Читать книгу Construction and Contracting Business - Entrepreneur magazine - Страница 13
ОглавлениеSo here we are in Chapter 5, “It’s Moving Day,” the time to make the big step toward success. At this point, entrepreneurs should have a clear understanding of the basic foundation needed to start a business.
They understand what a contracting business is and why it is important to the community and the economy.
They know if they have the proper background, credentials, and personality to become successful.
They have carefully researched and prepared a business plan and know how they will finance their enterprise.
They have established relationships with and have consulted with their lawyer, accountant, banker, and insurance agent.
They understand the requirements that must be met to satisfy state and federal government agencies. They’ve obtained the licenses they need and have established the required government accounts.
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State governments have a significant influence on businesses. Some states, as well as cities, are particularly friendly to small businesses. As of 2015, the five friendliest small business states were Texas, New Hampshire, Utah, Louisiana, and Colorado. The five friendliest small business cities of 2015 were Manchester, NH; Dallas, TX; Richmond, VA; Austin, TX; and Knoxville, TN.
One of the first questions startup business owners ask themselves is, “Where should I set up my operations, and how much space do I need?” Many start in their own homes, either in the basement, a spare room, or in the garage. There are certain advantages to starting this way but also many problems.
The positive aspects are largely related to costs. It’s cheap. The structure is already there so you have no initial costs to construct or rent a building. You may have some remodeling to do, but most often this can be done at a reasonable cost. There are no rental expenses to pay every month and no landlord to deal with. It’s also very convenient to have your office at your home; no time is wasted commuting. Property maintenance and utility costs can be shared by the homeowner (you) and your business. Finally, home improvement expenses such as a new roof can, in part, be treated as a business expense. Many people in all kinds of businesses have found ways to work from a home base.
Now for the downside: The Internal Revenue Service has very strict rules regarding in-home offices, so watch your deductions carefully. You can deduct only that portion of your home, and even your utilities, used for business.
Family support is a crucial factor in deciding to run your business from your home. Because you can never really get away from the office, it’s easy to spend too much time at work. Conversely, it is also easy to turn on the television set and get away from work. The key is to be disciplined and manage your time effectively.
There are other things to think about when considering a home office. It’s important to be able to have a normal home life as well as a stimulating and successful business environment. Ask yourself these questions before you open an office in your home:
Do you have employees who will work full time in your home? How does your family feel about it?
Do you expect to meet with clients at your home? If you do not have a separate entrance to your office, how do your spouse and children feel about strangers walking through their home?
Will the neighbors complain about increased truck traffic stopping to deliver supplies? Will they be upset if you have several trucks and vans parked in your driveway each night?
Do you have enough space to store all your equipment and supplies?
Do local zoning codes allow business activity in your neighborhood? You may also run up against people in home associations or on condo or co-op boards who may give you a hard time about running a business from your home. There may not really be any problem, but typically most people running co-op or condo boards have an ax to grind.
How well are you insured and covered in case a co-worker or client gets injured?
No matter where you ultimately decide to open up shop, you must decide how much space you’ll need to operate efficiently. As is usually the case, when you think you have just the perfect size office, it will instantly become too small. Ideally, an office should be designed with some flexibility. Most businesses add staff over time and need space for each individual to perform his duties. At a minimum, contractors should have space for the owner, the staff, and a meeting room.
The office for the chief executive of the company should be large enough to hold meetings with at least several people. However, today many meetings include people on conference calls or video conferencing. Off-site meetings have become very easy and often quite cost effective, rather than trying to travel to various meeting locations. In your office search, you need to look at renting spaces that are large enough for a desk, computer, printer, filing cabinet, and perhaps a comfortable chair.
The work space for design staff should be determined by the equipment they use. The drafting table is rapidly becoming a relic as most new designers and architects work on a personal computer. However, they may need space to print out plans and a table to lay them out. Storage space for the printed designs is critical and usually takes up lots of space.
