well (for good reason)-- and your being different could attest to this difference.
You claim, this is negativity because it doesn’t fit your agenda. What it is-- is: not a wholesale negative statement-- rather a cautionary tale that you may encounter. . . while at the very least prepare you to face reality.

Confidence is necessary in making the first step.
As the Chinese philosopher (Lao Tzu) said: “The journey of a thousand miles begins with a single step.”

The thousand -mile journey is not lined in its entirety with fragrant petals of roses --you can also get pierced by its painful prickle.
 
petersonra said:
So instead of paying someone $500-1000 a week, your spouse works basically for free. What a deal for both of you. :)
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Bob, you are missing a very important nuance here which I have bolded below.

Coppersmith said:
Spouses ... doesn't require you to pay them regularly ...!
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I did not say your spouse is not paid. Your spouse in fact, shares in the total profits of the business. If you are charging correctly, they are earning a princely sum. What I said was they don't require a regular i.e. weekly 40 hour paycheck. This is in fact exactly how two partners earn from a business. They make take a small draw weekly, but the majority of their earnings is paid when the company can afford to make such a payment. In other words, a partner or a spouse is willing to wait for their payday vs. employees who are not.
 
If you get to the end of the first or second month and the funds don't add up, charge more.

Diversify your clients. I had a couple of industrial customers, several commercial customers, and GC's, and tons of residential customers and was able to weather the Bush/Obama recession. I had a combo license (commercial/residential) so I could work on any job.

Don't be afraid to show a GC the finger, I mean the door. If they are screwing you, they're probably screwing the customer and it will bite you.

Don't forget to pull liens on jobs you can't afford to not get paid on. (There aren't too many of those.)
 
Coppersmith said:
Bob, you are missing a very important nuance here which I have bolded below.

I did not say your spouse is not paid. Your spouse in fact, shares in the total profits of the business. If you are charging correctly, they are earning a princely sum. What I said was they don't require a regular i.e. weekly 40 hour paycheck. This is in fact exactly how two partners earn from a business. They make take a small draw weekly, but the majority of their earnings is paid when the company can afford to make such a payment. In other words, a partner or a spouse is willing to wait for their payday vs. employees who are not.
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Look at it this way.

If you are a union electrician in Chicago, your total pay and benefit package is in the $80 an hour range. If your spouse works some place, he or she is probably not far off from that number.

That means to break even versus the two of you working for someone else you would need to show a net profit for the year of something in excess of $300,000. if you don't believe me run the numbers. Even if your spouse worked at a job that paid half as much, your business would still have to clear $225,000 a year to break even versus both of you being employed elsewhere.
 
1. Don't try to get rich off one job.

2. When it starts to seem like you're making some money, assume you're not. Put it back in to your business.

3. If it's a nice day on a Friday afternoon and you're still working, you might make it.

4. Pay help on time at any cost.

5. Pay taxes. IRS does not fool around.
 
petersonra said:
If you are a union electrician in Chicago, your total pay and benefit package is in the $80 an hour range.
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Ouch. I'm a union electrician in Tampa. If I were working as a journeyman and not an owner, my total pay and benefits package would be $35.28. (Lowest in the Nation except for Guam I'm told. But cost of living is a lot less too.) Not sure I'm willing to endure the cold of a Chicago winter for the extra money.

petersonra said:
That means to break even versus the two of you working for someone else you would need to show a net profit for the year of something in excess of $300,000. if you don't believe me run the numbers. Even if your spouse worked at a job that paid half as much, your business would still have to clear $225,000 a year to break even versus both of you being employed elsewhere.
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You make a good point, but for those spouses that stay at home, work part-time, or don't earn so much, my point is valid.
 
electrofelon said:
1. Form an LLC and have an accountant who knows how to use it. If you are paying over a grand or two in taxes per year, either you are doing incredibly well, or you dont have the right accountant.

2. Charge more.

3. If your state DMV is a PIA, register your LLC in montana and register your vehicles there.

4. Endeavor to keep learning and keep improving.
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Always wondered why so many LLCs and Corporations are formed in Delaware?
 
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