About a week ago I was talking with a construction company owner who told me that his customers were not responding to his presentations well. In particular, he said that when he had tried to talk about being the “Contractor of Choice” during his presentation, the customers didn’t care. All they wanted to know was the price.

Here are two thoughts on this issue. First, if a customer is only interested in price or talking about price, you probably have the wrong customer. Look at the last dozen or so calls you have been on and if that is the theme, take a hard look at where those leads were coming from. You don’t need price shoppers, and it’s possible that’s what your advertising strategy is attracting. Time to make a change.

Second, find a friend or colleague who can role-play with you, and give your sales presentation to them. Ask for their feedback, and make sure they know you’re willing to hear the truth. It is possible your presentation needs some adjusting, and could be leading to that response. Put your ego in your pocket and listen carefully to what they say.

If a customer isn’t interested in your business and only cares about price, they are either the wrong kind of customer or they don’t understand the offer.

During the presidential debate last week, one of the candidates said, “We have to do away with Cost Plus Contracts . . . We need to have fixed cost contracts.”

Finally! He related how a ship that was supposed to cost $140 million was now over $400 million and it still wasn’t done. No surprise there. I wonder how many $900 toilet seats were installed on that ship? (The quote starts about 1:35.)

I have been telling contractors to stay away from Cost Plus Contracts for years. Most Cost Plus contracts run over what the client had in mind to spend, and that is why so many end up in dispute. The client ignores the fact that they set the parameters of the job with the design they choose and the selections and/or changes they make. When the bills start coming in, guess who they point fingers at? It isn’t the guy or gal in their mirror, trust me. It’s their contractor.

I don’t want to be negative, there is enough of that in the news. So let me be positive. Stay away from Cost Plus contracts and I am positive you will be far less likely to have problems with your clients.

I know that many contractors prefer Cost Plus contracts because they don’t have to do the difficult task of estimating the job. They don’t have any confidence in their estimating ability. Other contractors don’t know how to estimate labor accurately, or how to handle hidden conditions on a job, or how to handle allowance amounts for selections that haven’t yet been made. A Cost Plus contract is the easy way out.

We will be covering all of these issues in our series of classes on estimating - if you’ve missed the first few classes, they are available online. The time spent learning how to write an accurate estimate is much more enjoyable than the time spent arguing with a client for payment. (www.ProfitableEstimating.com)

Do a good job of advertising, get your web page up and working, schmooze, do those things you need to do to keep your phone ringing. When it does, sell a solid job, at a fair markup and with a fixed figure price. You will do just fine.

Marc Dodson, Editor and Publisher of Western Roofing magazine has a great editorial this month. Marc talks about the value of marketing. Let me share part of that article with you.

“Basically, the message is to keep marketing and promoting to get what you can right now while keeping your name in front of your potential customers for future sales when the market rebounds. Once the market starts rebounding, it’s too late to start trying to get your message out, your competitors have already beaten you to it, and you’ll never catch up.

This is the time to make your move, to stand out. Anyone can get the job done when there’s plenty of work, materials, and labor to go around. Now is the time to let your customers know that you’re there for them. After all, if your company is viable when times are tough, it stands to reason that you can take care of business and get the job done during the good times as well. Take advantage of the situation and make a statement to your customers.

I once had a contractor tell me that he welcomes the slowing of the construction market. ‘It weeds out the guys that shouldn’t be in business in the first place. It gets rid of the ones that don’t know how to put on a roof or manage a business. I get so tired of telling customers that we’ll always be here, long after our competitors have vanished. It’s times like these that I can make my point.’ “

It doesn’t matter if you install roofs, build new homes, do remodeling, wire or plumb. This message applies to everyone in our industry.

I took a call from a coaching client this morning. He gave a quote to an owner for about $36,000 for a new garage. His “competitor” quoted the same garage at $22,000.

This is going to happen, but if you do a good job of marketing, advertising and promoting your company, you will be able to pick and choose the leads you take and the sales you make. Then you will not have to deal with home or building owners who aren’t smart enough to spot a bad deal when it is presented, and don’t know yet that their “good contractor with the cheapest price” will vanish into the sunset in the middle of the job.

I had an interesting phone call this morning. I called a contractor to get 10 yards of gravel delivered. He answered the phone, “Hello.” I said, “Is Bob Able there?” He answered, “This is.” The phone was then silent.