A small conference or meeting room for getting together with clients and sales representatives or holding staff meetings is essential to many businesses in the contracting industry. Some interior designers have suggested that meeting rooms should be designed so that each person attending the meeting has 30 to 35 square feet of space; therefore, if you anticipate meetings with two to six people, a 12 by 16 room should be adequate. If you do not find affordable office space with a large enough meeting area, or conference room, keep in mind that many cities and communities have meeting spaces available for rental. Regus (at www.regus.com) offers meeting rooms and offices in hundreds of cities as well, as virtual offices.
Storage space is often overlooked when planning a new office. Office supplies, machinery, and financial data archives take up quite a bit of room. In addition, most offices have spaces for coffee makers, microwave ovens, and book shelves for industry-specific publications. Of significant concern is having enough outlets for computers and other equipment as well as wifi and/or other means of online connectivity. Make sure you can connect from any place in your office.
Office Specifications and Details
Now that you’ve got a place for your stuff, you have to decide what that stuff is. A well-stocked and organized office runs much smoother and more successfully than one in a continual state of disarray. If good organization is not a strong suit of a contractor-owner, then she should consider hiring an experienced office manager or executive assistant to keep the office and support staff working smoothly and efficiently. Some of the physical items every contracting office should have follow.
The ability to communicate clearly and promptly with both co-workers and clients is critical to any business, especially a contracting business, so the first order of business is installing a telephone system that meets the needs of the business. You should have a landline with an answering machine and a professional greeting.
Ultimately, as an office evolves, a PBX (private branch exchange) system may be necessary. These sophisticated systems, usually costing several thousand dollars, provide a network within an office that offers automatic answering, call transfer, individual voice mail, intercom systems, conference calling, the ability to forward calls to another location, and to make telephone calls over the internet (referred to as VoIP, or Voice over Internet Protocol). Typically, these systems offer callers menu options for their calls: By pressing a series of numbers, the caller can be transferred directly to the person or department sought.
While a PBX telephone system increases the efficiency and usually the professional image of a company, care must be used when relying on one. Many potential clients are turned away by menu options; most people prefer speaking to a “real, live person.” They become impatient or angry when forced to listen to a long list of instructions and options. You want to make it as easy as possible for customers and/or potential customers to reach you. The first call a potential client makes is often his introduction to the company, so the method of greeting is crucial. A poor first impression can easily turn away potential clients. A simple answering machine message, having someone (or a service) answer your calls, or having them forwarded to you on your cell phone (if you will be available to take calls) are all possibilities. Most significantly, if you get a phone message, you should respond promptly, within an hour or two.
Over the last few years smartphones have all but taken over the world. They are now sophisticated enough to serve as a mobile business control center. Along with the obvious voice services and texting, you have email, web browsing, cameras, and an MP3 player at your disposal. Apps can enhance your user experience, but be forewarned that for every valuable app, there are probably 25 that are quite unnecessary for your business needs—so don’t get caught up with endless apps.
Nonetheless, the latest features have turned smartphones into mobile computers. In fact, in recent years, surveys have found that more people are using their phones for computers than they are using their laptops or tablets.
Cell phones are valuable tools for businesses of all sizes. At the typical mom-and-pop contracting company, the owner is frequently on a job site all day. At various times over the course of a day or week, the owner must be able to communicate with clients to ensure that work is proceeding properly, with the office for a wide variety of reasons, with suppliers to verify deliveries or order materials, with future clients to schedule meetings, and with an architect or designer to ask questions about the work.
Larger companies also rely on cell phones to coordinate work among several work crews, to locate a piece of machinery that had to be shared by two crews, or to find someone to repair machinery breaks. If the owner is not present on the job site, the cell phone is an invaluable tool for the crew foreman to verify details of an installation or get approval for changing the plans.
Finally, cell phones are a safety tool. In the event of a serious injury on the job, medical help can be called, and the injured worker treated without unnecessary delay.
