Mike Draper
If you’re still on the tools yourself, you’re losing money
BusinessIf you are still doing all the construction yourself in your business, that's fine. But understand that you will quickly reach a maximum annual earnings, and it will never really grow. You will be maxed out.
“Every time I take the tools out of my truck, I’m losing money.”
A contractor said that to me recently – and I completed agreed with him.
When he has to take the tools out of his truck and he has to go back on the tools himself – perhaps he’s down a worker – he’s costing himself too much money. He’s doing $30 an hour work and he’s missing out on the big picture.
If he’s on the tools when he should be going out and closing the sale on a new project – like a nice, clean $40,000 renovation with a decent bottom line – he’s costing himself a lot of money. Doing the work, rather than managing the work, is hurting his business.
Does every contractor have to stay off the tools, you ask? Well, it depends what type of contractor you want to be. If you want to be a tradesperson, a one man show, you can be on the tools and run the business, too. But understand that your business will be limited in size and scope and you will quickly max out on your annual earnings.
If you want to really build a firm, a business, you will quickly find out that you are much better off getting some labour help at $30 to $40 an hour to do the construction, while you turn to actually running your business.
This is the whole concept of Opportunity Cost. The cost of doing something yourself in business – rather than delegating it, or subbing it out, or hiring someone to do it – is the things that you don’t get to do yourself because you are now “too busy.” Like signing up lots of new, profitable work. Can’t do that if you are still on the tools.
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Good points. There are only so many hours in the day.
Plus if you’re the only one doing the work, if anything should ever happen to you or you decide to take a vacation or retire, the money will dry up if you’re the only one doing the work.
Big new profitable opportunity also has Big new huge liability with it. As long as you comfortable placing large bets will this work for you. I have seen too many go big or go home companies go out of business. I guess if you can sleep at night with the ticking time bomb of substandard work that is done for a price. To many people in the construction business focus on price rather than durability and reputation. It takes years to make a reputation seconds to destroy it. Once destroyed no matter how good your price no one will touch you with a 100′ foot pole. Good luck with this approach, you will need it.
Paul Denys
Designer/Renovator/Restorer/Carpenter Since 1983
I tried this aproch on 2 or 3 separate times. In all cases I got more headaches because of poor workmanship, calls as night on my home phone about stuff being left behind and more calls for deficient work then I could handle. Eventually I got rid of everyone and now only hire labour from a labour rental company when I need grunt work done. I make more money now then when I had guys working for me. That and then thought of paying the guys more then what I had left over was killing me. Now when there is a problem you only have to yell at one guy and that is the guy that did the work and owns the company. May not be the best approch but I make more money this way.
Here I could not agree more
Interesting comments. Is the real issue the business model or the hiring practices? in every industry, business owners feel they are the only ones who can do the job right. So ask, how do some expand beyond the owner and become large profitable companies? They do so by hiring like minded people who will do the work as well as the owner. This is not by chance but by how they hire.
Building a good team who can do the work right is hard but doable. Staying small may work for some and will provide a good salary. Growing a company is the only way to leverage one’s time and make more money.