Gang, if I knew anyone else who could have delivered that gravel, I would have hung up on the spot. I probably should have anyway.

Your telephone is how you come into contact with over 80% of your new clients (quote from Nancy Friedman at The Telephone Doctor) and, in construction, I think it’s over 90%. You don’t get a second chance to make a good impression, so please consider how you answer your telephone.

Do you sound like a schmuck with no manners, or do you present yourself as a professional? Think about it when your phone rings, my friend, unless, of course, you have more business than you need.

A question I hear all too often is, “Why should I help educate my competition? I’d rather they went out of business so I got the work.”

I have a simple answer, gang. Do it because it’s good for the industry. That makes it good for you. As the image of the construction industry slowly changes from “flakes in pickup trucks that you can’t trust” to “professional businesspeople who provide a good service at a fair price”, your image improves along with it. As more contractors learn how to run a business, conduct themselves professionally and raise their prices from starvation or going-broke to a point they can make a good living, the industry benefits. And it makes it easier for you to charge a fair price for your work.

Share what you know about business with your competitors to help make them a better contractor. Three out of four contractors will not last four years. When they fail, too many have a mountain of debt and court judgments that end up in bankruptcy court. Your suppliers and fellow sub-contractors take the hit. It hurts us all.

Many contractors go into business after learning their trade - they are mechanics through and through. That’s fine, but now they have to learn how to be business people, it’s a different world. Give them some help; let them know about the resources available. If you do it for no other reason, do it so they can better feed, clothe and house their families. I wish you could listen to the phone calls I get from wives with kids to feed and clothe and no money available.

Give them a hand; it will make our world a little better place for us all to work in.

A quote from Condoleezza Rice, Secretary of State came to us this morning via Brian Tracy. The quote said:

“Education is of no value and talent is worthless - unless you have an unwavering aim. Never find yourself without a compass.”

Are you focused on promoting your company and sales? If you want to get through this crunch, your focus has to be on sales. That is where your compass needle should be pointing.

More importantly, you should narrow down what you do. Don’t take any job that comes along, if it isn’t profitable and it’s not what you do best, don’t do it.

If your workload is slow, it is probably due to cutting back your advertising budget or advertising in the wrong place. You must increase your advertising when the economy slows down. You should also focus your advertising on the one or two things you do best. If you do, you will soon find your business getting the lion’s share of the calls for that type of work in your area. That is where you want to be.

You can be the best mechanic in the world and you can be the best educated contractor in town, but unless and until you get focused, with your compass needle pointing at good profitable jobs, you will struggle just to make ends meet.

Last week, we hosted a free online seminar through MyConstructionBiz.com focused on referral marketing. This free online seminar presented a way to maintain contact with friends and clients, generating referrals for your business. You can watch the seminar here.

After the seminar, we heard from a few attendees who were unhappy. They acknowledged that they learned valuable information from the seminar, but were upset that we were selling the system that would help them with their referral marketing. Some were especially bothered that the system was multi-level marketing.

I want to make something clear. We aren’t happy about multi-level marketing (MLM) either. That’s because with the business model of most MLM’s, the only reason to be involved is to get people below you in the organization. The only value you receive is what you get when others buy in below you. The system we presented doesn’t work like that - it is an actual product and service that provides value. It’s a great service that can benefit any business. If you can receive outstanding value without having to sign someone else up, it’s a good thing.

If you are worried about another business making a profit, that tells me your focus is on the wrong thing. Your focus should never be on how much money the other guy is making, whether it is us, your subs or your suppliers. Your focus should only be on how you can use the information, product or service to help sell and promote your own business so you can make a good profit. If you are concerned about how much money someone else is making, it will come through in your presentations with your customers. You will be hesitant to ask a fair price for your work because your focus will be on the price of your work, not the value of your work. And that will focus your customer on the wrong thing.

Those who stay focused on the goal of providing a good service or a good job, make good money. The rest go away. We have almost nine years and several hundred coaching clients that we have observed, watched, and coached. Those that have come to us for help and have been willing to change their thinking and refocus on the goal, have turned their businesses around almost always within 90 days. Those that worry about what the other guy is doing are the ones that go broke and go away.

Good news, gang, at least from our office. The phone has started to ring again. Yep, we have had to weather the same downturn in business many of you had, but we see some light at the end of the tunnel.

We have had more calls into our office in the last two weeks than at any time in the previous 5 months. Many of our clients are telling us their phone is starting to ring again, as well.

