Thread: Considering running my own carpentry business?

Originally Posted by JOS106

Have anyone here requested a 50% deposit if the cost of the job requires alot of materials, and collect another 25% at the time of delivery, and the rest after the job the done?

You must NOT be afraid of stating your terms of business - you may lose some jobs through it, but it may also save you from going under.

Big labour jobs: 25/25/25/25 or 25/50/25 and choose your timing of payments.

Big materials jobs 50/25/25 or even more upfront if the materials cost justifies it (e.g. custom made/milled stuff might be 60/20/20 or even 70/10/20).

You need to ensure that if you get stuck with materials (for whatever reason):
1. They can be easily used again (so lower upfront)
or
2. They are fully paid for if they can't be used again (custom/odd stuff).

Stick to your guns, have some pre-prepared arguments that will justify it ("If you drop dead and I'm halfway through....who will pay for the custom benchtop that I have ordered and paid for, and that I can't use anywhere else unless I design a house around it? My creditors won't have the patience for your will to be read". If your clients are fair dinkum - and they want YOU to do the job - they will have no problem with it.

That kind of strategy doesn't just help your cashflow, it can preserve you from bankruptcy. It also sorts out the wheat from the chaff: you may be surprised to learn that wealthy clients are the most likely to leave you in the lurch - and their jobs are always the most expensive materials.........so if they don't want to play ball, it's very probably a good indication that they are not to be trusted.

And the nitty gritty: your USP (Unique Selling Proposal) aka why people should hire you instead of the next guy.

This is a bit hard to define, and somewhat esoteric - you either get it....or you don't. You either have it...or you don't. The bottom line is making people want YOU to do the job. You only get one shot at this (with each client), maybe with a follow up. It's all about selling yourself, being personable, conveying competence, good humour, easy to get along with, adaptable, engendering trust. Getting the potential client to think "This is the guy I want for the job".

Selling is quite an art that not enough people understand. It is subtle; it is not in-your-face. It is applicable to everything, even the Federal Budget gets sold to us. The master salesman can vanquish all comers - but he also has to deliver the goods - no hollow promises like the Kemlani Loans Affair with Rex Connor. That leads to referral business, and I can absolutely promise you that there is no easier business to close than a referral.

Don't be scared to ask for referrals either (or a written reference).

If you do not understand what I'm talking about - that you just don't get it - then don't give up your day job, and let other people bring in the business. There are plenty of people who can do the job, but very few who can win the job.

Who pays for the materials is a good question, if you have to finance it with an overdraft or a CC then it becomes less obvious due to the overheads associated with that financing. I used to work in the interstate trucking industry for a while and one of the contractors there had 14 trucks that got filled with diesel every day, he used a CC to do that as he paid the sum owing before interest became chargeable and he reckoned he had enough frequent flyer points to go around the world 6 times first class. He was working in a mature & established business that had a good cash flow and it most probably would not work for a start up which was struggling for cash flow due to the requirement to pay the outstanding debt at the end of the month but it is something to think about and I believe commonly done.

I'm not a chippie, far from it, but I still own a significant business which I started 30 years ago. I worked nights for six years prior to that to save enough to support my family for a full year plus a grubstake to finance the early months. It takes at least a couple of years to get the enterprise out of the intensive care ward to the stage where people start calling you for work. Leaving customers sufficiently chuffed for word to spread is the ongoing task. They are your new bosses.

Debt is your enemy. You need to understand terms like cash flow, effective administration, customer expectations etc.

If a customer has a problem, fix it immediately. Frequent communication instigated by you will set you apart from the mob. Too many tradies will take the easy way out and tell people they'll be there tomorrow, don't ring and just don't turn up.

When you're ready to strike out you'll know it yourself. Try to line up your first job beforehand to get the ball rolling.

Good luck,

mick

I would be looking to line up a lot more than just the first job, particularly if it's a small one. When we kicked off our building company back in 1971, we had twelve months worth of work signed up. We made every effort to keep this continuity of work, but to no avail. Within a year of our company set up, the Whitlem Government was in power and the building industry was besieged with strikes and material shortages. Cement was unavailable, nails were hard to get, fibro was in short supply and many other items were trading on the black market. In 1975 we had twelve homes under construction. All waiting for eaves. That was a dark year. Totally beyond our control. We would have been better off having no work on the books and just doing bits and pieces until things got back to normal. Moral of the story: Don't get too far in front of yourself, but try to keep a reasonable amount of work ahead. Put money away in the good times to cover the down turns.

Thanks guys for the replies...... as i am reading through all your responses i respect that they're honest and matured. Hearing it from people who has been there and done that is much appreciated.

I just got a call from a popular builder around this area who offered me some small jobs, minor adjustments, touch ups, granny flats etc since i am starting out and he knows i dont have a big crew yet. Its not my target but its a start. Also spoke to a handyman who i worked with years and asked him if he can lend me a hand if i need people, he sounds cool about it.
@FenceFurniture.... yes selling yourself plays a big role, i think being well prepared, looking professional can earn the clients trust. I haven't had much experience in talking to clients yet but i believe first impressions is vital, if it starts out well then it ll end well, if i can deliver my promises............... i think

I realised from the start that when we have a business, customer service is the key to keeping a company going, nowadays with the internet and online communications, it only takes a few people to leave a negative feedback about you to potentially loose your reputation and future customers. I like to think that i am a people person and straight forward talker. But still there are plenty of things to learn, like not putting to much trust in a client, ive seen many client who have turn nasty towards the tradesman over money at the end of a job.

Tell him nicely what your payment regime is before getting involved. He is very probably a nice bloke but you need to be aware of what you need and how you want be paid to meet your personal commitments.

I don't remember if it has been mentioned in earlier posts but you need to factor in holiday time for yourself. You might be able to work without a break for 18 months to 2 years while getting set up but remember that if you are employed you get paid holidays so your business should be able to support the same.

Hi

Having done three renos as an owner builder, the first two were all my own work so no problems. The last reno was using subcontractors which for the most part was a nightmare. So my advice to you is, if YOU are GOOD at what YOU DO, can do it PROPERLY and EFFICIENTLY then you will succeed. So many people with whom I have had discussions on their renos ALL report the same problems, too many mistakes or errors (the contractor doesn't know what he's doing), poor work for a high price etc., etc.

If your word of mouth advertising spreads, you will always be in demand. As I state above if you are GOOD, EFFICIENT and on time, charging a fair price, your prospective clients will wait for you to be available and keep you in work. Communicate with your client, it helps the client feel important to you and that you are on the ball. Perhaps do the first few jobs at a "lower" price, maybe while you are employed, and tell the client your price is lower BECAUSE you are trying to build up a business. Oh, that brings up another point ALWAYS, ALWAYS be HONEST with your client. If YOU "stuff up" say so DO NOT try to pass the buck! (it will come back and bite you). If you misquote on labour or materials let the client know, be honest, the client will appreciate your honesty. You may lose the job (probably unlikely), but you will retain a potential client. Honesty is a commodity that is becoming rarer by the day, good clients remember the honesty. We have paid more to a worker because he has been trustworthy (and a good worker of course).
Best wishes for your future... )
Finally if you can give that little extra touch to a job (at minimal cost to you) DO IT, the rewards will flow.

^ Well said and great advice. Thanks

I just got my contractors licence i am surprised cause i was told it could be 6 weeks but its only been 2 weeks. YAY. Time to finished my business card and bunch of other paper work to do before i can advertised.

Anyone know if theres a contractors card thats suppose to be on its way to be?