Websites such as www.myrateplan.com and http://smartphones.specout.com are valuable for comparing cell phone features as well as cell phone plans available in various regions of the U.S. However, it is always better to speak personally with a sales representative who specializes in business needs. A company that needs several cell phones can often negotiate a better price by talking with a salesperson. Remember, Verizon, AT&T, Sprint, T-Mobile, and others are all very competitive, so go for the best deal you can get.
Getting the idea? Efficient communications systems are the lifeblood of any business. Every office needs the following machines to streamline communications and make running the business more efficient, and inevitably, more successful:
1. Telephone answering machine. Unless your office has a PBX system, this still works. While it is preferable to have a real person answer calls or forward them to your cell phone, an answering machine can be a useful tool for times when the office staff is busy and for evening and weekends.
2. Fax machine. Not very popular anymore, so prices are low, but a fax machine can still be useful for ordering materials, sending government and insurance reports, sending and receiving client documents such as proposals and change orders, and ordering office supplies.
3. Copy machine. It’s invaluable for making duplicate records, printing copies of interoffice memos for distribution, and myriad other uses too numerous to mention.
4. Multifunction machine. It can do many of the above tasks from a single source. These versatile machines can be connected to a personal computer and print, scan, fax, and copy documents of all types; they can also be used as stand-alone machines and act as your primary copy machine.
A simple desktop computer can handle the daily work of the business. A more powerful computer is needed for computer-aided drafting (CAD) work. A laptop notebook, or the newer and smaller netbook computer, can be a useful selling tool, with photographs of completed work available to show prospective clients. Finally, the tablet computers like the iPad offer business owners a portable device capable of connecting to the internet via cellular services or wifi technology. With a myriad of productivity applications available, most business owners can benefit from these computers.
fun fact
During the early 1950s, the first commercial computer built in the United States, named UNIVAC, occupied more than 350 square feet of office space (about the size of a two-car garage) and had the ability to perform 1,900 operations per second. In 2012, IBM built a much smaller supercomputer named Sequoia capable of performing 16,320,000,000,000,000 calculations per second.
Much to the dismay of some older architects and designers, the computer has replaced the drafting board and T-square as the primary tool for designing property development projects. Not only do computers make it much easier to make changes and revisions to plans, they can create cost estimates for clients and share information with other design or installation professionals.
Finally, connecting the computer to the World Wide Web via the internet has become the modern way of advertising, communicating, and purchasing. There are, however, several cautionary notes about using the computer as a business tool. First, data and information can be lost if the computer breaks down or is damaged by an electrical storm. Therefore, it is critically important to have a good backup program to save records. Indeed, most computer consultants recommend using two sets of backup media such as a flash drive or external hard drive and a third back up that is taken off-site and kept in a secure place. Today, you can also utilize cloud computer backup, which refers to backing up data to a remote server accessed via the internet. Cloud backup data is stored in, and accessible from, multiple distributed and connected resources that make up a cloud. For more on cloud backup, visit www.webopedia.com/TERM/C/cloud_backup.html.
In recent years, options for online data storage have grown considerably. Check out www.toptenreviews.com for online backup services reviews to research available options. While working away on your computer daily, it’s easy to forget how many people every day are devastated when vital data is lost because of a computer virus, malfunction, theft, accident, or even an act of nature. Backing up data is essential. In 2005, for example, when Hurricane Katrina hit the city of New Orleans, business owners who used the backup systems at that time were able to restart their companies much faster than those who lost all of their data . . . some of which never recovered and never returned to business.
Every office needs everyday supplies. Your needs will vary depending on the size of your business and your budget. As you look at the list in Figure 5–1, page 54, prioritize your needs. After you’ve done your shopping, fill in the purchase price next to each item, and add up your costs to get a head start on estimating your startup costs. Of course, this is not a complete list of supplies that you may need, so tailor it to what you think you will use.