If you plan and do a good job of advertising, you will still get little dips in the economy but they will be short lived. Do what you should be doing and good stuff will come your way. Hang in there gang, my prediction is that after the election is over you will see even more improvement.

In the meantime, use the time to study your business. Be willing to learn and try new things. Attend our free online seminars at MyConstructionBiz.com (second free Estimating class - next Thursday, September 18). Read everything you can on sales and marketing. Be patient, and be diligent. It will come together.

A question was asked this morning by one of our coaching clients. “How do you know when you have done a good job of marketing?”

Well, obviously the phone is ringing, but I think there is a better measure. I would say it is when you can pick and choose the jobs you want. When you are getting leads in that quality and number, your marketing is right on.

Remember to stay focused on sales. Many of our coaching clients are now telling us that they are getting more calls now than they have had in months. Things are turning around, in spite of the media’s attempt at doom and gloom. Hang in there, do your marketing and schmooze, and stuff will happen, your phone will ring.

The two deadly “I’s” in construction:

1) Inventory

2) Invoicing

Inventory: When you are done with a job, send the leftovers back to the supply house. Pay the restocking fee and get it out of your hair. If you put it in a warehouse or storage area of some kind, you will handle it at least 7 or 8 times minimum. Then when you get tired of seeing it, moving it, climbing over it, tripping over it, you will either sell it to someone at 50% of what you paid or give it away. Send it back.

Invoicing: If you want to delay your income and create cash flow problems for your business, then invoice. Invoicing is one of the biggest mistakes in this business. Put your payment schedule on your contract and tell the nice folks, “Here is our payment schedule, and please be prepared to follow it. We don’t bill and we do not invoice.”

Got a call recently from a contractor with a wee bit of a legal problem. It seems he got involved with a homeowner that kept adding stuff to a job, then when they got a bill for the extras, the homeowner decided the price was too high and they weren’t going to pay it.

So the contractor took it to an attorney, who got the court to set up an arbitration and now he has real problems.

Problem number one - the attorney did not insist on a non-attorney arbitrator, but settled for another attorney with no construction law experience at all. That means two attorneys collecting a paycheck, and no one with knowledge or experience settling the case.

Problem number two - the attorney keeps having “one more thing to do”, and guess who’s paying the bill?

Problem number three - the other side made an offer to settle and guess what…it is the same amount that our contractor friend had been billed by his attorney! Isn’t that great!

Problem number four - the contractor requested several items of discovery that for some strange reason the attorney keeps failing to provide to the contractor, although it had been given to the attorney several months ago.

Problem number five - the contractor learned the other day that the arbitration has been moved out eight weeks, although the attorney has known about the new date for three weeks now.

Problem number six - the attorney agreed to the new arbitration date even though the contractor told him four months ago, in writing, that he would not be in town during those hearing dates.

Gang, this is gross incompetence on the part of the attorney. If you run into this or anything like it, fire them, the sooner the better. I would even tell him/her I want my money back and if they refused, I would file a complaint with the State Bar.

The only thing worse than being cheated by a homeowner is finding an incompetent attorney when you try to recover.

(By the way, if your client keeps adding stuff to a job, make sure you get signed change orders, with the price spelled out, BEFORE you make the change!)

One of the most common requests we receive is information on how to estimate a construction job. To meet that need, Michael Stone will present two 75-minute free online classes in September on the fundamentals of estimating.

In these two classes, planned as the first in a series of classes on construction estimating, he will cover the basics any contractor needs to prepare to estimate a remodeling job or estimate a new home construction project. This class will benefit every remodeling contractor, new home builder or specialty contractor. Michael is a popular speaker and teacher who has taught estimating to contractors in 42 different states and in Canada.

An accurate estimate is the first step in selling and building a profitable job. Construction estimating isn’t easy, and knowing how to estimate a construction job is critical for any remodeling contractor, new home builder, or specialty contractor.

Part 1 will be held the morning of Thursday, September 4, and will cover:

• Types of estimates
• Forms and checklists needed for estimating
• What constitutes a complete estimate
• Steps to developing an accurate estimate
• Problem areas

Part 2 will be the morning of Thursday, September 18, and will cover:

• Creating the takeoff
• Communicating with subs and suppliers
• Steps to assembling an estimate
• Compensating for difficulty
• Comparing actual vs. estimated costs
• Getting paid for itemization
• Construction estimating software advantages & disadvantages, what to look for

The classes will be held on September 4 and September 18 at:

- 8 am Pacific
- 9 am Mountain
- 10 am Central
- 11 am Eastern time

Register here

These two online seminars are free. If you aren’t familiar with online seminars, all you need is an internet connection and speakers. If you have a headset with microphone, or if you call in to the telephone number provided, you will also have the opportunity to ask questions. It really is free, but you must register to attend.

