3 Pro Tips for Rookie Building Contractors
In a bid to help contractors learn, save and share, Pro Construction Guide recently asked four of our most seasoned Advisors to list one or two things they wish someone had told them early in their careers or things they would do differently based on what they know now.
The contractors, who have 184 years of combined experience, herald from four states along the East Coast and include two remodelers, an electrician and a painter/home decorator. Based on their responses, there are three credos every rookie contractor should live by:
- Never stop learning.
- Know your overhead costs.
- Find a business mentor.
Below are excerpts of their responses. We hope you find them useful as you build your own contracting business, and we urge you to chime in with your own pearls of wisdom on our Facebook page.
H.G. “Butch” Bundy, who is based in Debary, Florida, has 50 years of experience as a remodeling contractor under his belt.
His advice to his younger self and newer remodeling contractors is to take advantage of as much free training as possible to keep abreast of the latest materials, products, techniques and technologies being used by fellow trades.
“What’s helped me is accumulating knowledge about subcontractors such as electricians and plumbers, etc.,” said Bundy, who has also paid to take a few courses at his local community college. “Being a remodeler, I am exposed to all sorts of different materials and trades, so if there’s an electrical company that offers a seminar on latest electrical panels, I’ll go to it.”
Bundy also subscribes to a lot of product-oriented newsletters.
“I get 130 emails a day,” he said. “Some people say that’s spam. Well, no it’s not because 94 percent of my business comes from existing customers and referrals. It’s good to know what’s new that you can pitch to those clients. It’s not just about profit but about making their lives easier.
Bundy says tracking product innovation has only become more important as the Internet of Things becomes a reality.
“Most of us in the construction industry, at least initially, did not see that people would embrace this technology,” he said of the appliances, cameras, doorbells, light controls, security systems, thermostats and other smart devices penetrating the home services market. “I had to have a few of my customers educate me on it.”
Tip: Consider installing blank conduit in any of the commercial jobs you do in anticipation that tenants will need it.
Peter Schmitz, who has 49 years of experience as an electrician, relocated from Wisconsin to North Carolina in 2018 to work for the arm of Samaritan’s Purse that provides medical staff, supplies and other services to hospitals around the globe. He recently returned from a three-week assignment in Africa and, in 2019, helped open an emergency field hospital in the Bahamas following Hurricane Dorian.
A self-avowed “tool nut,” Schmitz reads voraciously and urges contractors to “never stop learning.”
But in addition to EC&M (Electrical Construction and Maintenance), Electrical Contractor and ENR (Engineering News-Record) magazines, he has read plumbing and heating publications, attended trade shows and scoured the web.
For instance, he recently watched a video on horizontal boring on the outside chance it might help a subcontractor on a future project.
“To make your job easier and make yourself money, you need to get the job done and done the right way,” he said. “Of course there is a point where you can have too many, but when you have too few, the job can take you twice as long.”
Schmitz, who is pushing 70, urged new contractors to put as much effort into learning how to run a profitable business as mastering their craft.
“I probably was 10 or 15 years into my business before I realized — perhaps after reading or making mistakes — that I needed to confer with professionals in the financial and legal part of the business,” he said.
Tip: If you prefer working on job sites to working behind a desk, pay close attention to the ratio between employees, hours spent on administration and profits. Schmitz found his sweet spot is somewhere between three and five employees.
Ronald Sauvé, who has been building and remodeling homes for more than 50 years, is a big proponent of building science.
“I wish the internet had been around and I had connected with Building Science Corp. down in Massachusetts because it is probably one of the most viable sources for builders around,” said Sauvé, who lives in Eliot, Maine. “I’m often surprised by how little builders and remodelers know about the basics of the business and physics, which building science can fill us in on. I know I’ve learned from them why things are or are not working on the customer side.”
Sauvé said he would have benefited from focusing earlier on the legal aspects of setting up a business.
“It seems like there are a lot of ‘chucks with a truck’ out there — people who don’t know whether they need to be licensed, etc.,” he said. “It’s not hard these days to just do a little research online, but I often wonder if some contractors know what to do in that regard.”
In Amherst, Massachusetts, Steve Shumway owns Shumway Painting Co., which won the 2018 Master Painter Award from Fine Homebuilding Magazine and Benjamin Moore.
Shumway, who has 35 years of experience, wishes he’d done more earlier in his career to help him understand his overhead costs and set a pricing strategy.
“So many people jump in and think ‘I will charge so much per hour because so-and-so charges so much,’” said Shumway.
He noted that many contractors also make the fatal mistake of thinking they have no overhead, even though they own trucks and tools that are constantly wearing down.
“That’s a big mistake people make, and why, after a year, they ask, ‘Why am I not making any money?’ And after three years they ask, ‘Why am I out of business?’”
In hindsight, Shumway would have sat down much earlier with an accountant or other mentor who could help him work out how much to mark up overhead costs to earn a healthy profit.
“Trial and error is one way to learn, but it’s an expensive way,” he said.
Tip: Read “The E-Myth Contractor,” an e-book by Michael E. Gerber. In addition, join a trade association like the Painting Contractors Association to take advantage of their educational programs.
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