FIGURE 5–1: Office Supplies Checklist
Use this handy list as a shopping guide for equipping your office with supplies (you probably already have some of these).
The contracting industry is large and diverse; each segment has its own specialized tools and equipment. Some contractors work most efficiently when they carry their equipment in a van, some need dump trucks, while others rely on pickup trucks with specialized compartments and racks. The same is true for power and hand tools. The best advice we can give is to encourage you to talk with other contractors and ask what they use. Many established successful contractors are more than happy to help a fledgling business get started. Another approach is to stop at job sites and see what other contractors use; of course, if you have been an employee of a contractor and are striking out on your own, you already know which tools and equipment you’ll need to get started.
In Chapter 4, we discussed the types of governmental and insurance accounts required of most businesses. Below is a supplemental list of items and accounts each business should have. Much of this information can be found on the internet at http://business.usa.gov.
Labor law posters. These are required by both the federal and state governments. These explain various rules and regulations established by government agencies such as the Equal Employment Opportunity Commission (EEOC). These posters, which must be placed in an area where all employees can easily read them, can be ordered from government organizations or from the U.S. Department of Labor. Private companies sell all-in-one posters that include all the required information. Some of these include only federal government posters, others cover individual states, and some are a combination of federal and specific state information.
Occupational Safety and Health Administration (OSHA) Form 300. Log of work-related injury and illness.
OSHA Form 301. Injury and illness incident report.
OSHA Form 300A. Summary of work-related injury and illness. This report must be filled out and posted where employees can read it, even if there are no reported work-related injuries or illnesses.
Safety Data Sheets (SMDS) and Material Safety Data Sheets (MSDS). Forms that contain information and data about chemicals and other hazardous substances. The forms contain instructions for safe use of a material and procedures for dealing with emergencies. Employers must have the sheets available for employees who may come in contact with hazardous materials. Suppliers of these materials usually provide the sheets upon request.
Minor’s work permit. Employees under 18 years old must obtain a work permit prior to starting their employment. These workers have limitations placed on them based on their age and the type of work they perform with both federal and state regulations applicable. Contractors must be careful when hiring young employees because strict safety regulations apply to minor workers. For example, young workers can neither operate a circular saw nor assist operations that use a circular saw. These employees also may not work as roofers. Other regulations govern maximum work hours allowed both on a daily and weekly basis and strict limitations on driving vehicles and operating machinery.
warning
A construction, or mechanic’s, lien is used to collect past due amounts owed to a company claiming the lien. These liens can be attached to land, buildings, or partially completed new construction. Once a lien is placed on property, the owner may lose some control over it until the lien has been satisfied and the past due amounts paid in full. Lien laws vary widely from one state to another and can be very complicated. Understanding how the lien law works in your state may save you money, time, and embarrassment.
Be very careful with using credit cards. Failure to pay the full amount due each and every month is an extremely expensive mistake. When late fees are added to interest charges, the cost of paying only a portion of the monthly invoice can easily exceed 20 percent of your purchases. Using a credit card can be a very useful tool for a company. However, care should be taken when deciding which employees have the authority to have or use one. The best advice is to keep the list of users to a bare minimum and require that itemized receipts accompany the monthly invoice and each purchase has a legitimate business purpose. Remember, a simple rule of thumb is to use a credit card by choice as a convenience to help maintain your cash flow or to keep from carrying a lot of cash, but NOT in a situation where you do not have the money available in hopes it will come along later. Remember, debt should be a decision, not a default, and credit card debt is dangerous.