Many contractors are experiencing a lower dollar volume of business. That means less money coming in the door to pay overhead, so the smart contractors have cut back on overhead spending.

If you are in that boat, have you prepared your employees for the fact that bonuses (if any) may be reduced or completely eliminated this year? You can’t do less business and still have money to dole out bonuses, picnics, Christmas parties, etc. They may not like it, but this is about business, not employees (or owner’s) likes or dislikes. Sometimes survival is more important, and if your business doesn’t survive, there won’t be any jobs, either. If money is tighter this year, you can’t provide things that you have in the past.

Be very careful, gang. Check with your attorney if you decide to cut back on a benefit that you have provided in the past. An unhappy employee can file a grievance with your state employment board and cause you some serious problems if you don’t handle it correctly.

I heard from a contractor recently who is dealing with a hostile owner who vents via email. Not in person, mind you, just in writing. That is not acceptable behavior from anyone, and you don’t have to accept it.

In your contracts (every contract, regardless of the size) add language that lets them know you will not respond to nasty or abusive emails or phone calls. If the folks have a problem, they must call you and set a time to meet face-to-face to get issues resolved. Before you let them sign the contract, review that clause with them so they can’t claim you are doing anything other than what it says in the agreement.

Now, this means you have to do the tough work, and meet face to face with an angry customer. Will you always be able to solve the problems when you meet with them? Of course not, but you can at least part company at a neutral level with no knots in your stomach. It’s much better than letting someone, hiding behind a keyboard, dump a wad of crap on your plate on a regular basis. People will be far less likely to be hostile in a face-to-face meeting, and you stand a much better chance of resolving the issues. And that’s the only way you can move forward.

In his most recent newsletter, Joe Gracia talks about the “10 Money-Making Elements for Your Marketing Pieces”. Joe outlines any number of mistakes that most businesses make when they try to advertise their businesses.

One of those mistakes is believing that graphics and pretty pictures sell you and your company. Joe says they don’t. He says that words do the selling.

I believe he is right on track. You must give your customers a reason to buy and one of the best ways you can do this is to answer the customer’s three basic fears on every page of your advertising.

Will you do the job your customer wants done? That is the big one. Customers want you to listen when they tell you what they want. They don’t want to hear what you want.

Will you do the job on time? This is another item that contractors are noted for; not doing a job in a timely manner. When you set a time schedule, keep it. No stories, no excuses, make it happen.

Will you do the job at a fair price? Not the cheapest price, a fair price. You can’t describe a fair price with a picture or a graphic. That needs to be done with words.

Many signs are that our economy is turning around. But you still need to market your business and let people know who you are, where you are, your phone number and what you can do for them. Get right after it. Those that have cut back on their advertising budget instead of increasing it will probably not be around when our economy takes off again.

And, if you haven’t yet, sign up for our free online seminar Thursday evening (tomorrow!) on marketing. You never know what you might learn.

Join us for a free online seminar the evening of Thursday, August 21, when Michael Benedict, Market Opportunity Director for Deluxe Corporation, shares his knowledge and experience in marketing. With a focus on low cost, easy to implement marketing tactics, Michael will walk through a discussion of why marketing is important, and provide ideas specifically for construction-related small businesses.

Michael Benedict has over 10 years experience helping small business Contractors manage and advertise their business. He works in Marketing for the Deluxe Corporation (formerly NEBS, Inc.), a Fortune 1000 company with more than 8,000 employees that helps small businesses grow through a wide range of innovative products and services in customer loyalty and brand building.

Register here.

The free online seminar will start Thursday evening at:

• 5 pm Pacific
• 6 pm Mountain
• 7 pm Central
• 8 pm Eastern

and is scheduled to last 1 hour and 15 minutes.

If you aren’t familiar with online seminars, all you need is an internet connection and speakers. You will have the opportunity to ask questions if you have a headset with microphone, or if you call in to the telephone number provided. It really is free, but you must register to attend.

Join us!

We are rapidly running out of 2008. That means the holiday season is around the corner. For those of you who are looking for a way to boost your annual revenue, have you considered holiday decorating for your customers?

Now is the best time to get trained on how to design, sell and install holiday decorations. There are a number of companies doing training seminars over the next two or three months and it would be well worth your time to check it out. One source of training and materials is SeasonalSource - there are probably others in your area.

Take a look at what has proven to be a very lucrative business for those that get involved.

Last weekend, my hunting partner and I traveled to a 7000-acre hunting ranch, located north of Walla Walla in eastern Washington. We changed out an old, tired furnace and air conditioning unit in a double wide mobile home and installed a new heat pump system. The whole job took us just under 8 hours. The caretaker of the ranch lives there and with temperatures in the 100+ range and no AC in his house, he was miserable to say the least.

When we were done, we found him in the living room with a big smile on his face. We went to a nearby restaurant for lunch, then drove back to the house to make sure everything was working right before we cleaned up and left. The caretaker was sitting exactly where we left him in his comfortably cool home, he was a happy camper. I am sure you know the feeling of making a customer happy when you complete a job.

Only problem we had was that I had to get up the nerve to crawl under the home to cut and remove the old refrigerant and electrical lines and install new lines as needed. The area has a serious collection of rattlesnakes, and a quiet shaded spot, like the one under this house, is just what they like. So I took not one, but two flashlights, a long steel bar along with my sawzall and a utility knife. What I wanted to take was a shotgun or bazooka and Heathcliff my pet mongoose. Fortunately, no snakes and I got the job done.

The trade off will come this fall during deer hunting season. We now have two “hunts” with our name on them for some big mule deer. There were 14 bucks taken on this ranch in 2007, all of 4 X 4 or larger. While there is no guarantee we will get our deer, taking this job gave us the opportunity to hunt on this ranch.

In business, there are no guarantees and a lot of risk. You have to put out the effort to make things happen and if they don’t, try again. That’s what it takes, and with few exceptions, you will eventually get your reward of a strong and flourishing business.

An earlier post of ours from November of 2006 is getting a few homeowners riled up. The post is titled “Is My Contractor Overcharging Me?” and discusses homeowners who have contacted us, unhappy about the prices their contractor is charging.

A homeowner (named MC) posted this comment last week -

“all this goes out the window if you are gouging your cutomers and they can’t afford to pay. Most people don’t make 15 or $20 an hour so they don’t feel thay should be paying it to someone else. You must all work for rich people. I just had a remodeling company take 36 hrs with 2 guys to patch 2 holes and skim a wall that had some glue stains (not even the glue, just stains) to prepare to paint. (the room size is 8x 10 and they only had to do one side!! ) oh yes and they scraped the ceiling as it had some old texture on it. It should have taken 1 guy maybe 4 to 6 hrs. they sent me a bill for over $900 dollars. I am sending it back telling them it’s outrageous! probably worth only half what they are charging if that. In this economy you should be grateful for what you can get not trying to gouge customers. is my contractor overcharging me ?? Judging from the posts on this forum -YES!!!”

The second homeowner posted earlier today -

“I have to agree with mc on this. Contractor are out to rip off the unexpecting consumer. In the end, the one’s that question the work are the one’s who get a fair price. Has anyone here taken an accounting course. People want a break down of their prices. Of course you don’t want your customers finding out they are paying $50 for a $10 because they will go somewhere else. Get real, contractors are a gip and should be enforce to have fair accounting practices which include breaking down labor, material, parts, and drive time. Granted you shouldn’t have to advise your markup, but you are give misleading information with only a total.

I had 1 gallon of water pumped from my crawl space and a boot flashing replaced on my roof which in total took 1 hour of labor. I received labor of $67 hour and the flashing $20 for material. I later received a bill for $350. When asked for a breakdown and explaination of charges, the company was still vague and kept changing billing items. In the end, I took it to the Better Business Bureau and that corrected the problem quickly. The sad part, this company was even accredited by the BBB.

Contractors should be castrated in the sense they should no longer long to run an unfair business to even worsen the economy.”

One of our blog policies is to not allow flaming comments, and calling for castration is uncomfortably close. But we’re letting it stay because if you are in a construction-related business, you know it’s said, and it’s better to face this stuff straight on (there are a lot of ways to spell “stuff”).