Positive cash flow is often a problem for new businesses. During a project, funds are spent on wages and materials. Many times a client is not presented an invoice for the work until completion of the project and then may wait 30 days, or longer, to pay the bill. By securing credit with suppliers, a contractor can ease the pressure on cash flow—the money that comes in and out of the bank account. If managed properly, a contractor can purchase materials and often pay for them 30 to 60 days later. While some suppliers request payment in ten days, most do not charge a late fee until the invoice is more than 30 days past due. Every effort must be made to pay supplier invoices on time; and when cash is tight and payments cannot be made on time, the contractor must contact the supplier and explain the situation. Most suppliers are cooperative, especially if the contractor has a good payment record. Still, there are other suppliers who “go by the book” and do not agree to the delay of payment; some will even send a notice to your client that they will place a lien on his property if payment is not made. For obvious reasons, contractors must avoid this scenario at all cost.
Most contracting businesses require at least two types of bank accounts for handling their cash: a checking account, which does not pay interest, for accounts payable and payroll, and a savings or money market account for holding excess cash until it is needed. Interest rates for these types of accounts vary and change as the national economy changes, but the rates have been rather low in recent years. As a new business owner, however, you are not in a position to take on any high-risk investments with your profits.
Using cash as a vehicle to pay suppliers or employees is a very poor way of doing business. It also makes record-keeping difficult and opens the door to abuse and even theft. Instead, checks, credit, and credit cards are far better and safer methods of spending money. Online banking makes it very easy to handle your banking transactions and keep track of your balance at all times. Most banks have made online banking very easy in recent years.
Many entrepreneurs start their own business because they do not want to work at repetitive or boring jobs. Factory work has no appeal to them. They cannot imagine sitting behind a desk eight hours a day, shuffling papers. Spending days in a retail store is abhorrent to their senses. They are looking for work that is not routine and varies from day to day. The contracting industry offers just the type of working atmosphere that these entrepreneurs want and enjoy.
If you were to ask a contractor to describe a typical day at work, he would tell you that there is no such thing. That’s not to say that each of the 60 or 70 hours you will work each week is thrilling and rewarding. Every job has its unpleasant moments, and the contracting industry is no exception. However, for a vast majority of successful contractors, the fun times on the job far outnumber the frustrating and unpleasant times.
Most contractors start their days well before 7 A.M., when they begin to review the schedule for the day. While they usually have a schedule for the week on their iPhone or organizer, disruption and changes are the norm. Here are a few such business disruptions to explain why contractors must remain flexible:
Poor weather can cause a situation where even if you can get onto the job site, your work would not be productive.
An employee or several employees call in sick.
Supplies ordered for a job have been delayed in shipment.
The supplier has sent the wrong materials.
Equipment breakdown; a spare is not available.
The client has changed his mind and wants to review the plans before more work is done.
A subcontractor has not completed her work or has to alter work already completed.
Your computers or wifi is down.
Experienced entrepreneurs appear to have an instinctive ability to “see the big picture” and understand that the various elements of their business must work harmoniously for the business to succeed. However, the importance of attending to the smallest detail cannot be stressed enough. Entrepreneurs who are able to set effective company policies and passionately communicate their vision for success but overlook or ignore seemingly mundane details, such as meeting financial deadlines or following through on promises to employees or customers, are likely heading down the road to failure. This is not to imply that owners should micro-manage their business, but they must convey the importance of “attention to detail” to their employees.
Many new contractors wear multiple hats. They are the employer, the workforce, the scheduler, the mechanic, the designer, the bookkeeper, and the salesperson. While a spouse or partner may be of great assistance with these tasks, the owner usually has to spend a portion of his day on one or more of these tasks. Orders for materials have to be reviewed, customer statements have to be verified, equipment must be maintained, and new business secured. Most often, a contractor will work in the field during the day, spend a few hours in the late afternoon or early evening meeting with prospective clients, and then head back to the office to take care of paperwork and make telephone calls.
Saturdays are much the same, except more time may be spent on equipment maintenance, paperwork, and communications with clients. The weekend typically becomes Saturday night and all day Sunday. With disruption and chaos constantly lurking in the background, it is vital that contractors remain flexible enough to “change horses in midstream” and be nimble enough to remain productive when the expected work schedule is changed.