If you haven’t heard me talk about the downsides of cost-plus, or time and material contracts, read it now. Both comments are “poster-children” for why cost plus or T&M jobs are a fight waiting to happen. Both homeowners would have been better served with a fixed-price contract knowing what they would pay ahead of time, and both contractors wouldn’t be fighting to be paid for their work.

I enjoyed the comment from the second post - “Has anyone here taken an accounting course. . . . (contractors) should be enforce to have fair accounting practices which include breaking down labor, material, parts, and drive time. Granted you shouldn’t have to advise your markup . . . “ Let’s discuss that accounting course. If I take the sales price and deduct labor, material, parts, and drive time, what is left? Markup is proprietary company information.

I’m not sure what the price you quote a customer has to do with fair accounting practices - if your business doesn’t follow fair accounting practices, you’ll have to take it up with the IRS, not your clients. But tell me, does your doctor provide a labor and material cost breakdown when you visit? Have you ever asked how much of an office charge is labor and how much is overhead and profit? I imagine your CPA and lawyer work by the hour - do they tell you how much of that hourly rate is for them and how much is overhead and profit? Do you even ask, or assume it’s none of your business?

The contractors I know are out to provide a service and make a fair living doing it. Many of them are part of the small business entrepreneurial culture in this country, improving everyone’s life while they support their families, their employees, and their business. I don’t have a clue how contractors are making the economy worse - as far as I know, they have no impact on the cost of oil, don’t fund questionable mortgages, and are not big players in the stock market. If a contractor doesn’t charge enough for his work to pay all job costs, cover his overhead and make a fair profit, he won’t stay in business. And every business that fails is bad for the economy.

I need to add one caveat - I know there are dishonest contractors, and I know there are well-meaning contractors who aren’t great businesspeople. One of our posts earlier this year discussed that. I don’t know if the experience of either of these homeowners was with a dishonest contractor (a “D” contractor) or not, but my first impression is they worked with well-meaning contractors who are making serious mistakes in the way they run their business. If I’m wrong, and the contractors were dishonest, I apologize for their behavior. They are not representative of a majority of the construction-related businesses.

I read a blurb on a newsletter from a construction related site this morning that said:

“The Federal Reserve, caught between mounting job losses and rising inflation, is likely to sit tight and hope that the interest rate cuts it has already provided will be enough to heal a sick economy.”

Gang, I have to ask. What bad economy?

Do you see fewer people in the malls or shopping centers? Drive by any large mall on Saturday afternoon and the parking lots are full. We have contractors calling us asking where they can find good people. They have more work than they have people to do it.

The economy may be bad in the minds of some, but those who are advertising and running their companies the way they should be run are doing just fine. Gas prices are hurting a lot of us, and some people are losing jobs. But a lot of people are still spending money.

You can buy into the doom and gloom if you want. Most losers do. Or, you can do what you need to do for your business and you will keep as busy as you want to be. Your choice.

Sharon asked a reasonable question in a comment on a previous post:

I am in the planning stage of adding on a master suite addition to my house. With that said, I am having a very hard time with the laws of licensing subcontractors. I as the owner/contractor of this job according to my city clerk’s office must have all the subs I hire to be licensed with the city. That in itself is no problem. My dilemna is the person I trust the most with the building of it that has about 30 years experience is not a state licensed contractor or builder.. my question is what in simple terms that I can understand… WHY does he need that when I am taking all the risks..

This is my response, and I’d like to hear from others:

Even though most licensing efforts by cities, counties and even states are primarily moneymaking enterprises for the government, there is some merit in the licensing requirements. When I say they are moneymaking enterprises, it’s because they want the money for the license, but they won’t always police the licensee and make sure they operate like legitimate business and prosecute those that don’t.

Many states are now requiring a certain number of hours of education before a new or renewed construction related license is issued. While this is hardly a perfect method of policing this industry, it does help to keep most of the contractors accountable for learning something about this business beyond hammering and banging. Whether they use that new knowledge is another topic for discussion altogether.

There are a few questions that your question raises. Why would you choose someone that has chosen to work without a business license for 30 years? Why would he not get a license? There has to be a reason for this, and I would dig until I found it. If you aren’t willing to ask that question, are you letting personal feelings get in the way of good business decisions?

Then, you said . . . “the person I trust the most with the building of it” . . . I have to assume here that this person is going to oversee the whole job? If that is the case, then why are you claiming to be the general contractor? The city/county/state wants anyone (other than the home or building owner) that is going to be working on a job to be licensed. That way they know that he/she is also going to have the insurance and bonding to cover the costs of mistakes that happen.