One of the keys to success for contractors is learning how to efficiently schedule your labor and to manage the productivity of your work crews. It makes no difference if you are a one-person outfit or have 30 employees; productivity of labor must be constantly maintained even when all or some of the factors listed above are threatening to bring your workday to a screeching halt.
A contractor does not generate income for every hour he or she works. Time spent on the telephone, returning emails, or calling on a prospective client is not what some lawyers call “billable hours.” Contractors can rarely send a bill to a client who calls to ask questions about her project, and time spent preparing government reports cannot be billed to anyone.
The contractor must become something of a juggler when family or personal situations arise that require absence from work. Your teenage son’s championship soccer game is scheduled for 3 P.M. on Thursday; your daughter is starring in the school play scheduled for 1 P.M. on Wednesday; your spouse wants you to take the kids away for a few days to the new water park; your doctor has scheduled some tests for 9 A.M. Monday morning. For the very small contractor, these obligations do not pose a huge problem. Many clients understand that contractors actually have lives besides their work and are agreeable when you inform them in advance that you’ll not be on the job during those hours. But you must remember that during these times you are not generating income. Part of running a business is working to grow that business for the future.
Missing work is more difficult for the medium-sized contractor who has just a few employees. When you take time off to tend to personal obligations, your field workers may be left without proper supervision. Therefore, proper planning for the productivity of your work crew becomes a critical issue. Before an owner can send a field employee to a job site unsupervised, she must be confident that the employee has the knowledge and ability to complete the tasks satisfactorily. As some employees learn faster than others, the owner must be able to take whatever time is necessary to properly train each individual. Your goal should be to have a business that will not fall apart if you are not there. As a business grows you will hopefully find enough quality people so that if you are out sick or even go on vacation, these trusted individuals can keep everything running smoothly.
Some specialties in the contracting industry face unique challenges as a result of geographical location and weather. In the southwestern regions of the United States, extreme heat during the summer may limit the amount of physical activity that workers should do. Many who live there might say “It’s hot, but it’s dry heat.” However, if it is 115 degrees, it’s still hot. Employees working under these conditions should receive training to limit the risks of working in hot weather, to recognize the symptoms of the onset of heat exhaustion or heat stroke, and to learn what steps they should take if they or a co-worker becomes disabled due to heat stroke.
In other areas of the country, particularly in the north, contractors face obstacles created by adverse weather during the winter months. When the ground is frozen, excavators, landscape contractors, and even plumbers may not be able to work on a consistent basis. Some may have to lay off employees and reduce their staff to a bare minimum.
In recent years, however, many of these northern businesses have offered new services in order to maintain a revenue stream. Two of the most popular are snow removal and holiday decorating. Some have sold Christmas trees, others might provide carpet-cleaning services during the winter and/or repair snowmobiles.
Innovative entrepreneurs consider all their options, examine the costs and benefits they expect from a new venture, weigh the strengths and weaknesses of their staff, and forge ahead with the new service. Clients will expect the same high level of performance that is provided by your regular services. Therefore, employees must be properly trained to perform the tasks required by the seasonal service; substandard work will backfire and hurt the reputation of the company as a whole. Consider your skills and those of your employees, and see if you can forge another source of income during the down months in your business.
Using your home as an office can be very beneficial to a new contracting business; however, there are disadvantages. Weigh the pros and cons carefully.
Plan your spatial needs before building or renting; most likely, you’ll need more space than you think.
Up-to-date communications systems are crucial to the success of a new contracting business.
Set a realistic and thorough budget for office supplies and equipment.
Visit http://business.usa.gov to learn about the variety of government regulations that cover small business.
Visit your state’s website to discover relevant regulations.
There is no such thing as a typical day in the contracting industry.
Geographical location may bring special challenges to many contracting businesses. Find ways to work around such challenges so that they do not bring your business to a halt.
Consider other means of generating income if you are living and working in a part of the country that limits your business activity during certain times of the year.