Here is an example. Suppose you hire this guy to work on your job. He also gets the plans drawn. You, acting as your own GC, send the plans in, permits are issued and the job gets going. At the framing inspection the inspector red tags the job. You have put an archway between the existing part of your home and the addition. Oops, somebody forgot to get the opening engineered and the plans examiner missed it. Many jurisdictions are now requiring a licensed engineer to sign off on any opening over 8 feet wide. So, who pays for the new plans, the engineering, the delays to how many different people and subs and suppliers, the tear out and the reframing, the materials that are essentially ruined and must be replaced? You point fingers at him, he points right back. The fight is on. If you think this isn’t a common occurrence, then you are not knowledgeable enough to be acting as your own G.C.

That is just one example. Suppose he comes to you and recommends a friend of his who is an electrician. You, acting as GC, hire this guy, he does the work and 3 months after move into the new addition, you have an electrical problem. Somebody drove a sheetrock nail or screw through the 220V line to the new whirlpool bath. Because of faulty work, you have a fire and up goes your home in smoke. OK, again, where do you think this will all go? In most states I know of, if you have an unlicensed person or “contractor” on the job, you do not have the right to file any legal claim against that person or company. Likewise, they can’t file a claim against you. So what do you do now? You can’t sue the guy you hired to help build your job. In a normal situation, the contractor’s insurance should cover this type of problem, but your unlicensed “contractor” doesn’t have insurance or bonding. Do you sue the electrician? He will get a half dozen of his buddies to come in and testify that the job was done correctly. In a word, you will pay for the repairs and or rebuilding out of your pocket.

These are just two quick examples that I can think of, and these are mild compared to many that I have run into over the years.

Proceed as you wish, but I would not let anyone set foot on any project unless they were licensed, insured and bonded.

Comments from Frank Burdo -

Thank you, Frank!

This post is only to remind you that if you are a construction-related business that is marketing to the general public, your web site and your newsletters serve one purpose: to encourage potential customers to call you.

I received two newsletters from contractors this week. Pretty pictures, well laid out but no phone numbers could be easily found.

Your web site and/or your newsletter are not about you, your staff, or the jobs you have built. They are to let folks know you are in business and here is how they can reach you. To do that, tell them about you and your staff and the jobs you have built, but make sure they know how to reach you!

Put your phone number at the top, in a font equal to your company name. If your company name is:

KITCHENS OVERNIGHT

your phone # should be directly under your name -

1-888-944-0044

People want someone to talk to. They don’t want to fill out forms and they don’t have the patience to look for your phone number. Put it where they can find it.

I had an interesting experience this last week. I had a couple of young guys at my place working on our front gate.

I asked why they weren’t setting the post they were scheduled to set for the keypad. The young man said to me, “Your ditch is too wide, I don’t know how I am going to set the post. Besides, I don’t have time right now, I have another job scheduled that I have to get to.” What a treat to hear that someone else’s project was more important than mine.

I had dug a 12″ by 30″ trench for the electrical and phone line before they arrived. It was clear that the young man could only think in terms of his 6″ auger normally used to dig the hole for his post.

I dearly hope you have had a talk with your employees, and maybe even yourself to be sure this never happens on your job(s). That is no way to treat a customer. You can rest assured that the owner of that company is going to get an earful when we speak next.

It helps to be on the “customer” end of the business relationship now and then, to see life from the other side. Right now, I don’t like what I’m seeing!

When your employees tell you they want to work four 10-hour days because they want an extra day to play during the summer months, please consider more than just the needs of your employees.

If you only work four days a week, that means your jobs will sit idle for a day. How will that affect the other trades and, more importantly, the owner of the project?

I had a problem on a job we are doing at our place last week. When I called the office of one of the companies working on the job, the owner and almost everyone else was off playing. They take Fridays off during the summer. That means that what I hoped to do on Friday or Saturday has to wait until Tuesday or Wednesday this week. My job is now 3 – 5 days behind. I am not a happy camper.

Being in business is not about employing people. Being in business is about providing a service and making a profit doing it. If your employees want 3 days off every week, and you are in a service business like remodeling or any one of how many specialty businesses, then they should be given a choice to make. I am a strong supporter of taking a vacation, but shutting down your business one day a week, every week is not reasonable. Focus on the needs of your customers and your jobs first.